A funny thing happened on the way to Retailageddon: they forgot to tell some retailers.

And while there’s no denying the past year has been especially harsh on much of the retailing industry when it comes to their physical store base, it has by no means been universal. In fact, certain sectors of the business are operating on the plus side of the ledger when it comes to opening physical stores.

Opening Day

Remarkably, so far this year the total number of store openings exceeds the number of store closings for the first time since…well, since a long time ago. Coresight Research, which does a very good job tracking such things, says that as of the middle of March, 3,344 new store openings have been announced in the U.S. versus 2,649 announced closings. Quite a change from last year when tens of thousands of stores closed, and openings were few and far between.

As of the middle of March, 3,344 new store openings have been announced in the U.S. versus 2,649 announced closings. Quite a change from last year when tens of thousands of stores closed, and openings were few and far between.

But here’s the thing: This resurgence in physical retailing is highly selective. Legacy sectors, like department stores and some big box businesses, continue to shut doors and reduce their footprints. Mass merchants have pretty much leveled off and are operating at retail statis. But two channels — off-price and dollar stores — are continuing to open new stores at a voracious pace, throwing it in the face of those who believe the future is only online. Add in some deep discount grocery players and even the physical retailing anti-Christ Amazon, and you get to the math that shows the net gain in stores.

And what do all three of these channels — off-price, dollar and deep discount grocery — have in common, you might ask? Well, it’s pretty clear that the American consumer still loves a deal (real or perceived) and that V-tailing — that’s value retailing, just remember you read it here first — is an extremely compelling element of the marketplace. Shoppers are perfectly willing to bypass legacy retailers they have gone to for generations in pursuit of a bargain. Say what you want about the luxury market but when it comes right down to pulling out your credit card or hitting the buy button, the U.S. consumer is invariably going to gravitate towards the bottom. It may not be very pretty but it’s very real.

Getting Physical

 Which of course raises the big question: Why? If no one disputes that ecommerce will continue to gain share and the pandemic has forever changed shopping patterns, how come some companies are plowing ahead with new stores? A couple of reasons top the list:

1. As shoppers returned to visiting stores in person, the off-price channel was as strong as any in traffic counts. Financial results for companies like TJX, Ross and Burlington all confirmed that their in-store businesses returned quickly and in strength.
2. These same retailers have little if any presence online and understand that they need more physical locations to continue to grow. Even if they are tiptoeing into ecommerce it is being done gingerly and with no real sense of urgency.
3. The amount of available retail real estate — and the prices beleaguered landlords are willing to charge to get tenants — makes this very much a buyer’s market for any company willing to sign leases for new space. The basic laws of supply and demand are driving this feeding frenzy.
4. Lastly, and perhaps most intrinsically, one senses that off-pricers smell blood. As they watch department stores continue to deteriorate, losing stores and market share, they understand that they will be the prime beneficiaries of this shift in consumption — if they have the physical presence in place to take advantage of the situation.

Opportunity Knocks

The dollar stores and the deep discount grocery chain sectors have some of the same dynamics in play, though with a few twists. They aren’t feeding off dying department stores as much as providing a lower priced — real or perceived — alternative to traditional mass retailers in the general merchandise and food spaces.

So, this is why we’re seeing plenty of new store activity even as some people were predicting the demise of virtually all in-person shopping. It can’t be overstated that while ecommerce continues to gain share in virtually all merchandise classifications, it still represents at best a quarter or even up to a third of overall retail sales. The rest remains — and will likely continue to do so for the immediate future — inside the walls, halls and malls of conventional physical retailing.

Ten Brands on the Move

 So, here’s the latest tally of which retailers are expanding now and in the next year or two, focused on three sectors: off-price, dollar and deep discount grocery.

• TJX:The parent company to the country’s biggest off-price brands — TJ Maxx, Marshalls, etc. – is expanding its store base across multiple nameplates. Long-term it has said it will nearly double the number of HomeGoods units from its current 800-store count to 1,500. Short-term, the company plans to open 76 stores in the U.S. across all its banners in its fiscal 2022.
• Ross Stores: The number-two off-pricer says it will open 60 new doors this year, 40 under its main banner and 20 under the dd’s Discounts name. That will come on top of its current 1,866 locations with Ross saying it still expects to top out to 2,400 Ross and 600 dd’s stores, though it didn’t specify the timetable.
• Burlington:Coming off strong performances the past few years, the chain plans to open about 100 new locations this year. It currently has about 750 locations but in announcing its 2021 plans it said it eventually expects to get to 2,000 stores.
• Ollie’s Bargain Outlet: The regional chain has announced 40 to 45 new stores for this year, on top of its current count of about 400 locations. Ollies has said in the past it could have more than double that number of stores in the years ahead.
• Dollar Tree: Compared to off-pricers the dollar stores are even more aggressive. Dollar Tree said it expects to open 600 stores this year, 400 under its namesake banner and 200 under its Family Dollar subsidiary. That’s up from 400 last year. This includes the first 50 of its combo-stores that co-locate both brands into one building, primarily in smaller, rural markets that may not be able to support full-size individual locations.
• Dollar General: Even more proactive, this dollar chain is expected to continue its recent surge with around 1,000 new stores this year. That’s on top of its existing count of about 16,000 locations. Both dollar operations, it should be noted, will close a number of store locations over the year that will impact their total counts.
• Five Below:Geared to younger shoppers, this dollar-format company says it plans to open between 170 and 180 locations this year, up from 110 last year. This will take its total count into the 1,200 range.
• Citi Trends: An up-and-coming operation focused on apparel, accessories and home goods primarily for African American and Latinx customers, it says it plans to open at least 30 stores this year and another 100 by the end of 2023, on top of its current 585 units in 33 states.
• Aldi: The German based retailer, which brought its deep discount grocery format to the U.S. way back in the 1970s but has only really stepped up its expansion over the past decade, said it will add 100 more American stores this year. That will take it to about 2,100 locations by year’s end.
• Lidl: Another import from Germany with a similar format — and family heritage to Aldi — Lidl plans to add 50 stores here this year, taking it to close to 150 locations as it works to play catch up with its much later start on this side of the Atlantic.

Do the Math

 So, not counting some other retail players that plan to open significant number of stores during 2021 — Sephora, Ulta and Target to name a few — just the main off-price, dollar and deep discount grocery nameplates are talking about adding more than 2,100 stores before the end of their fiscal years (generally Jan. 31, 2022). That’s about two-thirds of the running count forecast so far and we all know it’s going to be a long year and lots of things can happen.

All in all, not too bad for the Retailageddon, right?