Retailers Expect to Open More Physical Stores This Year Than Close Them for First Time in 5 Years

More retailers are expected to open more physical stores than closing them for the first time in five years, according to an analysis of more than 900 chains by IHL Group, a research and advisory company, reports The Wall Street Journal.

Dollar General expects to open 1,000-plus stores in 2022, followed by Dollar Tree (nearly 500), which just increased prices by 25 cents because of rising costs of goods and freight. Merchants, food, drug and convenience chains are spurring the growth, which industry executives and analysts say is happening because physical stores hold a lot of value.

“It’s not like it’s stores against e-commerce anymore,” Brendan Witcher, a Forrester Research principal analyst, told the news outlet. “They play an integral role in supporting each other. The old story that stores are dead is simply not true.”

Toni Roeller, senior vice president of in-store environment and visual merchandising at Dick’s Sporting Goods, told the Journal her company is opening newer concept stores that include House of Sport, Public Lands and Golf Galaxy. Some have batting cages, rock-climbing walls, and putting greens.

“Five or six years ago, there was lots of discussion about whether e-commerce would gobble up bricks-and-mortar retail,” she said. “People research online, but many times they want to try before they buy.”

Harmit Singh, CFO of Levi Strauss & Co., noted a similar drift for the blue jeans company.

“The majority of consumers like to engage with us in our stores,” he said.

“We don’t look at the stores and e-commerce as separate,” Chris Riccobono of shirt brand UNTUCKit LLC told the Journal. “Bricks-and-mortar is an extension of our online business. We get a bump online within a 10-mile radius of each store we open. Stores are like an inexpensive billboard.”

Making things easier are rent prices. Levi’s Singh told the Journal he has been negotiating rents that are 15 percent lower than pre-pandemic levels.

Still, department stores and specialty stores will likely close 469 more stores than they open this year, down from 6,787 net closures in 2020, according to the Journal.

“What we’re seeing is that the more brick-and-mortar business that we’re creating, the more the digital is happening in those particular ZIP codes,” Macy’s CEO Jeff Gennette told analysts last week.


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