Tags: ubs | amazon | stores | retail | rival

UBS: Amazon to Force 75,000 More Rival Stores to Close

store closing signs going out of business
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By    |   Tuesday, 09 April 2019 11:13 AM

UBS reportedly estimates roughly 75,000 more stores need to close in the U.S., should e-commerce penetration grow to 25% by 2026, from 16% today.

Within that, about 21,000 clothing stores, 10,000 consumer electronics stores, 8,000 home furnishing stores and 1,000 home improvement stores should close, CNBC reported, citing UBS.

UBS in a note to clients this week said that “store rationalization needs to accelerate meaningfully as online penetration continues to rise.”

Assuming online sales’ share of total retail sales in the U.S. grows to 25% by 2026, from 16% today, roughly 75,000 more retail doors, excluding restaurants, need to close, analysts Jay Sole and Michael Lasser said, CNBC reported.

"That means for every 100 basis-point (or 1%) increase in online penetration, roughly 8,000 to 8,500 stores need to close. A lot of that growth is being fueled by Amazon, which is expected to account for roughly half of the U.S. e-commerce market," CNBC explained.

So far this year, several shopping-center staples unveiled plans to trim their footprints across the U.S., Bloomberg reported.

Gap Inc. said it would slash the store count of its struggling namesake brand by 230 locations over the next two years, just hours after J.C. Penney Co. confirmed it would shutter 18 department stores. That news came on the heels of L Brands Inc.’s decision to close 53 Victoria’s Secrets in North America this year. And it’s not just apparel: Tesla Inc., whose galleries are often inside shopping centers, just said it’s moving all its sales online.

These moves come on top of all of the chains that have already announced they’re closing down or reducing their footprints due to bankruptcy. This includes Payless Inc., which is abandoning 2,500 stores, Things Remembered, which is closing most of its 400 stores and selling the rest, while mall favorite Brookstone Inc. slims down operations and Sears continues to shutter locations. Taken as a whole, many of today’s shopping centers are becoming little more than an assemblage of fast-fashion retailers, Apple stores and food courts.

“You hear so much about shopping centers are dying. There definitely needs to be attrition, and there’s too many in the U.S.,” Michael Guerin, senior vice president of leasing at mall-owner Macerich Co., said in an interview earlier this year. The mall “just needs to evolve.”

However, one Wall Street analyst told Business Insider recently that mall giants should easily weather these closures.

These store closures will only have "a small impact" on major mall owners such as Simon Property Group and Macerich, Kevin Brown, an analyst at Morningstar told Business Insider.

"The mall receives a lease termination fee, covering the expense of having to turn the store over," Brown said. "Many top malls have a list of tenants looking to expand, including many previously e-commerce exclusive retailers that are looking to place select stores in only the best locations, so the drop in occupancy shouldn’t last for more than a few quarters."

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UBS reportedly estimates roughly 75,000 more stores need to close in the U.S., should e-commerce penetration grow to 25% by 2026, from 16% today.
ubs, amazon, stores, retail, rival
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2019-13-09
Tuesday, 09 April 2019 11:13 AM
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