In a 180-degree turn from 2020, retailers’ expansion plans are outpacing plans to close up shop so far this year.
US retailers have announced 3,199 store openings and 2,548 closures year-to-date, according to a study by Coresight Research. For comparison, the firm recorded massive 8,953 closures, along with 3,298 openings last year, as the Covid pandemic disrupted the retail industry and pushed dozens of businesses into bankruptcy.
Now, though, the country is seemingly turning a corner. The rollout of the Covid vaccine keeps ramping up. Another round of stimulus cheque is landing in many Americans’ bank accounts, and companies are by and large predicting a strong rebound of the consumer. The National Retail Federation (NRF) is forecasting retail sales in the US could grow anywhere between 6.5% and 8.2% this year, with the economy accelerating at its fastest clip in two decades.
The real estate market, meantime, presents an opportunity in 2021 for companies looking to grow. They will likely pay less in rent and have more flexible lease terms. A glut of vacancies has left landlords more desperate to fill space and sign deals they wouldn’t have ever considered pre-pandemic.
“Most retailers that survived Covid’s early days are now looking to refill their new store opening programmes,” says Bill Read, executive vice president for Retail Specialists, a brokerage firm based in the Southeast. “Demand for new stores is very robust right now. Playing catch up has everyone in a hurry up.”
Below are ten of the retailers that have store openings planned for this year.
Ulta Beauty is planning to open about 40 new stores in 2021. The retailer has earmarked roughly $70 million for store openings and remodels this year. Its plans include the remodelling of 11 outlets and ten relocations.
When the Covid pandemic hit, store openings slated for 2020 got postponed, Ulta’s management team told analysts during a conference call in early March. Many of the openings now planned for 2021 will happen during the first quarter, it said. During the second half of this year, Ulta is also rolling out a smaller version of its store in more than 100 Target locations.
LVMH-owned Sephora says it plans to open more than 60 freestanding stores this year, most of which won’t be in malls. Separately, the beauty business is on track to open some 200 pint-sized shops within Kohl’s locations this fall, which will ramp up to more than 850 sites by 2023.
Its store strategy focuses on reducing its exposure to suburban malls and getting closer to customers in other ways. As it moves into Kohl’s, it’s ending a years-long relationship with the department store chain J.C. Penney.
Make-up sales have battered during the pandemic, with more consumers embracing a low-maintenance and casual lifestyle, but Sephora is betting that demand for cosmetics will come back strong.
Burlington Stores is planning 75 new stores for 2021. The off-price retailer’s plans include opening about 100 recent locations while closing or relocating 25. During a call with analysts in March, management said it had shifted 18 store openings planned for 2020 into this year due to the pandemic.
About a third of this year’s openings will be a smaller-format Burlington is piloting. These will be about 25,000 sqft versus the typical 50,000 to 80,000 sqft. The company has said its goal for these locations is to keep inventory levels down and cut costs.
“When you have less in-store inventory, you need less physical space,” chief executive Michael O’Sullivan says. “This has significant economic benefits, increasing the pool of potential real estate sites, and providing the opportunity to open profitable stores in more locations around the US.”
Amazon is quietly opening more Amazon Fresh grocery stores, according to a recent report.
Amazon Fresh debuted in Los Angeles in September. The eleventh such store opened earlier this month, and Amazon is working on at least two-dozen more.
Amazon, which also owns the high-end Whole Foods grocery chain, sees an opportunity to take over vacant real estate to plant itself much closer to customers. Some of the Fresh shops are occupying empty Toys R Us locations, for example. The Fresh stores range from 25,000 sqft to 45,000 sqft.
It’s not just Amazon looking to grow, either. Grocery remains a competitive category, from the low-end to the high-end: Aldi, Lidl, Sprouts Farmers Market and Trader Joe’s have all announced store openings this year, as well. Dollar General, which sells groceries, plans to open 1,000 stores, including some with its Popshelf label.
Privately held Fabletics is planning to open two-dozen new stores in the United States this year, which will bring its tally to 74 by year-end.
The athletic apparel brand for women (and recently men) is also planning to open stores internationally for the first time, in London and Berlin. Some stores will have tech feature like a leggings fit tool and on-site demos of the Hydrow rowing machine. Fabletics has partnered with the at-home fitness equipment maker to market its products in stores and online and be the exclusive apparel provider for Hydrow’s trainers.
American Eagle has seen massive momentum with its Aerie lingerie and loungewear brand for teens and young women, which has helped boost its business overall, especially during the pandemic. The company expects it will open roughly 60 Aerie locations this year, including 25 to 30 Offline by Aerie shops. Offline is a new athleisure brand the company debuted last summer.
“We’re very excited about the malls,” said chief executive Jay Schottenstein during an earnings conference call in early March. “This is probably the best opportunity for us to pick up new locations offered at affordable rents for us.”
Dick’s Sporting Goods is planning to open six new namesake stores this year and six locations that will test fresh concepts. For example, in the coming weeks, it’s slated to open a first-of-its-kind experience-heavy location in Rochester, New York, called House of Sport, which will feature a track and field outside as well as an indoor climbing wall.
Dick’s Sporting Goods has a little more than 850 locations currently. Along with its off-mall sporting goods stores, the retailer operates Golf Galaxy and Field & Stream.
TJX is planning to open 122 net new stores this year, which would bring its total by the end of the fiscal year to almost 4,700 locations. TJX’s portfolio of brands includes the discount chains TJ Maxx, Marshalls, HomeGoods and HomeSense. Like many of its peers, the company sees an opportunity to land good real estate at a reasonable price, thanks to industry disruption.
“With the increase in-store closures by some retailers, we are in an excellent position to open new stores in some of our target markets,” says chief executive Ernie Herrman. “Further, we see additional opportunities to relocate existing stores to more desirable locations and to seek out more favourable terms when leases expire.”
Off-price chains like TJ Maxx and Marshalls have suffered during the pandemic due to their lack of a web presence. Analysts predict these businesses could see a strong rebound as Americans look to refresh their wardrobes head back to stores to shop, especially around crucial moments like back-to-school.
Five Below is planning to open between 170 and 180 new stores in 2021. Ninety-to -100 of those should come in the first half of the year. The company has said its goal is to reach more than 2,500 locations nationwide. It has more than 1,000 stores currently.
“We’re back to playing offence,” said chief executive Joel Anderson during a virtual ICR conference. “We feel great that we’ve got the store engine going again.”
And as it opens new locations and remodels old ones, Five Below is also testing a prototype in the back of some stores where it hosts esports events, which have grown to be popular among the tween and teen consumers that it targets. It’s partnered with Nerd Street Gamers, a national network of esports facilities and competitive gamer events, to operate the spaces.
Gap is planning to open 30 to 40 new Old Navy stores and 20 to 30 Athleta locations this year. The company is pegging its growth on these two brands, which have seen more robust demand from consumers in recent years. Simultaneously, its namesake Gap label and Banana Republic have struggled because they relied on workwear. The company is simultaneously close to about 100 Gap and Banana Republic stores globally this year, including 75 in North America.
“Our discussions with landlords have progressed quite well, and we are making quick and effective progress on our real estate goals,” says CFO Katrina O’Connell.
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