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Grocery Among Fastest-Growing Retail Segments: Report

8/30/2017
Generic Food Market

According to a new report from global research and advisory firm IHL Group, U.S. retailers are opening 4,080 more stores in 2017 than they’re closing and plan to open an additional 5,500 next year. The report, “Debunking the Retail Apocalypse,” identified grocery retailers as among the three fastest-growing core retail segments, with 674 stores expected to open.

The other two fastest-growing core retail segments, the report found, were mass merchandisers such as off-price retailers and dollar stores, with 1,905 stores expected to open, and convenience stores, with 1,700 stores.

IHL’s research reviewed 1,800-plus retail chains with more than 50 U.S. stores in 10 retail vertical segments. The firm discovered that for every chain with a net closing of stores, 2.7 companies showed a net increase in store locations for 2017.

“The negative narrative that has been out there about the death of retail is patently false,” asserted Greg Buzek, president of Franklin, Tenn.-based IHL. “The so-called ‘retail apocalypse’ makes for a great headline, but it’s simply not true. Over 4,000 more stores are opening than closing among big chains, and when smaller retailers are included, the net gain is well over 10,000 new stores. As well, through the first seven months of the year, retail sales are up $121.6 billion.”

Other research has pointed to the overall decline of grocery stores, at least in their traditional form, in favor of niche concepts and ecommerce solutions. 

Additional findings from IHL’s report include:

  • The total net increase of stores for 2017 is 4,080, including retail and restaurants. Core retail segments will see a net gain of 1,326 stores, while table-service and fast-food restaurants will add a net of 2,754 locations. In total, chains are opening a net 14,239 stores and closing 10,123 stores.
  • 42 percent of retailers have a net increase in stores, only 15 percent have a net decrease, and 43 percent report no change.
  • Specialty apparel retailers are experiencing the largest number of closings, with a net loss of 3,137 stores. However, for every chain closing stores, 1.3 chains are opening new stores.
  • Just 16 chains account for 48.5 percent of total number of stores closing. Five of these chains Radio Shack, Payless Shoesource, Rue21, Ascena Retail and Sears Holdings represent 28.1 percent of the total store closures.

 

“Without question, retail is undergoing some fundamental changes,” added Buzek. “The days of ‘build it and they will come’ are over. However, retailers that are focusing on the customer experience, investing in better training of associates and integrating IT systems across channels will continue to succeed.”​​​​​​​

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