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Dollar General Accounts For 80% Of All New Store Openings In The US

One week ago, when looking at the latest Fitch forecast of retailers most likely to file for bankruptcy next, we listed the hundreds of store closures already announced in 2017 between various bankrupt and still solvent retail chains.

Declining consumer demand for traditional retail venues and deteriorating financial results aside, we showed the simple reason for the persistent pressure on traditional “brick and mortar” stores to restructure with the following chart which showed that North America has a glut of retail outlets, as well as far too many shopping malls, something which is becoming apparent as sales per capita decline. On a per capita basis, the US has roughly 24 square feet of retail space per capita, more than twice the space of Australia and 5 times that of the UK.

But what about new store openings? After all, on a net basis the US retail industry has to still be growing. Here we have some good and bad news.

First the good news: according to a recent analysts by Bank of America’s REIT team, in which the bank analyzes both store openings and closings for the same sample of 33 retailers that its have analyzed since 2007, it finds that the projected net new store count for 2017 is 1,041, which is lower than last year’s actual 1,109. While the net number of 1,041 openings this year is lower than the 10-year average of 1,386, “nevertheless the numbers are still positive” is how BofA spins the silver lining.

Some more details from the BofA report:

For the group of 33 retailers, we estimated 1,128 net new stores, but the actual figure was 1,109 (a negative variance of -1.7%). Projected net store openings were close to the actual count by year-end. As mentioned, this number is somewhat lower than the previous 10-year average, which we believe is due to historically low levels of ground-up development, as well as caution from retailers who remained focused on margin over market share. Table 2 shows projected vs actual net new store openings for 2016.