Shift To Digital Could Force 100,000 Retailers To Shutter By 2025

A study by analysts at UBS found that 100,000 U.S. retail stores could close by 2025, a number the coronavirus pandemic has sped along, according to a report by USA Today.

The closures won’t only happen because of the virus’s reach, but more because of the larger trend toward digitization and eCommerce over the past several years.

According to research analyst Michael Lasser, speaking with CNBC, the most vulnerable likely victims of the contraction will be clothing and accessory stores, along with smaller retailers with less than 500 employees.

Lasser said grocery stores will also be vulnerable in spite of the appearance of their necessity during the pandemic. After the pandemic, Lasser said he thinks the struggle will become more apparent due to many more people using online grocery delivery apps they adopted during the pandemic.

Also, the pandemic may have instilled tendencies to shop in bulk more often, and people’s tendencies to linger and spend long amounts of time shopping will probably take a while to come back. Lasser said the once-common habit of going out for leisure activities — going to movies or out to eat and stopping unexpectedly at grocery stores — might dwindle.

Because of those side effects of the pandemic, Lasser said there will be downward pressure on many grocery stores that were already not doing well. And there will be less need for physical locations if many people begin using mobile apps.
He said at this time during the last recession, the economic downturn had shuttered around 7 percent of businesses, or around 55,000 stores.

This time, by comparison, similar percentages could mean another 40,000 to 45,000 businesses close.

Additionally, the unemployment rate has skyrocketed by the millions over the past weeks, and many workers are taking pay cuts or being furloughed. Fourteen percent of American workers are now unemployed because of the pandemic.