Retailers Who Are Moving Ahead
Not everyone’s closing up shop — these retailers and restaurants have made strides in 2009, and are planning expansions in 2010, and beyond.
Jill Bensley and Erica Barton

As the holidays approach, the retail industry is showing signs of new life. Buoyed by 3.5 percent third-quarter growth of the gross domestic product, the retail sector may have seen the worst.

Always important to the rebound are plans for store expansion. In fact, 2009 shows more than 250 individual retailers who had plans to expand by more than a total 10,000 units. A summary by merchandise class is given below:

Walgreens has the second largest number of stores planned in 2009, second only to McDonalds.

Announced plans for 2010 include more than 49 different retailers with plans for more than 3,500 new locations. While not all of the aforementioned expansions are in the United States, the sheer volume signals better times for the retail sector.

The Top 50 in 2009

A list of the top 50 expanding companies by number of units is shown in Chart 1. As can be seen, the most expansive include McDonalds at 1,000 new units; Walgreens at 554 units; Dollar General at 500; Subway at 484; Zara at 450 (through 2011) ; GameStop at 400;  Family Dollar at 385; Dollar Tree at 235; 7-Eleven at 200; and O’Reilly Automotive at 150. Obviously, the lower end of the retail spectrum is gaining the most in this recession.

But that is not the whole story. Some of the more interesting of the retail stories are discussed below, after the discussion of retail expansion by merchandise category.

The Top 50 by Merchandise Class

As the saying goes, the devil is in the details. A look at some of the more expansive retailers in each merchandise class provides a picture of what is happening now and what the outlook holds.

Food and beverage operators, as shown in Chart 2, comprise the majority of new locations, accounting for more than 4,200 new units. Some of the most prolific include McDonalds, Subway, 7-Eleven, Papa John’s, Chipotle Mexican Grill, Popeye’s, Go Green Station, Papa Murphy’s, Yoshinoya, and Auntie Anne’s.

In the apparel and accessory category, the top 50 companies’ number of units is shown in Chart 3.

Zara, a fast-fashion Spanish retailer, is the most expansive, although their 450-unit expansion includes stores worldwide through 2011. TJX Stores’ expansion indicates the public’s thirst for discount fashion. Brown Shoe Company, Famous Footwear, and Ross Dress for Less make-up the number three, four, and five positions. Forever 21’s new format larger store will account for the majority of the 44 new stores and again highlights the public’s demand for current fashion at a low price brought to market ASAP. Aeropostale, with its inexpensive teen clothing, is expanding while many in the genre are losing market share. Fashion Metro, Urban Outfitters and Dress Barn finish out the top 10 and continue the trend of reasonably priced fashion-forward “cheap-chic” clothing.

10 Retailers/Restaurants To Watch In 2010

Many of the expanding retailers are unexpected in this downturn. Ten of the more interesting and prolific brands are highlighted below.

Aeropostale — With 40 new stores planned for 2009, this teen apparel retailer is growing while most competitors in its category are lagging. Inventory management, a new brand serving 7- to 12-year-olds (P S from Aero), and double-digit sales increases in 2009 back Aeropostale’s success. The brand is poised to exceed earnings projections through year-end.

Go Green Stations — This new alternative fuel distributor is planning approximately 100 convenience stores in 2009 and 1,000 in 2010, located on the eastern seaboard. The company is a subsidiary of Alternative Fuel Distributors, organized in 2007 to develop, construct, own and operate convenience stores offering alternative fuels and convenience goods to retail customers. Fuel available will include E-85, which is a grade of fuel comprised of 85 percent ethanol. The company currently operates 1,500 stations in the United States.

Ulta Salon Cosmetics and Fragrances — One sector that always does well in a recession is moderately priced cosmetics, and Ulta is one of the best. Offering an extensive cosmetics line and beauty products as well as a store brand, this retailer also has a salon. Visit any store and you will observe women of all ages primping and experimenting with beauty products of all kinds. With 35 new stores announced in 2009, Ulta will be one to watch as the economy improves.

Smashburger — This cook-to-order Angus beef burger is “smashed,” seared and seasoned on the grill and topped with a variety of cheeses, fresh produce and condiments. The food is served quickly and on a plate -— not in a bag. Smashburger offers online, telephone orders or in-store dining. Smashchicken sandwiches, salads, veggie frites, haystack onions, Haagen-Dazs shakes, beer and wine are also offered.

Buckle is a brand on the rise; it’s one of the few apparel retailers who are expanding. The company had 20 stores planned in 2009.

Buckle — With a shopping cart of more than 75 brands, this retail giant owns Guess, Lucky, Billabong, Hurley and Converse, making it one of the premium brands excelling in a down economy. The company also owns a less expensive line of private-label apparel. About 370 retail stores have thrived in the past 24 months, and 20 new stores are planned for 2009.

Red Mango — While most premium food operators are suffering in these slim economic times, this premium yogurt operator from Korea is planning 40 new units in 2009. With only one operator as its true competitor (Pinkberry), Red Mango offers a delicious brand of yogurt offered in limited flavors including Green Tea, Pomegranate by POM Wonderful, and Tangomonium. Also offered are fresh fruit toppings, dry cereal and Ghirardelli chocolate sprinkles.

Freshii — With fresh and natural food products as its overriding concepts, Freshii is one of the most prodigious food operators in 2009, with plans to open 90 new units. The brand focuses on healthy, fresh meals and snacks served quickly. Freshii offers build-your-own salads, wraps, rice bowls and soups. As of July, the chain had 15 units open in Chicago and Toronto, with restaurants under construction in Illinois, Washington D.C., California, Pennsylvania, Colorado and Wyoming.

The Dollar Segment Stores — Once the domain of the lowest consumer economic sector, this retail category is thriving in today’s economy. The three major players are planning more than 1,000 stores by year-end 2009, as shown below:

Family Dollar     385 units

Dollar General     500 units

Dollar Tree     235 units

Even when the economy recovers, this segment is poised to keep doing brisk sales, as the growing Boomer demographic reaches retirement age and must cope with fixed incomes.

Vapiano — This chain offers casual dining serving hand tossed pizzas, fresh pasta and gourmet salads. With 30 locations, another 100 are under development, and 55 are coming online in 2009. Customers use a “chip card” to order food and drinks with their own individual choices of ingredients.

Chipotle Mexican Grill — This chain specializes in burritos and tacos using high-quality raw ingredients and classic cooking methods. With 830 restaurants, this fast-casual operator was bought by McDonalds, who has since sold the chain in 2006. The restaurant design adopts simple materials in a distinctive way, offering venues more architectural and less standardized than other fast casual restaurants. In 2009, Chipotle will build 120 new units.

Panera Bread — Panera Bread sells fresh food and warm bread at full price, encouraging customers to linger in the store and use the Wi-Fi or visit with friends. The St. Louis based company had sales increases of 16.2 percent in 2008 and profits were up 33 percent in the first half of 2009. Annualized growth has been more than 31 percent. Panera Bread is opening 80 new units in 2009.

Jill Bensley is president of Ojai, California-based JB Research Co. She can be reached by email at jill@jbresearchco.com. Erica Barton is an independent research consultant based in California.

This article contains data from an article, “Recession Expansion: Complete List of 2009 U.S. Retail Industry Store Openings” by Barbara Farfan that appears at http://www.about.com. Numbers cited in this article were for future stores planned as of 2009 (expansion in 2009 and beyond).

©2009 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.