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E-commerce is the future of retail

(Credit: Amazon)

A UBS analysis found that one in every 11 retail stores will likely close in the next five years, as shoppers continue to turn toward e-commerce. In the most dire scenario, more than twice as many stores — about 150,000 in total — could close over that span, Bloomberg reported.

  • Secular decline of retail, accelerated: Even upon reopening, visitors were slow to return and shops rushed to offer services like curbside pickup and virtual shopping to get consumers buying again. Foot traffic at malls has fallen about 30% from a year ago.
  • Hardest hit retailers: Office-supply, sporting-goods, and clothing companies will likely see the most closures, with 35,000 combined.
  • Be Smart: Only auto-parts retailers are seen keeping about the same number of locations, with sales per store reaching an all-time high in the third quarter of 2020. These shops are more protected from digital options because they’re often needed by customers immediately and offer services that need to be done in person, Bloomberg noted.
  • Backdrop: Consumers across the globe spent $900 billion more at online retailers in 2020 compared with the prior two-year trend, according to a report released by Mastercard Economics Institute. As consumers picked up online purchases in the parking lot and got packages or takeout dropped at their doorsteps, e-commerce made up about $1 out of every $5 spent on retail globally. That’s an increase from about $1 out of every $7 spent in 2019, CNBC noted.
  • Heard on the StreetUBS Report: “An enduring legacy of the pandemic is that online penetration rose sharply. We expect that it will continue to increase.” [Bloomberg+CNBC]

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