New research from investment bank UBS estimates that 50,000 retail stores out of the 940,000 currently operating in the U.S. will close their doors by 2027 (not including gas and food-service stations), Yahoo Finance reported.
“While there was a pause on store closures over the last few years, we believe this activity is set to sharply accelerate moving forward,” UBS retail analyst Michael Lasser said.
Several factors will contribute to the eventual mass shuttering, including decreases in consumer spending and available credit, and increases in the penetration of retail shopping and cost to run retail stores, according to Lasser.
Per Lasser’s calculations, if 50,000 stores close within the next five years, and the average sales per store is $5.7 million, that will leave $285 billion in retail sales “up for grabs” — giving major competitors better-positioned for online shopping the chance to capitalize big time.
As one of the most recognizable retail chains, Bed Bath & Beyond’s decision to file for bankruptcy has sent shockwaves around the industry. How long has the writing been on the wall, and what can we expect from the future of retail?
It’s easy to look back and think that Bed Bath & Beyond missed the boat on modern retail. But the reality is that it was one of the first major retailers to open stores in the early- to mid-1990s, paving the way for the massive customization and consumerism that followed. As tastes and trends shifted, the company struggled to stay relevant and competitive among big box retailers.
One major issue it faced was a lack of brands and products specifically tailored to customer needs. This made it hard to get the consumer to buy directly from the store. Additionally, customer loyalty never seemed to have been a priority. Its store rewards programs often left much to be desired, forcing customers to look elsewhere for deals.
But the bankruptcy of Bed Bath & Beyond shouldn’t be considered a death knell for the entire retail industry. In fact, this may be a wake-up call for stores to take the needs of customers more seriously and make sure that their customer service is top-notch. It also shows us the importance of keeping up with what customers want, even if that means changing the way you operate and updating your product selection.
Going forward, Bed Bath & Beyond is likely to face an uphill battle as it tries to recover. But the lesson here shouldn’t be that brick-and-mortar stores can’t survive in the digital age – it should be that businesses need to stay flexible and willing to try new things in order to keep up with consumer demands. With a smart shift to customer service, product selection, and digital offerings, retailers can still be successful in this new reality.