While retail sales in some sectors are under substantial pressure, especially sectors that did well in 2020-2021 amid pandemic nesting (furniture, home products, athleisure) and working/learning from home (furniture, electronics), U.S. consumers remain resilient in the midst of inflationary pressures on disposable income and mounting concerns about a recession.
Excluding auto dealers, gas stations and restaurants, retail sales grew 7.2% year-over-year in September and have been running in the high-single-digit area since the spring of 2022. That’s on top of double-digit gains last year as continued strength in the labor market, solid wage growth of around 5% year-over-year, and excess savings built up during the pandemic support healthy consumer spending.
Learn more about the latest consumer trends for the upcoming holiday season.
Forecasts for the holiday season have become more mixed recently. Amazon’s recent caution on the fourth quarter shouldn’t be taken lightly, but most on Wall Street and across the retail industry are looking for holiday sales to grow this year on top of record performance in 2021, even if the growth only keeps pace with inflation, which is running just over 6% by the Fed’s preferred metric.
And in a reversal of fortune of sorts, stores could see stronger sales growth this holiday season than ecommerce for the first time in years as consumers return to stores for in-person experiences with the pandemic easing further and life returning to (some sort of new) normal.
The National Retail Federation is forecasting 6% to 8% year-over-year growth in holiday sales (excluding gas, restaurants and autos). Non-store and online sales are expected to grow between 11% and 13% year-over-year.
Discount/dollar and off-price opening the most stores
In the first nine months of 2022, major U.S.-headquartered retailers announced plans to open about 5,870 stores, up from about 5,725 for the same period last year, and close about 1,185 stores, down nearly 60% from roughly 2,890 announced closings in the first nine months of calendar 2021, according to analytical work by The Daily on Retail, an investor-oriented industry research platform.
As has been the case for some time now, opening announcements have been concentrated in the discount/dollar and off-price sectors, which have historically done well in good and bad economic times and have been less affected by online competition than other areas of retail.
Five Below, which has expanded its price points above $5 with its Five Beyond initiative, said earlier this year it plans to triple the store count to more than 3,500 by the end of fiscal 2030 and open 925-1,000 stores over the next four years on a base of more than 1,200 stores.
Family Dollar is planning to open 400 new stores this year on a base of 8,000-plus stores, while Dollar Tree is planning to open 190 stores on a base of 8,000-plus stores.
Dollar General is also growing aggressively, though we aren’t including management’s plan to open 1,110 new stores in 2022 in our year-to-date tally since it was announced in December 2021.
Turning to off-price retail, industry leader TJX announced plans to open 150 new stores this year across its concepts on a base of nearly 4,700 total stores. Burlington plans to open 90 net new stores on a base of about 840 stores, and Ross Stores recently completed its 2021 store growth plans with the opening of 40 new stores in September-October, which took total openings for the year to 99 and the total store count to 2,019, including 1,696 Ross stores and 323 dd’s DISCOUNTS.
On a combined basis and including a few others not mentioned above, discount/dollar and off-price retailers have announced plans to open about 2,455 stores, or nearly 42% of all announced new stores for the 2022 year-to-date period through September.
Auto parts retailers aggressively growing store counts
Auto parts retailers have also shown less economic sensitivity than other retailers and continue to focus more on the in-store experience and growing their store footprints than online growth.
O’Reilly Automotive planned to open 175-185 net new stores this year, which implies just over 3% growth on a base of more than 5,700 stores, and Advance Auto Parts announced plans earlier this year to open 125-150 new stores on a base of about 5,000 total stores.
AutoZone is also growing its store base but has an August fiscal year and hasn’t announced any new store opening plans yet in calendar 2022.
Take a look at the most recent consumer shopping trends in retail.
Digitally native retailers continue pushing into physical retail
It’s important to note many retailers opening stores are digital natives, including Warby Parker, which went public last year and has reaffirmed plans to open 40 new stores this year on a base of about 160, which implies 25% growth.
Dallas-based beauty product “dollar store” MISS A has the most aggressive store growth ambitions among the digital natives and said earlier this year it plans to grow to 200 stores over the next five years, up from 15 at the time of the announcement.
Other digital natives opening stores include Gap’s Athleta brand, which plans to open 30-40 new stores on a base of 227, Fabletics, which expects to open 30 new stores on a base of more than 70 stores, and bed and bath brand Brooklinen, which said in April it plans to have 25 to 30 stores by 2024, including a tripling of the store count from two in 2022.
Closing announcements not concentrated in any one sector
Again, store closing announcements were down substantially in the first nine months of 2022 when compared with the same period last year. Among retailers announcing closings, Foot Locker is the leader, with plans to close 190 of its 2,800-plus stores. Foot Locker is also planning to open 100 new stores this year, however, so the net planned reduction is 90 stores.
Other retailers closing large numbers of stores include Bed Bath & Beyond, which recently said it will close 150 of roughly 770 namesake stores. Sears Hometown planned to close about half of its roughly 200 remaining stores, and Rite Aid said in April it plans to close 145 of its 2,400-plus stores, including 63 closings that were announced in late 2021.
Per The Daily on Retail’s methodology, openings and closings are specific numbers were 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 2022 but were announced in 2021 or prior.
Patrick McKeever covered retail for more than 20 years as a Wall Street analyst before launching The Daily on Retail in 2019.