Skip to main content

Shift to Expansion


A flurry of good news during the past several months has given the retail industry newfound confidence that the worst is finally behind them. They aren’t the only ones. At press time came word that U.S. consumer confidence had risen to its highest level in three years, coming in at 77.5 on the closely watched Thomson Reuters/University of Michigan overall index on consumer sentiment. That’s up from 74.2 in January, and is the highest reading since January 2008. 

And in yet more positive news, consumer spending rose 3.5% last year, the biggest increase since the downturn began in late 2007. Significantly, the spending gains quickened in the last quarter of 2010 — up 4.4%, the highest quarterly growth since early 2006 — suggesting that momentum will continue into this year. 

All this goes a long way to explaining why, after several years of belt tightening, retailers are ready to expand again. In the “Retail Horizons: Benchmarks for 2010, Forecasts for 2011” report, an annual study, sponsored by the NRF Foundation and KPMG, expansion topped retailers’ agendas for 2011, with 41% of the retail executives reporting that their companies plan to expand their domestic-store count this year, up from only 25% in 2010. 

Of course, for some retailers, expansion was never off the agenda, even during the worst of the downturn. Extreme-value discounters Dollar General, Family Dollar and Dollar Tree all grew their store counts significantly in the past few years, and the recovering economy isn’t slowing them down a bit. 

This year, Dollar General will add 625 stores, Family Dollar is on track for 300, and Dollar Tree will open 300 namesake units. On the specialty side, extreme-value teen retailer Five Below will open 50 locations. 

Beyond the extreme-value segment, other retailers expanding in 2011 include Best Buy, which will open 150 freestanding mobile stores, and fast-growing hhgregg, which is looking to add 45 sites, including 20 in the Chicago market. Urban Outfitters will open 50 to 55 stores under its various banners in 2011, and lululemon athletica will add 20 to 25 locations. Fresh & Easy Neighborhood Market will enter Northern California. 

North of the border, Marshalls will enter the Canada market in 2011. South of the border, Wal-Mart de Mexico plans to open 445 stores in 2011, the majority in Mexico. 

Smart retailers, of course, know that new formats are key to growth, and the good news is that retailers are once again stepping out in this direction. One of the most anticipated 2011 openings is a bridal-shop concept, BHLDN (pronounced “Beholden”) from Urban Outfitters, set to debut in the third quarter. The Men’s Wearhouse will test freestanding big-and-tall stores this year, and J.C. Penney has committed to opening 300 big-and-tall men’s apparel shops by 2015. Gap debuted a freestanding store for its Athleta brand, with 10 new units by year-end. 

Retailers are also investing in their existing locations. Target, for example, will remodel 400 stores this year, and Walmart Canada has announced a major remodel/expansion program. Restaurant chains are also getting into the act: Red Lobster has embarked on a plan to remodel all of its nearly 700 restaurants across the United States and Canada to a new nautically inspired design.

[email protected]

This ad will auto-close in 10 seconds