Brick-and-mortar Stores Back in Trend
Retail Tech Insights | Friday, November 18, 2022
After several years of investing in ecommerce, retailers are focusing on brick-and-mortar investments to capitalise on renewed demand for in-store shopping.
FREMONT, CA: Off-price merchants are taking advantage of consumers' tendency to trade down and look for deals due to inflation to expand their market share. With 1,910 reported new locations, discount retailers are the most prolific store openings this year. In the upcoming year, Nordstrom Rack plans to open eight more sites, some in major cities like Los Angeles and Phoenix and others in smaller towns like Wichita, Kansas, and Union Gap, Washington.
In just the months of September and October, Ross Stores Inc. launched 12 dd's Discount locations and 28 Ross Dress for fewer locations, bringing the total number of stores the firm has opened this year to 99. In Chattanooga, Tennessee, Dollar General recently inaugurated the 100th Popshelf site. By the end of the fiscal year, the company hopes to operate 150 standalone locations and 40 shop-in-shops.
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Fast-fashion Brands are Optimistic:
Primark and Forever 21 are banking that customers will keep looking to fast-fashion retailers for stylish clothes at low prices despite an unsteady year for the clothing industry. Primark anticipates expanding from 13 to 60 stores over the next five years, speeding up its expansion in the US even as parent firm AB Foods battles substantial and erratic inflation.
With 14 new retail locations, Forever 21 is reestablishing its brick-and-mortar presence in the US. The retailer's increased interest in in-store purchasing and pick-up alternatives led to the growth, according to the business's chief marketing, digital, and Omni officer.
As e-commerce growth slows and client acquisition expenses soar, digital native direct-to-consumer firms have increased brick-and-mortar expenditure significantly. To increase customer recognition, engagement, and revenue, Warby Parker and Allbirds increasingly depend on physical stores.
In Q3, Warby Parker added 13 locations, and by the end of the year, it plans to have 40 locations open. The company said that despite the weaker retail climate, its stores earn USD 2.1 million in annual revenues on average and need 20 months to profit.
Even though most of its stores are still not profitable, Allbirds claimed a 53 per cent increase in year-over-year store sales for the third quarter. However, according to the CEO of the company's earnings call, Allbirds views stores as a powerful acquisition tool, allowing us to gain leverage on marketing spend to lower customer acquisition costs, increase the penetration of valuable omnichannel repeat customers and are ultimately the best expression of their brand.
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