Ecommerce and Store Closures on the Rise

Sadie Keljikian, Express Trade Capital

Although fears of a “retailpocalypse” have mostly died down, the retail landscape is certainly shifting in favor of ecommerce, with more than 5,000 brick and mortar closures already announced in 2019. Many of the closures come from high-profile retailers like Gap, J.C. Penney, Abercrombie & Fitch, Tesla and Victoria’s Secret. Even Amazon has announced that it will close all 87 of its pop-up shops in Kohl’s, Whole Foods and malls nationwide.

A recent UBS study predicted that online sales will make up 26% of overall retail sales by 2026, from 16% today. Assuming current trends persist, roughly 75,000 more retail locations will close in that time. This amounts to approximately 8,000-8,500 closures per 1% increase in online sales. Amazon is expected to account for about half of the ecommerce market in the US at the end of the seven-year projection period. Of the 75,000 predicted closures, 21,000 clothing stores, 10,000 consumer electronics stores, 8,000 home goods stores, 7,000 grocery stores and 1,000 home improvement stores are expected to shutter.

Only time will tell whether these projections will come true, but on the bright side, Lasser and Sole say that the closures “should help the store productivity of surviving locations.”