UBS predicts 40,000+ U.S. retail store closures over the next five years as e-commerce, AI, and tariffs squeeze physical retail

UBS analysts predict more than 40,000 U.S. retail stores will close over the next five years as e-commerce, now accounting for more than 20% of total U.S. retail sales and projected to reach 27% by 2030, combined with AI-enabled shopping continues siphoning sales away from physical locations, with department stores and specialty retailers most at risk while off-pricers, Walmart, Costco, and Target are expected to keep expanding. Tariffs and net-negative immigration policies could drive even further closures if they remain in place, with UBS estimating retail sales could drop about 0.5% annually as retailers absorb roughly $100B in increased costs while lower-income households cut spending. The U.S. already had 5,000 fewer stores in Q3 2025 compared to Q3 2024, a reversal from recent years when openings outpaced closures, with the country now at fewer than three stores per 1,000 people, down about 12% from 2003.