Bed Bath & Beyond (BBBY) announced April 23 that it was filing for Chapter 11 bankruptcy. The demise of the well-known retailer represents the latest chapter in the degradation of the brick-and-mortar side of retail.
DON’T MISS: Bed Bath & Beyond Goes Bankrupt
A few factors are working together to contribute to the fall of the physical retailer, according to UBS retail analyst Michael Lasser. Surrounding a throughline over the past decade of an increased prevalence of online shopping is a reduction in consumer spending and credit availability, as well as the higher price tag that comes with operating a store.
Lasser estimates that 50,000 of the 940,000 stores in the U.S. will close by 2027, excluding gas stations. This predicted number is down from the 80,000 closures Lasser predicted in 2021, according to CNBC. Lasser’s forecast is based on an assumption of increased e-commerce penetration from the 20% it is at currently to an anticipated 26% by 2027.
Clothing and consumer electronics stores will be most affected, with 23,000 stores expected to shutter between the two sectors, according to Lasser.
It’s Not All Bad News
This theme of the in-person retail extinction is still an “investable” one, according to Lasser. The anticipated closure of these 50,000 stores could translate to nearly $300 billion worth of retail sales that are “up for grabs,” leaving the way clear for stronger brands – such as Walmart – to attract new sales.
Smaller chains and mom & pop shops are at the biggest risk of closure over the next few years, according to Lasser. Over the past decade, 40,000 of these smaller stores closed while bigger chains (with 500+ employees) added nearly 20,000 stores,
As Bed Bath & Beyond winds down its operations, 360 of its name brand stores, plus an additional 120 buybuy Baby stores, will eventually close.
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