Retail apocalypse hits brick and mortar stores
Physical clothing, electronics, and home furnishing stores are taking a hit as online penetration led by the e-commerce giant Amazon proliferate in their sales.
According to the estimates provided by UBS online sales growth is likely to rise to 25% by 2026 from 16% today, and this will lead to closures of roughly 75,000 physical stores, excluding restaurants.
In a note to its clients this week, the investment firm said “store rationalization needs to accelerate meaningfully as online penetration continues to rise.” The estimate implies that for every 1% increase in online penetration, roughly 8,000 to 8,500 stores need to close. Currently Amazon dominates about half of the U.S. e-commerce market.
Out of such 75,000 physical stores, clothing accounts for 21,000 stores, electronics for 10,000, home furnishing for 8,000, and home improvement for 1,000. Additionally, 7,000 grocery stores may also close if online grocery penetration rises to 10%, from 2%, by 2026.
In 2019, already over 5,000 store closures have been declared by retailers like Gap, Victoria’s
