Where Will American Retail Stores Go in the Next Decade?

Investing.com – Bernstein’s report indicates that the rapid growth of e-commerce has reduced the demand for many physical stores, and the retail landscape in the United States could undergo significant transformation over the next decade.

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Currently, the U.S. retail space far exceeds that of other developed economies, making it the most severely “over-stored” market globally. Analysts estimate that the per capita retail space in the U.S. is about 24 square feet, well above countries like Canada, Australia, and the UK.

As online shopping continues to expand, this surplus of retail space could lead to widespread store closures or repurposing. Bernstein estimates that in the coming decades, 2 billion to 6 billion square feet of retail space may become redundant, equivalent to approximately 15,000 to 40,000 large stores.

This shift reflects the growing role of e-commerce in American consumer spending. Online sales currently account for about 17% of retail activity, a significant increase from 3% in the early 1990s, intensifying pressure on brick-and-mortar retailers.

However, analysts say that many closed stores are unlikely to remain vacant. Instead, retail properties are increasingly being repurposed as developers seek to better utilize prime locations.

Past studies on store closures show that most vacant retail spaces are eventually occupied by other retailers, while some are converted into gyms, medical centers, self-storage facilities, schools, or housing.

Smaller retail outlets may also find a second life as logistics hubs for online shopping. Analysts expect that some stores, especially smaller formats like dollar stores, will be transformed into “dark stores” serving as distribution centers for online orders, enabling faster delivery.

While retail formats continue to evolve, not all store types face the same level of impact. Bernstein notes that warehouse-style membership stores and home improvement chains are relatively more resistant to e-commerce competition, but if online shopping continues to take a larger share of consumer spending, some traditional mass retailers may face greater structural pressures.

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