By Patrick McKeever
While there are growing concerns about record inflation, rising borrowing costs, the psychological impact of Russia’s invasion of Ukraine, and record-high gasoline prices, U.S. consumers continue to be very resilient, buoyed by broad-based labor-market strength, solid wage gains and accumulated savings during the pandemic.
The resilience is well reflected in retail sales, which rose more than 8 percent year over year in total in April and more than 6 percent when stripping out sales at gas stations, auto dealers and restaurants.
While inflation (higher retail prices) contributed to the year-over-year growth, the increase came on top of a surge in sales in spring 2021 as consumers received their stimulus checks under the American Rescue Plan.
Also noteworthy, physical stores did better again in April than online retailers after outperforming in March for the first time since the pandemic started in the spring of 2020 according to Mastercard SpendingPulse. The shift is being driven by consumers returning to more normal shopping patterns.
Opening Announcements Remain Concentrated in the Discount/Dollar and Off-Price Sectors
In the first three months of 2022, major U.S.-headquartered retailers announced plans to open about 4,400 stores, similar to the first three months of last year, and close about 635 stores, down from about 2,100 closing announcements in the first calendar quarter of 2021 according to analytical work by The Daily on Retail, a financially-focused industry research platform.
As has been the case for some time now, opening announcements have been concentrated in the discount/dollar and off-price sectors, which have various qualities/elements that make them less vulnerable to online competition and less translatable to ecommerce in general than many other retailers.
Five Below, which has expanded its price points above $5 with its Five Beyond initiative, recently announced plans to triple the store count to more than 3,500 by the end of fiscal 2030 and said it will open 925-1,000 stores over the next four years on a base of more than 1,200 stores.
Family Dollar is planning to open 400 new stores this year on a base of 8,000-plus stores, while Dollar Tree is planning to open 190 stores on a base of 8,000-plus stores.
Dollar General DG is also growing aggressively, though we aren’t including management’s plan to open 1,110 new stores in 2022 in our year to date tally since it was announced in December 2021.
Turning to off-price retail, industry leader TJX announced plans to open 150 new stores this year across its concepts on a base of nearly 4,700 total stores, Burlington plans to open 90 net new stores on a base of about 840 stores, and Ross Stores recently said it will open 75 new Ross Dress for Less Stores and 25 dd’s DISCOUNTS this year on a base of more than 1,900 total stores.
On a combined basis and including a few others not mentioned above, discount/dollar and off-price retailers have announced plans to open about 2,240 stores, or roughly half of all announced new stores for the 2022 year-to-date period through March.
Auto Parts Retailers Also Continue to Open Many New Stores
Auto parts retailers have also been more resilient to online competition than other retailers and also continue to focus more on the in-store experience and growing their store footprints.
O’Reilly Automotive ORLY said earlier this year it will open 175-185 net new stores, which implies just over 3 percent growth on a base of more than 5,700 stores, and Advance Auto Parts announced plans to open 125-150 new stores on a base of about 5,000 total stores.
AutoZone is also growing its store base but has an August fiscal year and hasn’t announced any new store openings yet in calendar 2022.
Digital Natives Pushing into Physical Retail
It’s important to note many retailers opening stores are digital natives, including Warby Parker, which went public last fall and said in pre-IPO investor materials it expects to sustain strong revenue growth into fiscal 2022 in good part by “expanding (its) retail footprint.” Management recently announced plans to open 40 new stores this year on a base of about 160, which implies 25 percent growth.
Other digital natives opening stores include Gap’s Athleta brand, which plans to open 30-40 new stores on a base of 227, Fabletics, which expects to open 30 new stores on a base of more than 70 stores, and Allbirds, which is planning 16-17 new stores on a base of 35 globally.
Closing Announcements are Concentrated in Footwear and Apparel
Again, store closing announcements were down significantly in the first three months of 2022 when compared to the same period last year, but among the retailers announcing closings, Foot Locker is the leader, with plans to close 190 of its 2,800-plus stores. Foot Locker is also planning to open 100 new stores this year, however, so the net planned reduction is 90 stores.
Other retailers closing stores including Amazon AMZN, which is shutting all its bricks-and-mortar bookstores and 4-star stores, Gap GPS and Banana Republic North America, which plan to close 50-60 stores combined out of more than 960, and Genesco, which is planning to close 46 of its 1,425 stores.
Next on the list are Chico’s, which said it will close about 40 of its 1,200-plus stores, and Children’s Place, which also plans to close about 40 stores and has more than 670 total stores.
Per The Daily on Retail’s methodology, openings and closings are specific numbers that were announced, not completed, and could extend over several years. Also, The Daily on Retail’s tally excludes openings and closings that may be occurring in 2022 but were announced in 2021 or prior.
Patrick McKeever covered retail for more than 20 years as an awarded Wall Street analyst before launching The Daily on Retail in 2019.
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