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Discount, Deep Value Drive New Retail Openings

With inflation stubbornly persisting, recession fears ever present and the consumer tightening their spending, there is a bright spot: Optimistic retailers have opened 5,396 outposts to date in 2023. Less buoyant is the breakdown, with less than half of those openings related to apparel.

Apparel-related retail store openings total 2,632 to date. That includes broadlines that sell apparel, as well as the dollar sector that may include some fashion accessories in its merchandise mix but is mostly focused on grocery items.

So far, there are at least 2,764 non-apparel stores set to open, including a few that have a connection to fashion. These doors include Asda Express convenience stores in the U.K., 30; jeweler and watchmaker Cartier, 10; lifestyle jewelry brand Kendra Scott, 12; McDonald’s, 1,900 globally, including 400 in the U.S.; Sephora, two stores in Buffalo, N.Y. plus 250 concept shops within a Kohl’s department store; Starbucks, 400 new locations, including 100 drive-thrus; Ulta Beauty, 25 to 30, and travel retailer WHSmith, 160 across 16 countries, many located in airports. The tally of store counts does not include expansions by grocery chains, such as Kroger and Aldi.

So what does this tell us about retail? The store concept isn’t dead and people still like shopping in a brick-and-mortar environment. The tally so far for store closings in the first quarter of 2023 is nearly 2,000 doors, all but securing a net gain in store count for the year ahead.

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A deeper dive into who is opening the new stores provides a read into how consumers are shifting their shopping behavior. The retailers with the biggest expansion plans are the dollar stores and deep value chains. Throw in the off-price sector and the 1,900-door expansion by McDonald’s, plus the warehouse club doors, and one can conclude that consumers are most definitely on the hunt for value. That’s no surprise given the global inflationary pressures over the past year.

In addition, the off-mall locations that Macy’s seems to now favor, plus the 100 Starbucks drive-thrus and the Asda Express convenience stores suggest a time-pressed consumer that wants the shopping experience to be quick and easy.

Below, openings so far by nameplate and expected store count.

Abercrombie & Fitch Co: 10

Backstory: The specialty chain is planning to open about 10 stores each year for its core Abercrombie brand over the next three years.

Aerie: 25

Backstory: The intimates concept Aerie has been the rising star in the American Eagle Outfitters Inc. operations.

Executive vice president and chief financial officer Mike Mathias said during the March 8 fourth-quarter earnings call that the retailer will open 25 stores this year.

Academy Sports + Outdoors: 16

Backstory: The retailer plans to open 80 to 100 new locations by the end of 2026, or at least 16 additional doors each year at the low end of the estimated range.

Burlington Stores: about 110

Backstory: The off-pricer said in November that it plans to open 500 to 600 new stores over the next five years. At the mid-point range, that would average 110 locations per year.

Century 21: 1

Backstory: The legendary off-pricer will reopen its iconic Lower Manhattan flagship on April 25.

The off-price retailer began its revival in 2021 in South Korea’s Busan after collapsing into bankruptcy brought on by a contentious Covid-19 insurance dispute following the COVID pandemic. This time around, the retailer is partnering with Legends Hospitality, whose employees will staff the Cortlandt St. flagship. The store will also feature a much small footprint.

Costco: 24

Backstory: The warehouse club’s is set to open 24 locations globally. The new doors include 15 new warehouse stores in the U.S. and nine international locations, split among Australia, Canada, China and Japan.

Dollar General: 1,050

Backstory: The dollar-store retailer said in December that it plans to add about 1,050 locations to its store network this year. Most of the stores are expected to open in the back half of 2023.

Dollar Stores: 650

Backstory: This dollar store chain has big expansion plans for the year, opening nearly 200 more doors than the 455 it opened in 2022. The company operates under the Dollar Tree and Family Dollar banners.

Five Below: 200 plus

Backstory: The tween and teen discounter that’s transitioning its Five Below banner to the higher price Five Beyond concept said in January that it plans to open 200-plus new stores in 2023. That’s in addition to converting over 400 existing Five Below banners to the Five Beyond format.

Most of the new stores are expected to be under the Five Beyond banner, the evolved concept that had its origins under the Ten Below test pilot. Some items in the stores can run as high as $25. The new openings are part of the chain’s plans to add 1,000 new doors to its store base, bringing the total in its network to over 3,500 locations by the end of 2030.

Flannels: 2

Backstory: The premium retailer that’s part of the Frasers Group umbrella is slated to open flagship stores in Leeds and Cardiff in 2023.

Kohl’s: 25

Backstory: The department store has disclosed that it plans to open 100 new locations in a smaller format concept over the next four years, or about 25 per year.

Macy’s: 5

Backstory: The retailer is seeing great potential in its smaller, off-mall format stores. It plans to open four Market by Macy’s and one Bloomie’s location this year.

CEO Jeff Gennette said last month during the retailer’s fourth-quarter conference call that if the new locations continue to outperform, Macy’s would accelerate off-mall openings beginning in 2024.

Marks & Spencer: 20

Backstory: The British department store retailer said in January that it plans to open 20 new stores in the current financial year.

The new locations are part of the department store chain’s “bigger, better” store plan across the U.K. that’s part of its store rotation program to have higher quality and more productivity at its full-line stores. The store openings are in addition to its 104 Simply Food outlet stores that are also on its 2023 agenda.

Monsoon: 22

Backstory: This British women’s fashion chain is back to growing its store base following its June 2020 bankruptcy filing during the COVID pandemic. The specialty retailer and sister brand Accessorize currently have a combined total of about 155 doors across the U.K.

Nordstrom Rack: 6

Backstory: The company website lists 6 new Rack stores are slated to open this year. The Rack banner will also see the opening of another 13 locations, but these doors are considered relocated stores.

Primark: 27

Backstory: The fashion retailer is opening the bulk of its new store base in the U.S., as well as locations in the U.K. and across 14 countries in Europe. The retailer plans to have in operation by 2026 60 stores in the U.S. and 530 locations globally.

Ralph Lauren: 83

Backstory: The company said at its Investor Day last September that it plans to open at least 250 stores over the next three years across its top 30 cities worldwide, but it didn’t include a targeted number for each year. On average, the company could open an estimated 83 doors each year.

Ross Stores: 100

Backstory: The off-price retailer plans to add 75 Ross Dress for Less doors and 25 DD’s Discounts locations. The store openings are part of its plan to open over 3,500 stores.

Target: 20

Backstory: The discounter said earlier this year that it has 20 stores slated to open in 2023 in a variety of store formats. The new doors are expected to include new design elements catering to the local communities, as well as sustainable features in the stores.

New options, such as Drive Up Returns that the retailer is rolling out, are also expected to be part of services that will be available at locations. One of the new locations in Queens in New York City opened at the end of March.

The North Face: 60

Backstory: The North Face owner VF Corp. said in October it plans to open 300 new retail and partner locations globally over a five-year horizon.

The TJX Cos. Inc.: 150

Backstory: The off-pricer operates the T.J. Maxx and Marshalls banners, as well as the HomeGoods and HomeSense nameplates. Total store openings are projected at 1,400, although TJX hasn’t provided a timeline for the new doors.

TJX CEO Ernie Herrman in the company’s fourth quarter earnings call estimated that as many as 150 doors could open in 2023.

Walmart: 26

Backstory: Walmart will open 26 Best Price wholesale cash-and-carry stores in India.

The banner was part of Walmart India, which was acquired by Flipkart in July 2020. Walmart took a $16 billion controlling stake in Flipkart in 2018.

Separately, Walmart plans to open 30 Sam’s Club warehouse stores over the next few years in the U.S. It marks the first time Walmart will add to its store base in its home market since 2017. The first store isn’t slated to open until 2024. Sam’s Club also has operations in Puerto Rico, Brazil, China and Mexico.