You must have already seen that a lot of retail stores right around your location must have gone out of business in the last few years thanks to the rising costs of maintaining these shops as well as the influence of e-commerce which has slowed down the sales of these retailers to a great extent. Due to these reasons, the shop owners are left without any option but to shut them down and think of other ideas. A new report published by UBS gives a concerning projection for the US retail store market in the next five years.
As per this report, about 50,000 small retail stores in the US will be closed in the next five years due to the rise in e-commerce as well as rising costs of infrastructure and other costs. Nearly half of these projected retail stores will be of consumer electronics and clothing stores as these are the two sectors most affected by the boom in e-commerce. The same report also mentions that home improvement stores and auto parts stores will remain unscathed even after the e-commerce impact.
Since the last count was made in the US, there are about 940,000 retail stores in the US and a 5% reduction in the retail stores can be expected in the next 5 years which is not a huge lot if you see the current trend in e-commerce market. The worrying part, however, is that big brands such as Costco, Target and Walmart among others will not feel the pinch of these closure and they will continue to thrive but the smaller retail stores will be the ones that are affected the most.
UBS’ report also mentions that “e-commerce sales are projected to rise to 26% of total retail sales by 2028, up from the current estimated level of 20%” and also adds that every 1 in four transactions will be made through e-commerce and picked up either from pickup stores or shipping options. At the moment, the retail sales growth is 4% every year but if the sales growth is slowed down then even more retail stores can be closed down in the next 5 years.
