Brick-and-mortar retail stores are back in business, with new openings outnumbering closures for the first time in four years according to an analysis by IHL Group.
The analysis of more than 900 retail chains found that most of the growth in new store openings is driven by mass merchants, grocery stores, drugs and pharmacy and convenience chains.
Interestingly, the researchers believe e-commerce is also driving some stores to increase their physical footprints as online and offline shopping experiences become more integrated. The report found that digital businesses are increasingly relying on physical stores to ship items to customers faster, and to enable customer pickup and returns of items.
Previously, the rise of e-commerce was often cited as the main factor driving physical store closures across the U.S. In 2020, the nation’s largest retailers closed 6,573 more brick-and-mortar stores than they opened, though the COVID-19 pandemic undoubtedly played a role in that.
However, 2021 has seen that trend reversed with retailers opening 4,361 more stores than they closed in the year to date.
“It’s not like it’s stores against e-commerce anymore” Brendan Witcher, a Forrester Research principal analyst, told The Wall Street Journal. “They play an integral role in supporting each other. The old story that stores are dead is simply not true.”
The trend has been accelerated by property owners offering big incentives to win back tenants who fled during the pandemic. For example, officials at Levi Strauss & Co. told the Journal their company is planning to open 100 U.S. stores in the next five years, and has been securing retail spaces for prices 15% less than they were pre-pandemic.
“The majority of consumers like to engage with us in our stores,” said Harmit Singh, chief financial officer at Levi’s.
Another well known brand, Dick’s Sporting Goods, is planning to open whopping 800 stores for its House of Sport, Public Lands, and Golf Galaxy brands, and those locations will feature “experience activities” such as rock climbing walls, batting cages and putting greens, to entice customers in.
At the same time, many digital-native retailers are looking at expanding into the physical world. The best example of this is Amazon, which not long ago announced plans to open its first department stores. It already operates a number of convenience stores in the U.S. under its Amazon Go brand.