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Retail This Year Is on Track to Open More Stores Than Close


Apr 10, 2021 by Laura Agadoni
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All I can say about this headline is, "Yes!" It's such a relief to hear we won't lose all our retail stores. It was looking pretty dicey after the coronavirus lockdowns had been going on for a while and retail stores were closing left and right.

But people need their retail fix, and a diet of only online shopping doesn't cut it for the many people who enjoy the shopping experience. Let's look into the latest on the retail front.

The stats

We've seen stores closed for business during the coronavirus, supposedly temporarily to "flatten the curve." But what really happened was many of those stores -- 8,960 to be exact, including popular retail chains -- went out of business entirely or filed bankruptcy. Here are some notable 2020 bankruptcies:

The tide is turning

Retail Dive reports a brighter picture for 2021, even with COVID-19 still on the scene. The U.S. should see at least 3,344 stores opening this year, according to Coresight Research, and that's just as of March; there could be more. This number is impressive, as it represents 39.5% more store openings than this time last year, and it outpaces the announced closings so far for 2021, at 2,649.

Discount stores reign supreme

It's a mixed signal for the state of the economy regarding who the biggest winners are -- they're mostly all discount retailers: Dollar General (NYSE: DG), Dollar Tree (NASDAQ: DLTR), Big Lots (NYSE: BIG), Five Below (NASDAQ: FIVE), Family Dollar, and Burlington (NYSE: BURL). That suggests a middle class moving toward the lower, not the upper, realm of the middle.

Other stores to watch

Other retailers besides the super discount chains are planning openings, though, such as Ulta Beauty (NASDAQ: ULTA), Sephora, Dick's Sporting Goods (NYSE: DKS), TJ Maxx and Marshalls, Gap (NYSE: GPS), and Skechers USA (NYSE: SKX). Let's delve deeper into plans for some of these stores.

Burlington

Formerly Burlington Coat Factory, this discount clothing chain plans to open 100 stores this year. Burlington uses a "treasure hunt" appeal to lure customers in; the store buys leftover inventory from more expensive stores, and customers come in regularly to see what sort of deals they can get on brand-name items. The store plans to open smaller stores, however, to keep costs down, such as moving into old Pier 1 outlets.

Dick's Sporting Goods

Many people left gyms during COVID-19 and instead started exercising in the great outdoors -- think golf along with general outdoor activities. Dick's is seeing growth in athletic apparel, footwear, and golf gear. It recently opened five stores and plans to open six more, including an experiential store.

TJX Companies

TJ Maxx, Marshalls, and HomeGoods combined make up TJX Companies (NYSE: TJX). This retailer operates in a similar manner as Burlington (see above). Although sales declined during COVID-19, the decline has lessened drastically. At the end of October 2020, sales were down only 3% compared to earlier in the year, which saw sales declines as high as 53%. TJX Companies is seeing the most activity in home, beauty, and activewear categories and plans to add about 50 stores in fiscal 2021.

Gap

If you were around in the '90s, you probably owned something from Gap, or at least were familiar with the clothing line. Gap was iconic Americana: effortless jeans and a tee. Gap is still doing well, not because of Gap itself, but because of its other stores: Old Navy and Athleta are in; Gap and Banana Republic are out. The parent company plans to close 350 Gap and Banana Republic stores and open 30 to 40 Old Navy stores and 20 to 30 Athleta stores by the end of 2023.

The Millionacres bottom line

For a while, no one knew what was happening with brick-and-mortar retail establishments. After a year of living with the coronavirus pandemic, the picture is getting clearer. It's not all gloom and doom for brick-and-mortar retailers. Many are coming back. Commercial real estate investors need to keep tabs on which retail outlets are likely to make a strong comeback and plan their investments accordingly.

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