Discount retailers to fuel store openings in 2024
Store openings from major U.S. retailers are expected to stay nearly flat from last year, but the number of closures is expected to drop.
That's according to Coresight Research’s latest U.S. and U.K. Store Tracker Extra report, which forecast that U.S. retailers will open an approximate 5,500 stores in 2024, a slight decrease from the 5,645 that opened in 2023. Discount stores will continue to lead store openings. Dollar General has revealed plans to open 800 stores in 2024.
The projected store openings come despite a crunch in available retail space, which in turn means high rent prices.
The number of store closures is predicted to drop to 4,000 in 2024 (down from 4,913 in 2023). The apparel sector and drug store chains will lead closures in 2024.
As of Jan. 12, 2024, Coresight estimated 592 store closures and 1,611 store openings for the year-to-date.
2023 Openings
Looking back at 2023, major retailers opened 5,645 stores in 2023, resulting in an estimated 90.1 million square feet (gross) of new retail space. The new openings have an average store size of 16,136 square feet.
General-merchandise discount stores once again led the way in terms of U.S. store openings, by sector, opening 1,938 stores in 2023 and accounting for 34.3% of total openings. The apparel sector came in second again, as it opened 1,494 stores in 2023.
By location type, off-mall retailers opened the most stores but also saw the most store closures in the U.S. Off-mall retailers closed 3,984 stores (accounting for 81.1% of total closures) and opened 4,684 stores (83.0% of total openings).
2023 Closures
Major retailers closed 4,913 stores in 2023, resulting in an estimated 88.0 million square feet (gross) of closed retail space, with an average store size of 17,921 square feet. Store closures grew 28.6% compared to 2022.
By sector, home and office retailers closed the most stores, 1,591, accounting for 32.4% of total closures in 2023. The apparel sector closed 1,046 stores, coming in at second.
“In 2023, a 28.6% rise in store closures in the U.S. and a 79.5% rise in closures in the U.K. came amid more muted consumer demand and rising interest rates pressuring indebted retailers,” stated the report. “These challenges were reflected in the increase in bankruptcies which included major names such as Bed Bath & Beyond and Tuesday Morning in the U.S. and Wilko and Paperchase in the U.K."
These headwinds will not vanish in 2024, although they could abate, with widespread expectations of multiple interest rate cuts in both countries set to be a positive for some companies. Despite this, we continue to see the expansion of discount segments in both countries as a secular trend, represented by expansion plans from names such as Dollar General in the U.S., B&M in the U.K. and Aldi and Lidl in both countries. Off-pricers, too, are likely to fuel store openings.”