Half of All New Stores Opening This Year Are This One Kind of Shop
They're not suffering the effects of online shopping like other stores are right now.
No matter how you look at it, the COVID-19 pandemic has had a disastrous effect on the retail industry. Many temporary closures have become permanent as the shift to online shopping has made it too difficult for big and small businesses to operate. But it appears that one type of store is immune to these changes as they'll make up about half of all stores opening across the U.S. this year. Read on to see what could be popping up in your town.
Dollar stores will make up almost half of all new stores opening this year.
According to data from Coresight Research, about 45 percent of the 3,597 large retail stores that will open in the U.S. this year are dollar stores, CNN Business reports. The new shops will be from the major national chains Family Dollar, Dollar Tree, and Dollar General.
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Dollar stores were booming even before the pandemic due to economic changes.
While it may seem like most stores are shuttering as times and shopping habits change, dollar stores have actually been opening across the U.S. in large numbers since well before the pandemic shook up the shopping world. According to retail analysts, a major thinning out of the middle class and a widening of economic inequality has driven the stores' growth for over a decade.
"We've seen a bifurcation in the economy," Ken Fenyo, the president and head of advisory and research at Coresight, told CNN. "So while the wealthy have done well and continue to do well since the Great Recession, there's certainly a lot of the population that has not done as well. The dollar stores appeal strongly to that segment of the population. That's probably the overriding reason we see for the growth in the format."
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Experts say dollar stores are less affected by the online shopping boom.
So far, Corelight reports that 2021 has seen more stores open than close in the U.S. as businesses take advantage of available real estate and low rents. But experts say the outsized number of dollar stores that will open this year is likely thanks to their unique position in the retail world that is less affected by online shopping's increasing share of commerce.
According to Gus Faucher, the chief economist at PNC Bank, some dollar store customers often have "less of an ability to access online retail," either from a lack of internet access or inexperience shopping online. He also told CNN Business that most of what dollar stores sell are items such as daily essentials and food that aren't often purchased over the internet. In other cases, it can also simply be shoppers looking for a good deal they can't find anywhere else as they become more conscious of their spending during tough economic times, Fenyo said.
Other national discount chains are planning on opening stores this year as well.
But it's not just Dollar Tree, Dollar General, and Family Dollar that will be popping up in the coming year. In a trend similar to what was seen during the Great Recession, other popular discount retailers are also planning on opening new stores soon, including Burlington Stores, Ross Stores, TJMaxx, Marshalls, Five Below, Big Lots, and Aldi, CNBC reports. Even some specialty retailers such as Fabletics, Sephora, Dick's Sporting Goods, Gap, Bath & Body Works, Old Navy, and American Eagle have announced they will be expanding their locations.
"We're very excited about the malls," Jay Schottenstein, CEO of American Eagle Outfitters, said during an earnings call in March. "This is probably the best opportunity for us to pick up new locations that we're being offered … at affordable rents for us."