In the first calendar quarter of 2023, significant U.S. retailers announced plans to open about 2,570 new stores, down sharply from about 4,400 announced openings in last year’s first quarter. They announced plans to close about 1,760 stores, nearly three times higher than the approximately 635 store closings announced in the first quarter of 2022, according to analytical work by The Daily on Retail, an investor-oriented consumer research platform.
Significant U.S. retailers announced plans to open about 2,570 new stores, down from about 4,400 announced in last year’s first quarter.
The drop in opening announcements and jump in closing announcements reflect the tougher consumer backdrop after two very good years with the benefit from pandemic-related stimulus in 2021 and excess pandemic savings in 2022, as well as the strong labor market in both years.
The labor market is still very healthy, with historically low unemployment and continued growth in wages, but inflation continues to reduce consumers’ discretionary income. Some spending has shifted from goods back to services, excess savings have been depleted somewhat, and there are widespread concerns about a recession as the Fed continues to raise interest rates to bring inflation down.
There are also a number of marginal retailers that were “propped up” by stimulus and by landlord concessions during the pandemic that are now struggling financially as discretionary spending slows. This is well reflected in U.S. retail bankruptcies, which more than doubled year over year in the first quarter, to seven, and are currently running at four for the second quarter to date: Boxed, AmeriMark, David’s Bridal and Bed Bath & Beyond.
David’s Bridal filed Chapter 11 for the second time in five years in mid-April and could liquidate its more than 290 stores if it can’t implement a going-concern transaction. Bed Bath & Beyond followed with its widely expected Chapter 11 and said it will close all remaining 360 Bed Bath & Beyond stores and 120 buybuy BABY stores by the end of June if a buyer doesn’t emerge.
Collectively, the dollar stores, off-price retailers, discounters and warehouse clubs continue to open the most stores. They announced more than 1,100 openings in the first quarter, or 43% of all announced openings. That doesn’t even include Dollar General, which said in December 2022 it would open 1,050 stores in its fiscal 2023, or Five Below, which said in March 2022 it would open 925 to 1,000 new stores by the end of its fiscal 2025.
NRF's State of Retail & the Consumer 2023 event discussed the health of the consumer and the retail industry.
Other retailers that announced large numbers of new stores in the first quarter of 2023 include Foot Locker, which said at a March investor event it will open more than 300 off-mall stores by its fiscal 2026, and Skechers, which said in February it would open 100 to 120 new company-owned stores this year. Bath & Body Works said in February it would open about 90 new stores in 2023 while closing about 50 stores.
Store closing announcements were more widely dispersed across retail in the first quarter. They were led by Foot Locker, which also said at its March investor event it would close more than 400 stores. Tuesday Morning filed Chapter 11 in January and said it planned to shrink its store footprint from more than 450 to about 200, and more recently said all remaining 200 stores could close if auction-winner Hilco’s bid is approved by a bankruptcy court in Texas.
Others announcing large numbers of closings in the first quarter include Bed Bath & Beyond, Things Remembered — which said it would close all its 130 stores — and Children’s Place, which has been shifting to a digital-first approach and said in March it would close another 100 stores on a base of more than 600.
As mentioned above, Bed Bath & Beyond is currently closing all remaining 360 namesake stores and 120 buybuy BABY stores, but like the additional Tuesday Morning closings, these closings are not included in our first quarter totals because they were announced in the second quarter.
Per The Daily on Retail’s methodology, openings and closings are specific numbers that have been announced, not completed, and could extend over several years. Also, The Daily on Retail’s tally excludes openings and closings that may be occurring in 2023 but were announced in 2022 or prior.
Patrick McKeever covered retail for more than 20 years as a Wall Street analyst before launching The Daily on Retail in 2019.