If ecommerce were to reach the point where it made up one-quarter of total retail sales, how much of an impact would it have on physical retail?

A UBS report hypothesized that if ecommerce penetration grew to that extent by 2025, 30,000 to 80,000 physical stores would have to close to achieve annual low single-digit sales growth per store.

eMarketer's forecasts don't go out that far, but for 2022 we forecast US retail ecommerce will only make up 15.1% of total retail sales. That's considerably higher than the current 10% level, but not on a path to reach 25% in 2025.

The UBS noted that not all sectors are likely to feel the same level of pressure. The home improvement sector appears to have stabilized, with locations declining by 1.1% year over year and the number of stores remaining at roughly 70,000 since Q1 2014. This was attributed to retailers like Lowe’s and Home Depot having a firm grasp on supply and demand.

Meanwhile, Coresight Research (formerly Fung Global Retail & Technology), which has been tracking store closings and openings, put the number of major US chains that shuttered in 2017 at 6,995, and it placed year-to-date 2018 announcements at 3,335. The stores hit hardest were softline retailers, which include apparel and home goods stores. Stores like Target, Costco and Dollar General saw expansions. Hardline retailers, which include home improvement stores, did close 2,044 locations last year, but that was tied to electronics stores like Radio Shack going bankrupt.

The physical store still matters for supply, gardening and appliance retailers. In its Q4 2017 earnings call, Home Depot reported that 6.7% of total sales in fiscal 2017 came via digital channels, and 46% of online orders were picked up in-store. Home Depot opened only three stores in the US last year and three more openings are slated for 2018, which is having an impact on store productivity. Total sales per square foot increased 6.7% to $417 for the fiscal year, its highest level since 1999, according to Carol Tomé, executive vice president and chief financial officer.

Among the home improvement retailers tracked by eMarketer, only Sears Hometown and Outlet Stores decreased store space in the past 12 months. Lowe's and The Home Depot grew 1.1% and 0.3%, respectively, which meshes with UBS' findings. 

Many of the recent store closings are simply the result of building too many locations over the past few decades. But changes in consumer behavior—foremost, the rise of online shopping—has also played a big role.