We should anticipate that we’ll see some combination of Walgreens and Rite Aid closings, should tentative merger agreements come to fruition with regulatory approval from the FTC, and the same can be said for Staples and Office Depot. Of course, we can all point toward the Great Recession as a catalyst leading to the demise of many retail chains, but even with an improving economy we continue to experience fallout from the expansion of omnichannel retailing and the ongoing shift toward online purchases.
A review of Eastern Massachusetts retail store counts from the past five years within our GRIIDTM database uncovered a number of retail chains that have experienced a significant decline of 10 or more locations, either through consolidation, acquisition by other retail firms, or liquidation. Heading the list of chains reducing store counts by more than 40 locations just since 2010 is Curves, which has been facing an onslaught of new competition during that time frame. This group also includes White Hen Pantry (acquired by 7-Eleven in 2006 and later converted), Blockbuster Video, and Radio Shack. A complete listing of chains with 10 or more closures is illustrated in Table 1 below.
While vacant storefronts are never a welcome site, they do sometimes offer opportunities to healthy retailers which are in expansion mode. A look back to 2010 shows that many chains exhibiting growth today were either not in existence yet, or were just beginning to grab hold in the region; at the same time a number of mainstays in the region continued to spread their wings with new store openings; and acquisitions were another means of entry into the region.
Led by Subway, seven chains added 25 or more new locations, including 7-Eleven, Metro PCS, Orange Leaf and others. In all, 35 chains added 10 or more locations. Among expanding categories, Fitness and Restaurants were two of the strongest. In the Fitness arena were Planet Fitness, Anytime Fitness, Get in Shape for Women, Pure Barre, and Koko Fit Club. Along with the aforementioned Subway, expanding restaurants included Panera Bread, Five Guys, and Chipotle. Coffee shops also made headway with Dunkin Donuts, Starbucks, and Marylou’s Coffee making the list. Orange Leaf and Pinkberry were at the top of the popular FroYo category, each adding more than ten stores. Personal Services continue to grow as well, with Massage Envy, Elements Massage, Supercuts, and Great Clips adding significant numbers of stores. Auto parts chains on the expanding list included Auto Zone and Advance Auto, while growing drug store chains included CVS and Walgreens. The complete list of retail chains in several categories that exhibited marked growth is shown in Table 2 below. It’s interesting, although not surprising, to note that many of the retail categories that have been growing during the past five years are those least impacted by online retailing. Conversely, a number of significantly contracting chains were greatly impacted by internet retailing – among them Staples, Borders, Radio Shack, and FYE.
Bob Sheehan, Vice President of Research