Between 2001 and 2008, more than 35,500 new stores - from warehouse clubs, supercenters and home improvement to convenience and grocery - opened around the U.S. And while almost all categories of stores showed significant growth (except for drug stores, toy stores and electronics stores, which actually contracted) during the eight years studied, some formats showed greater promise than others. According to new findings from Nielsen, the economic turmoil of the last year or so has already had a profound effect on the retail environment as some retail chains cut back on expansion plans, shrink or liquidate.
"While many retailers will likely scale back expansion plans in 2009 and 2010, aggressive and forward-looking retailers will use this time to test new formats and look for opportunities to expand in existing and new markets as weaker retailers close their doors or put themselves up for sale. Americans will continue to look to stretch their dollars further given the current economic uncertainty, creating larger markets for discount retailers and grocers alike. At the same time, we expect to see continued contraction among electronics, toy retailers and other discretionary retailers," said Todd Hale, Senior Vice President of Consumer & Shopper Insights at Nielsen.
|Store Format||Stores In 2001||Stores In 2008|
|Hardward Home Improvement*||14,309||17,806|
|Source: The Nielsen Company (January 13, 2009).|
Since 2001, value and convenience stores increased store count by the largest percentages. But that trend is not likely to continue. Since the end of 2007, the number of convenience stores declined by more than 1,400. Additionally, the number of toy stores has declined by 60% over the eight year period (from 2,458 to 999). Electronics stores dropped by 5%, and with the recent announcement from Circuit City that it will liquidate all of their 567 stores, that retail format will likely continue to decline.
On a more positive note, several retail channels showed solid growth:
Additionally, pet stores, book stores, office supply, hardware/home improvement and liquor stores all posted growth as well.
Walmart and Target led expansion over grocers, which expanded more slowly and in different ways, such as opening new, smaller formats.
The niche grocery segment has shown tremendous growth, with expansion from high-end (Whole Foods and Trader Joe's) and low-end (Aldi and Save-A-Lot). Aldi, the deep-discount German grocery chain is looking to add 75 stores in the US in 2009, and its sales grew 21% to $7 billion in 2008. Aldi and Save-A-Lot, which has also expanded during the eight-year period in question, offer budget-conscious consumers extreme value across a reduced assortment set with strong emphasis on store brands.
In the drug store segment, Nielsen finds rapid new store openings as well as acquisitions from three big chains. Walgreens opened or acquired 2,952 stores between 2001 and 2008, while CVS expanded by 2,158 stores and Rite Aid expanded by an additional 1,316 locations. CVS will get another boost in store count when they close the deal to acquire Longs Drugstores. Warehouse stores also continued to be popular, with BJ's, Costco and Sam's all showing significant growth.
Perhaps the most interesting finding of Nielsen's research is the tremendous growth within the Dollar channel. While Walmart corporate opened up 1,025 stores between 2001 and 2008, the five leading dollar store chains opened 8,291 locations during the same period. Companies like Dollar General, Family Dollar and Dollar Tree opened thousands of stores each. And in the process, some of the companies, notably Dollar General and Family Dollar, have evolved to offering more mainline brands than in the past to position themselves as a destination trip among their core shoppers.