Retail Stores Plan Big Increases in 2011

A recent report by the CoStar Group--one of the top commercial real estate information companies in the country--reported a possible bright lining in the US economic future as retail and restaurant chains plan new openings across the US in 2011. Of the more than 400 reported, there were a few dozen-plus with significant plans for growth.

Out of these 400 businesses, 26 retail stores (listed below) reported by CoStar were among those with some of the greatest activity. There is one possible key factor to consider when analyzing this report. From the retail short-list, 18, or 69 percent, directly advertise discounts or offer savings to consumers in some manner. While some are obvious, such as Wal Mart and Dollar Tree, others, such as Jo Ann, Seven-11, and Pep Boys, are not. Why are these stores mentioned here, and what is the significance of this list?

Jo Ann is a fabric and craft store. It seems if these stores are expanding, there may be a trend toward more home crafted items and hand-sewn clothes. In years past, making your own clothes and gift items were common ways families saved money and stretched the family budget. Is this a growing trend in 2011 and beyond?

Seven-11 stores (owned by Seven & I Holdings Co. of Japan) are another retailer planning substantial growth in the coming year. They are not necessarily considered a discount store-in fact, many of their products cost more than in other retail outlets. Why are they included here?

For one, Seven-11 sells basic food items such as eggs and milk at competitive prices. These are staples that people often run out of before the end of the week. They also sell liquor and lottery tickets. Liquor sales tend to rise when times are hard, according to the Altoona Mirror, and lottery sales seem to be one item that is "recession proof," as reported by the New Haven Register. (One other possible factor may be convenience, especially for travelers and kids who just want to run in and grab a snack and soda without considering the cost-- during recession or otherwise.)

Pep Boys is also on the list. Could this be due to the fact that people are gong back to fixing and servicing their own cars? As cars age, they need repairs. People are "keeping their cars much longer than they did just four years ago," according to Wall St. With unemployment still plaguing us, a simple oil and filter change can still cost less for DIYs.

Garrick Brown, ChainLinks Retail Advisors research director, remarked about the current growth of these retailers by saying, "the current surge demonstrates to us two key factors; the return of optimism within the retail sector, and the desire to expand quickly now-while rents are still low."

While it is good to see new growth in any sector--for any reason--this trend toward discount retailers and Do-it-Yourself suppliers may indicate something other than optimism, at least among consumers.

It may be a sign that our citizens are remaining frugal with their dollars-either out of necessity, or from fear of the future, as prices on essentials such as gas and food continue to erode the already pinched wallet of most consumers. Shopping at discount stores may be a win for these retailers, but what will be the overall effect on the economy as a whole? Only the future will tell what the real picture is.

List of discount retailers planning growth in 2011 according to CoStar
--Dollar Tree-625 stores
--7-Eleven- 350 stores
--Dollar General
--Bottom Dollar Food-110
--Family Dollar-300 stores
--Five Below-50 stores
--99-Cents- 25 stores
--Burlington Coat Factory-20 stores
--Jo-Ann Stores-50 stores
--Ross Dress For Less-60 stores
--Save-A-Lot-100 stores
--Walmart-400 stores
--Pep Boys-55 stores
--Citi Trends- 65 stores
--ALDI (short for "ALbrecht DI'scount)- 100 stores
--ULTA (discount beauty retailer)-60 stores
--Fresh and Easy-60 stores
--Forever 21-50 stores

Source:

http://247wallst.com/2010/11/30/why-car-sales-may-not-improve-in-2011/

http://www.costar.com/News/Article/Retailers-Growth-Plans-Up-40/126803

http://www.altoonamirror.com/page/content.detail/id/516587/Despite-hard-times--alcohol-sales-are-on-the-upswing.html?nav=725

http://www.nhregister.com/articles/2011/01/18/news/doc4d34d2466b0fe626917499.txt