U.S. retail stores still face structural contraction pressure

Overview

This report examines how many physical retail stores in the United States need to close. Using e-commerce penetration, retail sales growth, per-store sales efficiency, store density, retail concentration, and real estate supply as key variables, the report projects the potential scale of net store closures in U.S. retail by 2030. The core conclusion is that, under the base-case assumption that e-commerce penetration rises from about 22% currently to 27%, the number of U.S. retail stores may continue to decline.

Core views

UBS's base-case scenario shows that total U.S. retail sales will continue to grow, but sales will increasingly concentrate online and among leading retailers, reducing demand for physical stores. If e-commerce penetration reaches 27% by 2030, the number of retail stores could fall from 947,078 to 906,825, a decline of about 40,253 stores. Large-scale retailers such as WMT, COST, and AMZN are expected to continue capturing a disproportionate share of gains, while department stores, malls, and some discretionary retail stores face greater adjustment pressure. Shopping center REITs are relatively more resilient because limited new supply offsets some of the pressure from store closures.

Analysis framework

The report uses a scenario analysis approach, combining total retail sales, online penetration, the share of e-commerce fulfilled by stores, per-store sales growth, and store density relative to population/households to estimate the number of stores required by 2030, and compares the sensitivity of store closure levels under different e-commerce penetration and category growth assumptions.

Methodology notes

• Industry supply-demand modelRetail store demand scenario model

  Estimating required store count based on sales and per-store efficiency

  It first estimates total retail sales and e-commerce sales in 2030, then subtracts online substitution and adds e-commerce sales fulfilled by stores, and finally uses per-store sales assumptions to derive the number of stores required.

• Penetration analysiseCommerce penetration scenario

  The impact of rising e-commerce penetration on store demand

  The report starts from the current e-commerce penetration rate of about 22%, assumes it rises to 27% by 2030 in the base case, and compares the impact of higher or lower penetration rates on the number of store closures.

• Real estate supply analysisretail real estate supply balance

  The protection that limited new supply provides to shopping center REITs

  The risk to shopping center assets depends not only on tenant closures but also on new supply; the report argues that limited new supply can partially offset the pressure from store closures.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• WMT、COST、AMZN

  Beneficiaries of share concentration

  Strengths

  Strong scale advantages, price competitiveness, supply chain capabilities, and omnichannel fulfillment capabilities.

  Weaknesses

  Given their large growth base, continued share gains require maintaining advantages in pricing, logistics, and membership ecosystems.

  Comparison

  Compared with traditional department stores and small-to-medium retailers, they are more likely to gain a disproportionate share of sales as the industry concentrates.

  Risks

  Tariff costs, weaker consumer spending, regulation, and intensifying competition could compress margins.

• Department Stores

  Traditional format facing higher store closure pressure

  Strengths

  They still retain advantages in branding, locations, and the display of certain categories.

  Weaknesses

  Traffic pressure, online substitution, and insufficient sales efficiency make store networks harder to sustain.

  Comparison

  Compared with discount retailers and e-commerce platforms, they are more vulnerable to rising e-commerce penetration.

  Risks

  Sales declines, store closures, inventory markdowns, and weaker mall traffic may create a negative feedback loop.

• Shopping Center REITs

  Relatively defensive retail real estate assets

  Strengths

  The report believes they are supported by limited new supply, with supply constraints partially offsetting store closure pressure.

  Weaknesses

  They still depend on tenant health, lease renewal capacity, and local consumer demand.

  Comparison

  Compared with malls, shopping center REITs have a more resilient setup.

  Risks

  If retail closures exceed expectations or consumer spending weakens materially, occupancy and rents would still come under pressure.

• Malls

  Retail real estate assets facing greater challenges

  Strengths

  High-quality malls may still maintain attractiveness through location, experience, and quality tenants.

  Weaknesses

  The report points out that malls face a more challenging setup, with department store sales and vacancy rates as key pressure points.

  Comparison

  More vulnerable than open-air shopping centers and properties oriented toward necessity-based consumption.

  Risks

  Anchor store closures, rising vacancy, redevelopment costs, and financing pressure.

• Internet Retail

  Structurally favored direction

  Strengths

  Rising e-commerce penetration directly expands the online sales pool and drives fulfillment network optimization.

  Weaknesses

  Online growth may require higher logistics, returns, and customer acquisition costs.

  Comparison

  Better aligned with the consumer migration trend than pure offline stores.

  Risks

  Slower penetration growth, margin pressure, and platform competition.

Key data

• Current e-commerce penetrationabout 22%The report measures online penetration based on retail sales excluding gasoline.
• 2030 e-commerce penetration assumption27%Base-case assumption used to estimate the scale of store closures.
• Total retail sales excluding gasoline$6,843,870 to $8,326,614TTM 3Q'25 to 2030, assuming a 4.0% CAGR.
• E-commerce sales$1,492,458 to $2,232,134Derived from e-commerce penetration and total retail sales.
• Share of e-commerce sales fulfilled by retail stores15% to 25%The base-case scenario assumes stores take on more online fulfillment functions.
• Retail store fulfilled sales$5,575,281 to $6,652,514Includes offline sales and the portion of online sales fulfilled by stores.
• Per-store sales$5.89 to $7.34Assumes a 4.5% CAGR.
• Number of retail stores excluding gasoline947,078 to 906,825About 40,253 fewer stores in 2030 versus current levels.
• Recent store closuresmore than 10,000 storesCharts show cumulative closures of more than 10,000 stores from 4Q'23 to 3Q'25.
• Retail stores per 1,000 residents2.8 storesThe current level is down 13% from 2003.
• Retail stores per 1,000 households7.0 storesThe current level is down 15% from 2003.
• Potential tariff cost shockabout $100 billion; about 0.5% annual sales dragIf tariffs remain through 2030, the report believes store closures could be significantly higher than in the base case.

Impact & implications

For investors, this report highlights the structural divergence within U.S. retail: e-commerce, scaled retailers, and leading platforms with fulfillment capabilities are more likely to benefit; department stores, low-efficiency stores, and mall assets dependent on foot traffic face closure and valuation pressure; for shopping center REITs, fundamentals should be assessed by looking at both tenant closures and new supply, rather than store count alone.

Risks

• E-commerce penetration above the base-case assumption would expand the scale of physical store closures.
• If tariffs remain in place through 2030, they could bring about $100 billion in cost pressure and weigh on spending by low-income consumers.
• If the assumed 4.5% CAGR in per-store sales cannot be achieved, the required number of stores could be lower than the base-case estimate.
• If the concentration trend toward leaders such as WMT, COST, and AMZN accelerates, pressure on small-to-medium retailers and traditional formats will intensify.
• Mall vacancy, declining department store sales, and tenant bankruptcies could amplify retail real estate risk.
• Some chart OCR inputs in the report are incomplete, and precise segment-level figures should be based on the original report charts.

What to watch

• Whether U.S. retail e-commerce penetration continues to rise from about 22% toward 27% or higher.
• Whether the net store closure trend continues after 4Q'23, especially for department stores, home furnishings, apparel, and consumer electronics stores.
• Changes in the share of U.S. retail sales growth captured by WMT, COST, and AMZN.
• Whether tariff policies remain in place through 2030, and whether retailers can pass through about $100 billion of potential costs.
• Vacancy rates, construction as a share of inventory, and tenant renewal performance for shopping centers and malls.
• Whether per-store sales growth is sufficient to offset declining store counts and online substitution.