This year, many contractors will be driving equipment shod in wheel boots into the interiors of retail store spaces, taking care not to damage existing flooring as they do renovations. CNBC cited data from Coresight Research showing that retailers will be opening 3,199 stores. This is more than the 2,548 stores that closed in 2021. It is a huge improvement over 2020 when 8,953 stores closed and only 3,298 opened.
The closures in 2020 left many store spaces vacant and pushed landlords to lower rent and offer lease terms with more flexibility and lower risk. Companies that are opening stores this year are benefiting from this. In addition to new openings, retailers are also renovating their existing stores.
These developments are aligned with the forecast of the National Retail Federation that retail sales in the country will increase between 6.5 percent and 8.2 percent in 2021. It stated that the U.S. economy is growing at a higher rate than that in the past 20 years.
Case Study: Dollar General
Although the company’s net income in the second quarter of 2021 dropped by 19 percent to $637 million compared to $788 million in the same period in 2020, Dollar General is optimistic. In the second quarter of this fiscal year, it is investing $518 million in its stores. This includes opening 1,050 new stores across the country, remodeling 1,750 existing stores, and relocating 100 existing stores. It is also allocating $19 million to upgrade information technology (IT) systems and implement other technology projects.
Case Study: Target
Target experienced enormous growth during the pandemic. In 2020, its record-breaking sales of $15 billion exceeded its growth over the past 11 years. In 2021, it is on track to even exceed that with first-quarter sales of $4.5 billion. Target executives highlight that the success was due to the complementary nature of their online store and physical stores. More than 75 percent of sales in their online store was fulfilled by their physical stores through same-day deliveries, in-store pickups, and their Drive Up curbside pickup service.
In 2020, Target invested around $2.65 billion in its stores. For 2021 and beyond, the company intends to invest $4 billion a year to open new stores and renovate existing ones. This year, 150 stores will be remodeled. Among the innovations to be added are using technology in restocking shelves, creating more automated sorting hubs to free up personnel from sorting and packing orders, and using artificial intelligence (AI) to identify better delivery routes for efficiency.
Target’s online store will remain. Customers can still go online anytime to compare products and then drop by the physical store to try them on or see them in real life before purchasing. They can continue to purchase online and have the item delivered or pick it up themselves.
Case Study: Walmart
At the farther end of the spectrum, Walmart earned revenues of $123.93 billion in the first quarter of 2020, $130.38 billion in the second quarter, $127.99 billion in the third quarter, and $141.67 in the fourth quarter. The company remodeled 200 stores in 2020 and will remodel 1,000 stores this year.
The remodeled stores are user-friendly for people who do not use the Walmart mobile app, but users will experience added benefits. The app will provide navigational directions to easily find products. It will also enable contactless paying through Walmart Pay. All shoppers have the option to do self-checkouts. Some stores will have the Scan & Go system.
Retail Stores Upgrades
The pandemic drove people toward e-commerce, causing many retail companies to create online stores. While this was new to many people, it was not long before they got used to the many features of digital shopping that are so easy and quick. They could browse through many products and compare them and their prices in just a few minutes, instead of walking around a huge store or walking from store to store. They could also do this any time of the day or night.
With more and more Americans getting fully vaccinated, though, they are eager to go out of the house again. Here lies the attraction of shopping in person in brick-and-mortar shops that are also coming back. The shops are no longer the same as before, though.
Many will follow the examples of Walmart and Target and even try to do more innovations. By learning from their online retail stores, companies aim to provide their customers with a complete shopping experience by integrating digital technology into physical stores. Their online stores and physical stores will be complementary. This benefits the customers while expanding the sales opportunities for retailers. It is a win for both sides.