Remember when retail stores were considered a thing of the past? Not anymore, according to Coresight Research, which said: “For the first time in four years, US retailers will open more physical stores than they close.”
Deborah Weinswig, CEO of Coresight, has identified two forces driving the physical retail phoenix, and both are rooted in the digital world. She explained that digital businesses now depend on physical stores, which they’ve learned are eager to ship and make great places to pick up and return online purchases. She said physical stores also help fulfill e-commerce orders.
Until November 28, Coresight reports that US-based retail chains have opened 4,361 more stores than they have closed. Last year, the industry closed 6,573 more stores than it opened. The National Retail Federation (NRF) said 2021 was a “banner year for store openings.” Research for the trade group is ongoing until the end of the third calendar quarter (October 31).
The NRF said retailers made about 5,725 store opening announcements this year, nearly double the 2,890 store closing announcements in the same period. The trade group said the change in momentum highlights the optimism of retailers and the recognition of the importance and long-term benefits of brick-and-mortar stores.
NRF CEO Matthew Shay said the lower number of store closings reflects several factors, including a large number of actual closures in recent years, especially when the pandemic hit in 2020 and retailers Americans have made more than 10,700 store closure announcements.
“A stimulus-induced rebound in consumer spending, pandemic-induced lease renegotiations and balance sheet restructuring have also helped reduce the number of store closings,” Shay said.
LEAD EXPANSION OF STORES IN DOLLARS
The dollar store segment continues to dominate new store openings with footprint expansions across the United States this year and beyond.
Dollar General, based in Goodlettsville, Tennessee, opened 1,050 new stores in 2021, more than any other retailer. The retailer said it will have more than 18,200 locations in total by the end of January. This includes 100 more Popshelf stores in 2022. The new concept store caters to high-income households in suburban areas. Dollar General had 30 Popshelf stores in six states at the end of October. Texas is Dollar General’s next target for Popshelf stores, which are slated to open in early spring.
Dollar Tree, which had 15,685 stores at the start of the fiscal year, plans to open 600 new stores under its two banners, Dollar Tree and Family Dollar, next year. Dollar Tree increases prices after the first of the year on many items due to higher supply chain costs and inflationary pressures. Dollar Tree turns to a model used by Five Below, a discount store that carries an assortment of general merchandise at prices typically under $ 5.
Five Below, led by former Walmart.com executive Joel Anderson, said the company will open between 170 and 175 new stores this year, giving it nearly 1,200 locations. Anderson said the longer-term goal is 2,500 stores across the United States over the next five years.
While the dollar store segment has captured the lion’s share of new store openings, the non-price segment is also keen to expand its presence.
TJX, the low-price leader by market share and sales, announced more than 120 new stores this year to bring the banner-owner retailer TJ Maxx, Marshall’s and HomeGoods to more than 4,572 locations in the United States and Canada. Porto Rico.
Burlington added 100 new stores based on 761 this year, and it’s also downsizing the store to be more similar to TJ Maxx. The store’s expansion came on the heels of the online business shutdown in early 2021.
Laurie Hummel, senior vice president and general merchandise manager at Burlington, said the retailer’s decision to shut down the online business made sense given the model deals being liquidated and operating at lower margins. She said the cost of fulfillment, last mile delivery and returns is too expensive. With the money saved by shutting down e-commerce, Burlington plans to open another 100 stores over the next year. The company plans to increase the number of its stores to 2,000 over the next few years.
This year Ross Stores added 45 new namesake stores and 20 DD’s Discounts, giving the retailer approximately 1,860 stores. Ross CEO Barbara Rentler said the company is back to its pre-pandemic plans to open about 100 new stores each year on track to 3,000.
AUTO PARTS AND OTHERS
Auto parts stores are also increasing their physical footprint, with AutoZone adding 200 new locations in the United States, giving it more than 6,700 locations. According to the NRF report, O’Reilly expects a net of 165 to 175 stores in addition to 5,616, and Advance Auto Parts plans to open 80 to 120 new stores on a base of more than 4,800.
Digital native retailer Warby Parker is opening 35 stores this year, providing the eyewear retailer with a store base of 160 locations. Fabletics added 24 new stores to its base of 50, and the Parachute home goods banner opened 20 new stores, for a total of 30. Raymond James analysts expect the trend to continue over the next two years as more online retailers turn to brick and mortar to enable an omnichannel shopping experience.
Online retail giant Amazon also recently announced plans to open small stores in California and Ohio. The locations will be approximately 30,000 square feet and approximately one-third the size of a traditional department store. Amazon has not provided any additional information on this upcoming driver. The good online retailer Wayfair has also said it will open three stores in 2022.
The wave of store closings observed in recent years has slowed considerably this year. Department stores and shopping centers are among the hardest hit in recent years.
Macy’s continues to close 125 underperforming stores by 2023. About 45 of them occurred in 2021, leaving 60 remaining closings. Macy’s said 10 of them will perform in January.
The NRF said nine retailers announced 100 or more store closings this year, including Christopher & Banks, which filed Chapter 11 in January and subsequently said it would close all 449 stores in 44 states. Foot Locker plans to close 345 of its 2,950+ stores, and Francesca, who filed Chapter 11 in December 2020, announced in January 2021 that it would close half of its 550 stores. American Eagle Outfitter will close 225 of its 880 stores in the United States by 2023.
Specialty channels have also been hit hard. Disney closed 60 stores in the United States in 2021 and Bed Bath & Beyond closed 43 stores. Children’s Place closed 122 stores this year, reaching the target of 300 closings announced by the end of 2020.
CVS has announced plans to close nearly 900 locations over the next three years. The retailer said the closures were linked to more online sales since the pandemic.
Editor’s Note: The offer side section of Talk Business & Politics focuses on businesses, organizations, issues and individuals engaged in the provision of products and services to retailers. The Supply Side is operated by Talk Business & Politics and sponsored by Propak Logistics.