That's No Retail Apocalypse: New Concept Stores Are Taking Vacant Retail Spaces
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Retail is an industry of churn. Old retailers go, new ones take their place.
That is what is happening now more than a "retail apocalypse," the International Council of Shopping Centers reports, with a broad array of retailers seeking out space in shopping centers formerly occupied by departing brands. That includes both new concepts and variations of tried-and-true stores.
For example, this year the TJX Cos. will open 15 HomeSense stores, which sell furniture, lighting and art, following a successful U.S. test of that Canadian concept. The company also opened 25 of its existing Ross Dress for Less brand stores and a half-dozen DD’s Discounts stores in early 2018.
Retail giant Target is planning 35 more stores this year, mostly small prototypes, such as a 24,700 SF store in Washington, D.C. It plans to open as many as 130 such small stores by the end of 2019.
Whole Foods will open 16 more 365-branded stores this year, according to Amazon. This concept’s 30K SF space makes it a better fit for shopping centers than the Whole Foods' standard size of 43K SF, the company says.
There are still brands looking to expand their big boxes, though that size has taken a beating in recent years. These include Lowe’s Home Improvement, which is planning 25 new warehouse stores for 2018, and Hobby Lobby, which says it will open about 60 stores this year. Dick’s Sporting Goods plans to open about 20 stores this year.
Also, online retailers are busy opening up physical stores, ICSC said. Beauty retailer Glossier is opening pop-ups, regular stores and permanent showrooms, while Indochino, an online seller of men’s clothing with 22 showrooms, will be adding as many as 18 more this year.
Warby Parker, formerly an online-only eyewear retailer that opened 64 physical stores in 2017, will add as many as 100 stores by the end of this year.
Much of the current wave of retail expansion is by value brands. Dollar General, which opened a company-record 1,315 stores last year, is opening 900 more this year, and will remodel about 1,000 stores. Its rival Dollar Tree plans to open about 600 stores this year.
Consumers still seek “perceived value and are very price-conscious, with less emphasis placed on the durability of the goods,” JLL Senior Vice President of Retail Leasing David Hull told ICSC.
Even apparel, perhaps the most volatile subsector of retail, is seeing some brands expand. Examples include fast-fashion retailer H&M, which plans to open 390 stores this year in the United States and other countries under its various banners, as opposed to the 170 it is closing.
Nordstrom Rack is opening 14 stores this year, five of them in Canada, including a 35K SF location in the Ottawa Train Yards power center in Ontario. Also, as Ulta Beauty expands into smaller new markets, the retailer is planning 100 new U.S. stores this year, about equal to last year’s total.
Beauty chain Sephora will roll out about 50 stores in India over the next three or four years, and the company is adding Sephora beauty-supply units inside 70 of its U.S. stores. The brand is also opening about 30 more Sephora shops inside JCPenney stores this year, even as that brand downsizes.
Other kinds of stores opening in newly empty space include restaurants and experiential retail. In short, even as some brands collapse, other retailers are jumping to fill the void, because consumers still want to shop.
"We believe consumer confidence is fundamentally strong,” Hull said.