2023 - A Year of Projected Physical Store Growth
Jim Inglis
Author - Breakthrough Retailing, How a bleeding orange culture can change everything!
Kate King at the Wall Street Journal reports - Barnes & Noble Store Expansion Leads Big-Box Real-Estate Revival in 2023. The bookseller is opening more stores than it is closing, including two in the Boston area in locations formerly occupied by Amazon Books
Why is the Barnes & Noble story important? This is a company that all the 'experts' declared dead. The story was that Amazon had killed the traditional book stores and that this was just a harbinger of disastor for the entire physical store business model. The truth is, according to Forbes, that independent book stores experienced a 49% growth between 2009 and 2018.
The National Retail Federation states that store openings announced in 2021 were more than double the number of closing announcements. Vacancy rates for retail space are at historically low levels.
There is a strong trend of stores focusing on value are leading the retail growth. Dollar General and Dolllar Tree have opened a combined 1300 stores recently. TJMax opened 104 stores this year and projects potential growth for 1500 more!
The new and shiny thing always gets a disproportion attention and undeserved merit. We now see Amazon struggling for increased sales while their costs escalate faster than sales. This trend points out the ROI issues for Amazon's retail business that has simply not been able to demostrate on-going profitability.
The bloom is off the rose -- there is a growing concern by investors that can be seen in the fact that between July of 2021 to November of 2022 Amazon's stock market capitalization declined one trillion dollars! That's trillion with a "T".
The National Retail Federation reports that the growth of e-commerce spiked during Covid at 19% of the U.S. market, but is now returning to a "new normal" of 15%. This leaves physical stores with the lion's share of the market. Keep in mind that in the home improvement business it is common for 50% of the orders which originate online are fulfilled in the physical store. We also see a trend of pure online retailers rapidly opening brick and mortar stores. Brick and mortar stores are viable and there will be continued growth in the foreseeable future.
U.S. Government statistics show the dramatic growth of online sales during Covid and the return to a more normal trendline now:
