Discount stores

Supply Side: Dollar, Discount Stores Dominate Retail Store Growth for 2021


As Walmart and other retailers focus and spend heavily on omnichannel shopping, other discounters such as Dollar General, Dollar Tree and Ross have announced expansion plans for more stores in 2021.

Coresight Research reports more than 3,199 new store announcements in the first quarter of 2021, compared to 2,548 closures. This is the first time in years that the industry has shown net growth in stores, according to Deborah Weinswig, CEO of Coresight Research.

Coresight has tracked 8,953 closures, as well as 3,298 openings in 2020, amid the COVID-19 pandemic. Coresight announced 4,548 store openings in 2019. So far, in the first quarter of 2021, Coresight has said store openings are on track to overtake previous years.

The discount and non-price segment is on the verge of continuing to grow and carries the bulk of new store expansion projects. Wells Fargo analyst Ike Boruchow said recent surveys from his company indicated growth in beauty specialties and the low-cost discount segment of retail.

Scott Benedict, director of retail studies at Texas A&M University, said discounters and dollar stores are an anomaly because they thrive despite a limited online presence. He said dollar stores serve a lot of them on a budget, and during the pandemic they also became the go-to for refill trips when consumers needed cleaning supplies or diapers.

“It’s quite interesting when you think about how dollar stores and discounters are defying conventional retail trends that are pushing retailers like Walmart to double down on e-commerce and omnichannel shopping amenities that attract. also consumers, ”said Benedict. “It just shows that what works for one retailer won’t work for others. “

SHOPS IN DOLLARS
Dollar General is among the retailers forecasting the most store growth this year, with 2,900 real estate projects underway. This includes 1,050 new stores, 1,750 store renovations and 100 store moves. The Goodlettsville, Tennessee-based company had more than 17,177 stores at the end of 2020. CEO Todd Vasos recently said the company is growing from a position of strength and plans to make targeted investments to strengthen its competitive position and further differentiate itself from other discount retailers.

The chain extended pickup options for customers to 17,000 stores last year. Dollar General also continues to experiment with an expanded fresh food format to 9,500 square feet with additional coolers for meat and fresh produce and additional payment channels, including self-service.

“We believe this even larger format positions us better to meet the growing needs of our customers, particularly in very underserved markets,” said Jeff Owen, COO. “We estimate that there are now approximately 13,000 additional small-box store opportunities in the continental United States that are available for a Dollar General store.”

Dollar Tree and Family Dollar are also increasing the number of stores this year. Dollar Tree, based in Chesapeake, Va., Plans to open 600 stores in 2021 and renovate 1,250 Family Dollar locations. The company will open 400 Dollar Tree stores and 200 Family Dollar stores. The company said the new Family Dollar stores will be the new combo format piloted in 2019 as a Dollar Tree and Family Dollar combination under one roof.

The company said the new combination format is ideal for small towns and rural communities of 3,000 to 4,000 people and where Dollar Tree typically does not operate. Michael Witynski, CEO of Family Dollar, said the formats offer higher gross margins with lower store spend.

“We are extremely satisfied with the response from our customers to the new combined store concept,” he said. “We will continue to refine our strategic store formats to better serve our customers while improving productivity, margins and in-store returns. We want formats that make the most of the Dollar Tree and Family Dollar brands to serve customers in all types of geographic markets. We believe that we can continue to change, evolve and improve.

By early 2021, Dollar Tree was operating 15,658 stores in the United States and Canada under the Dollar Tree, Family Dollar and Dollar Tree Canada brands.

OFF-PRICE DETAILS
While mainstream department stores like JCPenney and Macy’s continue to announce store closings, non-mall discounters like Ross, Burlington and Five Below are expanding the store footprint.

Jan Kniffen, CEO of J. Rogers Kniffen Worldwide, recently told the Northwest Arkansas Business Journal that discounters continue to be popular with cost-conscious consumers and those who enjoy treasure hunting. He said the stores don’t have an online business, but defied the odds as they offer discounted brands.

Ross Stores plans to open 40 Ross Dress for Less stores and 20 dd’s Discounts in fiscal 2021. In the long term, the retailer said it was confident Ross would have 2,400 stores – up from 1,866 locations – and dd’s Discounts would have 600 stores.

Discount competitor Burlington canned its online business in 2019 and hasn’t looked back. The discounter plans to open 100 new stores this year and reach 2,000 stores in the future. Burlington operated 750 stores to start this year.

Burlington CEO Michael O’Sullivan recently said he expects more full-price retail store consolidations and closings, which should work in Burlington’s favor. As stores close, “many shoppers, especially the wealthier, rushed shoppers, will migrate more of their spending online,” O’Sullivan predicted. “But we do anticipate that other buyers, more value-oriented buyers, will find their way to lower prices.”

Burlington also said it will open smaller stores that carry less merchandise and have lower operating costs than traditional stores. Smaller stores will be approximately 25,000 square feet in area compared to the 50,000 to 80,000 square foot locations that the company typically builds.

Benedict said the smaller formats made sense for Burlington and the big discounters because their model involved transforming merchandise quickly. He said consumers visit stores because they expect to see something different from the last time they shopped.

TJX Companies Inc., the parent company of TJ Maxx, Marshalls and HomeGoods, plans to open 122 stores this year, giving the discount chain nearly 4,700 locations by the end of the year. Like many of its peers, the company said it sees an opportunity to land good real estate at a reasonable price, thanks to industry disruptions.

“With the increase in store closings by some retailers, we are in an excellent position to open new stores in some of our target markets,” CEO Ernie Herrman told analysts in late February. “We also see additional opportunities to relocate existing stores to more desirable locations and seek more favorable terms when leases expire.”

EDITOR’S NOTE: The offer side section Talk Business & Politics focuses on businesses, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is operated by Talk Business & Politics and sponsored by Propak logistics.


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