Brand owners and licensees will continue to be challenged to navigate the swirling seas of a changing brick-and-mortar lineup this year.

Pier One Imports is the latest casualty, filing for bankruptcy earlier this week, only a few weeks after announcing plans to close up to 450 stores – one of many who have announced hundreds of store closing in the past few months. And chains such as arts and crafts retailer AC Moore (145 stores) and paper goods purveyor Papyrus (254) are shutting down altogether.

Store Closings

Real estate firm Cushman and Wakefield has forecasted 12,000 U.S. stores will close this year in the U.S., which would be a 29% jump in just a year. Is this downsizing or right-sizing of the U.S. marketplace which, by some accounts, has five times the retail space per capita as most other countries? To some extent, it doesn’t matter what you call it; it translates into fewer linear feet of shelf space for suppliers to populate with their goods.

But the yin to that yang is characterized in part by two groups – DTC brands expanding their physical retail footprints, and off-price and value chains. Once overlooked off-price retailers and dollar stores are now being embraced, and are expanding rapidly.

Off-Price Expansion

For example, HomeGoods, which carries a broad range of licensed bedding with fashion brands such as Calvin Klein and Tommy Hilfiger and operates 800 stores, is planning to expand to 1,400 over the next few years. And Dollar General is planning to open 1,000 locations this year (on top of the 975 added in 2019) in increasing the chain to 17,000 stores.

And then there are the direct-to-consumer brands. For example, newly public bedding retailer Casper has 60 stores and is planning to increase to 200 in the next several years. And Amazon is expected to expand all retail formats this year including Amazon Books, Amazon 4-Star, Amazon Pop-Up, Amazon Go and Whole Foods.

Will the additional floor space from the so-called alternative channels of distribution be enough to offset the shrinking foot print of department stores and fashion chains?  That’s what we’ll be monitoring this year.