Five Below, Home Goods, and other discount stores are opening new locations in 2021.
Dollar stores have done particularly well over the last year during the pandemic.
Discount stores are defying the larger trend of retail stores closing in favor of e-commerce.
As many stores close around the US, a few retailers are thriving and opening new locations in 2021. Discount retailers Five Below, Home Goods, TJ Maxx, and dollar store chains all plan to open new stores as the rest of the industry struggles. The COVID-19 pandemic made online orders surge, but it wreaked havoc on brick and mortar retailers.
Coresight Research found that major retailers closed 8,741 stores in 2020, and predicts as many as 10,000 will follow this year. Other retailers that didn't close filed for bankruptcy, including J Crew, Nieman Marcus, and JCPenney. TJX, which owns - TJ Maxx, Marshalls, Home Goods, Sierra, and Homsense - announced plans in February to open 81 stores across its brands in 2021, and plans to nearly double Home Goods from 821 current stores to 1,500 over the next few years.
The off-price retail brands owned by TJX, which sell discounted goods from other retailers, have benefitted from supply chain issues over the past year. Despite a harsh retail climate in 2020, the company opened 43 stores through the year, with the rest of planned openings shifted into 2021. Like much of the industry, TJX's were down in 2020, but the discount store owner sees possibilities for a rebound. "We see many opportunities to leverage our flexible business model, gain more customers, and continue driving the successful growth of TJX for many years ahead" chief executive Ernie Herman said in a February call.
Dollar stores like Dollar Tree and Dollar General are also benefitting from the retail climate. In the fourth quarter of 2020, Dollar Tree - which also owns Family Dollar - added a net 79 new stores and renovated another 106. It plans to open 600 new stores in 2021, and renovate 1,250, the company said earlier in March. Sales increased 7.2% year-over-year.
Story continues Dollar General also plans to open 1,050 stores in 2021 after opening 1,000 stores in 2020. While Dollar General hasn't yet released fourth quarter results, third quarter sales were up over 17% year over year. Both dollar store chains have focused on rural markets, a strategy that paid off in 2020 as people shopped closer to home.
Five Below is another discount chain with openings planned this year. It plans to open 170 to 180 new US stores in 2021, after opening 120 in 2020. Like its dollar store competition, Five Below is doing well with a net sales increase of 21.1% over the holiday period from November 3 through January 4. Big name retailers continue to announce store closures for the coming year. Macy's is already in the process of closing 45 stores this year, and Disney recently announced plans to close 60 North America stores and focus on e-commerce.
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