Retailers could shutter more than 40,000 stores over the next five years, as structural and macroeconomic pressures reshape the U.S. retail landscape, according to analysts at UBS.
The projected closures are being driven primarily by continued e-commerce growth, increasingly supported by AI, alongside policy headwinds such as tariffs and tighter immigration, which are expected to weigh on both costs and consumer demand.
Online sales now account for more than 20% of U.S. retail, up from just over 10% in 2019, and UBS expects that share to reach 27% by 2030. As more transactions shift online, the revenue density required to sustain large store networks is declining.
Department stores and specialty retailers are seen as most exposed, while off-price and value-focused chains are expected to continue expanding.
The U.S. retail footprint is already shrinking. Between Q3 2024 and Q3 2025, the total number of stores fell by around 5,000, according to Bureau of Labor Statistics data cited by UBS.
Store density has also declined, with fewer than three stores per 1,000 people, down roughly 12% from 2003 levels. If population growth stalls or declines, UBS estimates closures could approach 70,000 locations.
The environment is increasingly favouring scale players such as Walmart, Costco and Target, which can compete on price, logistics and assortment.
Smaller and independent retailers face mounting pressure as consumers prioritise value, convenience and experience, areas where larger operators can invest more aggressively.
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Despite the shift, physical stores remain a core part of omnichannel strategies, particularly as fulfilment hubs for delivery and click-and-collect.
Some analysts argue the issue is not excess stores alone, but under-optimised formats. Research suggests consumers still value in-store experiences for product discovery and tactile engagement, provided retailers deliver on service and environment.
Tariffs and broader economic pressures are compounding the challenge. UBS estimates tariffs could drive around $100 billion in additional costs across the sector, with retailers absorbing part of the impact and passing the rest onto consumers.
Lower-income households, a significant portion of the market, are expected to reduce spending as a result, potentially dragging retail sales growth down by around 0.5% annually.
The U.S. retail sector is moving toward a smaller, more efficient footprint. The combination of digital migration, cost pressure and shifting consumer behaviour is accelerating consolidation, rewarding operators with scale and adaptability, while leaving weaker formats increasingly exposed.
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