2021 was a turning point for retailers, with store openings overtaking store closings
Just one year after a record number of stores closed permanently at the height of the pandemic, the retail store has made a comeback, with more store openings than closures in 2021.
This year through Dec. 16, major retailers have announced 5,083 store openings versus 5,079 store closures, signaling that retailers are striking a balance between online and in-store shopping in the age of e-commerce, according to Coresight Research, a global retail and technology consulting and research firm.
Major retailers, including Walmart, Target and Home Depot, beat earnings expectations in the last quarter, despite supply chain issues slowing inventory. Tapestry, which owns brands such as Coach and Kate Spade, rebounded from the overwhelming pandemic in the last quarter, reporting a 26% increase in revenue from a year ago.
“The fact that retailers have more money means they can stay in some of their physical leases longer and have more patience to do and think differently,” said Deborah Weinswig, CEO and Founder of Coresight Research. “The point is, you have to have a physical space to mean something to the consumer. “
The slight growth in store openings marks a turning point for retailers in the pandemic. For nearly two years, physical stores have turned cold amid door-to-door orders, social distancing measures and the rise in online shopping. This forced weaker retailers and bolstered the heavyweights, largely on how companies adapted to the new digital world before the virus hit the country, said Jay Sole, analyst at UBS.
“The pandemic pushed forward many stores that were going to close over time,” he said.
Iconic retailers and department stores went bankrupt last year as the coronavirus spread across the country. Upscale department store Neiman Marcus filed for bankruptcy in May. The mall’s staple of the year 2000 True Religion Apparel filed for bankruptcy in April. The minimalist and trendy American branch of Japanese company Muji filed its case in July. But by the end of 2020, all three companies were out of bankruptcy.
“We take a relationship that exists with an in-store customer and strengthen it digitally,” Geoffroy van Raemdonck, CEO of Neiman Marcus, told Vogue Business last September. He added that the business is “very focused on having the customer there, how they want and when they want.”
What a shopper wants in a store has changed dramatically over the past two decades, said Mark Mathews, vice president of research development and industry analysis at the National Retail Group. Retail Federation. Retail stores have traditionally been places shoppers visit to browse and buy, Mathews said. But, even as e-commerce increases its share of total retail sales, the physical store continues to be a place for shoppers to browse new products, make a return, or pick up orders online. An annual consumer survey released in December by professional services firm PwC found that 55% of shoppers reported shopping in-store weekly or daily, compared with 36% of shoppers who said they buy often on their phones. .
What a shopper wants in a store has changed dramatically over the past two decades.
Physical stores also play a role in increasing sales, even though they are done online, Weinswig said. When retailers close a physical store, online sales 50 percent fall on average in this market, she said. Mathews compared it to fears that the popularization of ATMs would drive out bank branches. Like bank branches, physical retail stores aren’t all about debit, he said.
“It’s about the value of the brand,” he added. “It’s about creating experiences and connecting with the brand and allowing people to go to Best Buy and learn about the product they’re trying to buy. “
Some companies that originally sold exclusively online, like Warby Parker, Casper, Allbirds, Bonobos, and Dollar Shave Club, have now all opened their own stores or started selling on physical shelves. Some previously online-only businesses have chosen to expand their real estate footprint with new stores. For example, home furnishings retailer Wayfair plans to open three stores in Massachusetts in 2022, which would bring the total number of stores to four. Beauty brand Glossier opened a second permanent U.S. store in Los Angeles last month.
“It looks like the massive store closures over the past two years have somewhat stabilized,” said Brandon Isner, retail research manager for the Americas at commercial real estate investment firm CBRE. . “[Digital retail brands] now see brick and mortar retail as a way to grow the brand and get a whole new customer base that they might not have been able to get from online sources.
But as retailers tighten their footprint, the stores of the future will not be the same. Retailers like Walmart and Allbirds are experimenting with new shopping platforms, including live shopping on Pinterest TV, TikTok, and Twitter. Nike is testing what’s known as ‘ghost retail’, where shoppers jump into a virtual queue to talk to a store associate who can tell them about the products they have in a store without ever leaving their store. residence.
“You build bridges with customers wherever they are, that’s kind of what retail has always been about,” Weinswig said. “We went a little beyond the field … [but] to me it’s all retail and I don’t think you can take your heart and soul out of it. “
The new retail landscape even makes room for under siege brands like Toys R Us, which opened a new 20,000 square foot flagship store in the American Dream Mall in East Rutherford, New Jersey at the start. of the month. Other retail companies are also planning to reopen flagship stores, Weinswig said.
“These stores had a different value than that realized by the retailers,” she said. “Even though these locations don’t generate positive cash flow, they serve a higher purpose. “