Siddharth Kavale
NEW YORK (Reuters) – Opening new stores is back in vogue at some U.S. retailers.
Executives at several major retailers have in recent weeks touted the chains’ efforts to increase market share by opening new locations. The goal, for example, is to add 300, Walmart (NYSE:) – 150; Sam’s Club, 30; Bloomingdale’s – 15 and Bluemercury – minimum 30.
The new expansion marks a major shift in strategy after years of store closures and warnings of a “retail apocalypse” brought on by the rapid growth of online shopping, especially during the pandemic.
Shoppers continue to visit stores, even if it’s just to pick up online orders or grab a coffee at Starbucks (NASDAQ:). This came even as some big-name retailers filed for bankruptcy protection, from JC Penney to Lord & Taylor to Bed Bath & Beyond (OTC:).
Walmart and Target praised consumers’ love for in-store pickup and delivery services in their latest results, which are driving more visits and sales. Walmart said its pickup and delivery offerings for online orders helped increase traffic by 4%. Target said “Drive-up” was popular because it generated about 240 basis points in traffic during the holiday quarter compared to the prior quarter.
For example, Target said Tuesday it will open more than 300 mostly full-size stores over the next decade. The Minneapolis-based chain plans to add more grocery sections to new stores after it achieved $8 billion in additional sales in the category since 2019. Once developed, Target’s new stores are expected to generate $15 billion in annual sales.
It also intends to renovate nearly 2,000 existing stores. The renovations will range from full-scale renovations to less drastic upgrades, adding new lighting fixtures, Ulta Beauty (NASDAQ:) areas in Target stores and building back-of-house space to fulfill online orders through Target’s same-day delivery service.
The addition of larger stores, most of which will be larger than the chain’s average 120,000-square-foot stores, is a departure from its recent strategy of opening smaller stores in urban areas, analyst Edward Yruma of Piper Sandler & Co. said in an interview with Target Investor. Meeting in New York following the results of the holiday quarter.
For example, last year Target announced plans to open six new stores in New York City, many of which take up less space than a typical big-box Target store.
Walmart has also changed its strategy. In 2015, the retailer said it would slow store openings to focus on growing its e-commerce business to compete with Amazon.com (NASDAQ:). The store last opened in November 2021.
However, in January the company announced plans to build more than 150 new supercenters and smaller markets over the next five years. This comes just a year after the company said it would open 30 new Sam’s Clubs across the country, the chain’s first openings since 2017. The company will also remodel 650 existing Walmart stores over the next 12 months.
Walmart, which has annual sales of more than $600 billion, operates about 4,700 stores in the United States, most of them huge supercenters selling everything from apples to shoes to televisions.
Macy’s (NYSE:) is another retailer building new stores. The department store operator has laid out plans to open several more luxury Bloomingdale’s and Bluemercury stores over the next three years. But the company also said it would close 150 major Macy’s stores, including some flagship stores, to focus on expanding those higher-performing luxury brands.