Retailers last year boosted their store productivity levels nicely: In the last four quarters, productivity has increased an average of 4.1%, up from average growth of 2.9% in the previous four, according to a UBS report.

Sales per store is a key (and perhaps obvious) indicator when it comes to predicting where and when a retailer might reduce its physical footprint. Over the last 12 months, retailers have shuttered about 1,000 net stores, compared to about 5,000 net closures over the previous 12 months. That easing was helped along by topline improvements last year, and those would have to be sustained to stave off further closures, UBS said.

But they’re unlikely to be, “as the boost from fiscal stimulus fades,” according to UBS analysts, led by Michael Lasser. “This will likely lead to an acceleration in physical store closures in the upcoming year.”

In the third quarter last year, sales per store over the trailing 12 months rose 3.7% year over year to $4.54 million — “a new high” — driven by a 3.6% increase in sales plus a -0.1% decline in stores (to 739,846), according to the UBS team. “Looking forward, we believe that store rationalization needs to accelerate meaningfully as online penetration continues to rise,” he wrote, saying the analysts’ best case estimate is for 75,000 stores to collectively shutter by 2026, if e-commerce penetration rises from today’s 16% to 25%. “For every 100 bp increase in online penetration, 8k-8.5k stores would need to close,” he said. “To put this in perspective, [Amazon’s North America] revenue represents the equivalent of 30k retail stores & it added the sales of 7.7k stores in FY’18.”…..more here