Ulta, Gap, Target and more: These retailers are still opening stores in 2018
The retail sector is flush with store closures taking place later this year. Toys R Us marks the latest company to deal a blow to the industry, leaving real estate owners scrambling to find replacements for vacated boxes.
There are, meanwhile, some retailers planning meaningful expansions in 2018 and beyond. The idea of having bricks and mortar is still an important part of the business — most companies admit they can't succeed in retail without stores.
"There are still retailers looking for quality space," Suzanne Mulvee of CoStar Group told CNBC. "I think your issue is there is a mismatch in the marketplace that has to be dealt with. ... The store closures are for very large boxes, while the folks opening stores are looking for mid-to-smaller boxes."
According to CoreSight Research, more than 3,000 stores are slated to be closed this year by retailers including Claire's, Zales parent company Signet Jewelers, Lane Bryant owner Ascena Retail Group and Best Buy. Filling the gaps, though not entirely, roughly 1,700 store openings are planned so far from companies including Warby Parker, Gap and Aldi.
Here are eight retailers opening more stores in 2018.
Ulta Beauty is planning to open 100 new stores in 2018. CEO Mary Dillon said on a recent call with analysts and investors that the openings allow the company "to continue to drive more market share gains as we enter markets." Ulta is even adding stores in markets where it already has a presence, she said. The retailer is meanwhile remodeling its older stores to include skin services, Chanel-branded makeup stations and Benefit Cosmetics bars, among other new touches and fresher fixtures.
Off-price retailer Ross Stores is planning to open 100 more stores in 2018. This will consist of 75 Ross and 25 dd's Discounts locations. As shoppers continue to navigate toward "bargain hunting" experiences in retail, companies like Ross, TJ Maxx owner TJXand Burlington have all benefited. The larger store formats for off-price chains are said to be one logical replacement for Toys R Us' old shops, according to real estate analysts.
Eyeglass retailer Warby Parker will add roughly 40 stores to get to nearly 100 stores by the end of the year. While these openings alone might not be enough to fill larger gaps in the marketplace, Warby has spearheaded a trend of e-commerce brands moving offline. Companies like Untuckit, Everlane, Bonobos, Casper, Allbirds and Away are opening more stores this year, amounting to hundreds of new locations altogether.
Discount chain Dollar General will open a whopping 900 stores in 2018. Focusing on more rural communities, the retailer wins the dollars of lower-income shoppers, alongside rival Dollar Tree, which owns Family Dollar. Dollar General is planning to remodel about 1,000 of its existing locations by year's end. "We continue to believe that investing in the business through our high-return new store growth is the best use of our capital," according to CEO Todd Vasos.
Target is in the midst of remodeling its current store fleet while planning to open 35 small-format locations in 2018. It opened 32 such stores last year. The pint-sized shops are typically situated in urban markets or near college campuses. According to CEO Brian Cornell, the smaller stores can be more profitable per square foot than Target's bigger boxes, and they drive more frequent purchases by shoppers throughout the week. There is a bigger emphasis on grocery and apparel within the new stores.
Dick's Sporting Goods
Dick's Sporting Goods has slowed its store expansion plans of late and only anticipates opening about 20 stores in 2018. However, CEO Ed Stack hinted on a recent call with analysts and investors that the retailer would considering opening more locations once market rents drop. This could soon be the case in the wake of Toys R Us' departure. Dick's Sporting Goods is one of the few retailers on the market that would fit perfectly within a Toys R Us box of anywhere from 35,000 to 65,000 square feet in size.
While Gap is cleaning up its store fleet and plans to shutter 200 locations by 2020, it also has new openings coming down the pipeline. The closures will fall to the namesake Gap brand and Banana Republic. In turn, Gap will open roughly 270 stores under the Athleta and Old Navy banners within the same time frame. CEO Art Peck has said the Athleta brand in particular has seen tremendous growth of late, threatening the likes of Lululemon and Nike in the women's athleisure category.
German-based grocer Aldi has an aggressive expansion plan for 2018. The discount chain plans to open about 180 new stores by year's end, with the goal of growing its store fleet to 2,500 stores nationwide by 2022. Rival Lidl is newer to the U.S. market and recently cooled its growth, having opened too many locations too quickly last summer. Both companies, though, are expected to continue to expand as supermarket chain Tops Markets goes bankrupt and Bi-Lo (a subsidiary of Southeastern Grocers) shutters stores.