HIGH POINT — The Gift and Home Trade Assn. kicked off its annual conference with a virtual agenda of presentations and networking sessions. The keynote speaker for the first day of the conference was Michael Lasser, managing director and senior research analyst at UBS, who examined data points that show various COVID-19 affects on the industry and calculated projections for the future of physical retail stores.
In his presentation Lasser examined his recently published research, which he mentions in this interview with CNN, around the future of physical retail. One of his key findings is that the industry can expect e-commerce penetration to rise from its current 15% to 25% over the next five years. This increase in consumers turning to e-commerce is in large part due to COVID-19 and the increase of consumers working from home.
In fact, Lasser reported that right now one out of two American workers has been working from home for the past six months, and this increased amount of time at home has fed the rise of e-commerce.
Lasser says this will have a profound impact on the physical retail landscape, and he predicts roughly 100,000 store closures. “We are going to see a reckoning in retail over the next five years,” Lasser said.
Specifically, Lasser explained that with every 1% increase in e-commerce penetration, approximately 10,000 retail stores would need to close to maintain the equilibrium in retail. Clothing boutiques and furniture stores were cited to make up a large part of that number, with an expectation of 25,000 clothing stores closing and 10,000 furniture stores.
Of the retailers that are most at jeopardy, small-chain retailers and indoor shopping malls have the greatest cause for alarm, according to Lasser. Smaller retailers, in particular, will need to implement e-commerce strategies and keep up with the rising price of employee wages and other operational costs if they intend to survive.
Interestingly, Lasser pointed out that the rising popularity of the buy online, pickup in store service will be one of the biggest challenges for indoor shopping malls to overcome.
On a more positive note, some of the data reviewed revealed how changing consumer trends should lead to an increase in home décor purchases. Now that many consumers are working from home, commute times have decreased. By saving money on gas and having more time at home, consumers are sprucing up their spaces. In fact, according to Lassler’s research, 15.5% of time saved as a result of working from home was spent on home improvements.