In a 180-degree turn from 2020, retailers’ expansion plans are outpacing plans to close up shop so far this year.
U.S. retailers have announced 3,199 store openings and 2,548 closures year-to-date, according to a tracking by Coresight Research. For comparison, the firm recorded a whopping 8,953 closures, along with 3,298 openings last year, as the Covid pandemic upended the retail industry and pushed dozens of businesses into bankruptcy.
Now, though, the country is seemingly turning a corner. The rollout of the Covid vaccine keeps ramping up, another round of stimulus checks is landing in many Americans’ bank accounts, and companies are by and large predicting a strong rebound of the consumer. The National Retail Federation is forecasting retail sales in the U.S. could grow anywhere between 6.5% and 8.2% this year, with the economy accelerating at its fastest clip in two decades.
The real estate market, meantime, presents an opportunity in 2021 for companies looking to grow. They will likely pay less in rent and have more flexible lease terms. A glut of vacancies has left landlords more desperate to fill space and sign deals they wouldn’t have ever considered pre-pandemic.
“Most retailers that survived Covid’s early days are now looking to refill their new store opening programs,” said Bill Read, executive vice president for Retail Specialists, a brokerage firm based in the Southeast. “Demand for new stores is very robust right now. Playing catch up has everyone in a hurry up.”
Here are 10 of the retailers that have store openings planned for this year.
Market cap: $18.13 billion
12-month stock performance: Up 119%
Ulta Beauty is planning to open about 40 net new stores in 2021. The retailer has earmarked roughly $70 million for store openings and remodels this year. Its plans call for 11 locations to be remodeled and 10 to be relocated.
When the Covid pandemic hit, store openings that were slated for 2020 were postponed, Ulta’s management team told analysts during a conference call in early March. And as a result, many of the openings now planned for 2021 are expected to happen during the first quarter, it said. Beginning in the second half of this year, Ulta is also rolling out a smaller version of its store in more than 100 Target locations.
“We continue to be optimistic and positive about the outlook of physical retail, and we’ll continue to find terrific locations across the country,” Ulta President David Kimbell said. “We see plenty of growth ahead of us.”
Kimbell is set to replace current Ulta CEO Mary Dillon, when she steps down in June.
LVMH-owned Sephora says it plans to open more than 60 freestanding stores this year, the majority of which won’t be in malls. Separately, the beauty business is on track to open some 200 pint-sized shops within Kohl’s locations this fall, which will ramp up to more than 850 sites by 2023.
Its store strategy is focused on reducing its exposure to suburban malls and getting closer to customers in other ways. As it moves into Kohl’s, it’s ending a years-long relationship with the department store chain J.C. Penney.
Make-up sales have been walloped during the pandemic, with more consumers embracing a low-maintenance and casual lifestyle, but Sephora is betting that demand for cosmetics will come back strong.
Burlington Stores is plotting 75 net new stores for 2021. The off-price retailer’s plans include opening about 100 new locations, while closing or relocating 25. During a call with analysts in March, management said it had shifted 18 store openings planned for 2020 into this year due to the pandemic.
About a third of this year’s openings will be a smaller-format Burlington is piloting. These will be about 25,000 square feet versus the typical 50,000 to 80,000 square feet. The company has said its goal for these locations is to keep inventory levels down and cut costs.
“When you have less in-store inventory, you need less physical space,” Chief Executive Michael O’Sullivan said. “This has significant economic benefits … increasing the pool of potential real estate sites, and providing the opportunity to open profitable stores in more locations around the United States.”
