Some of the state’s largest retailers are in expansion mode even as the broader retail industry struggles.
Some of the state’s largest retailers are in expansion mode as the broader retail industry struggles
The brick-and-mortar retail industry is floundering.
Sales are plummeting for once-beloved and thriving brands such as Sears, as consumer habits shift and online giants, namely Amazon, continue to steal market share from long-standing retailers.
HHGregg, Bebe and The Limited are among the retailers closing up shop in Tennessee and elsewhere across the country. J.C. Penney, Macy’s and MC Sports are contracting and shedding workers. The departures will leave real estate holes — or opportunity — as the very face of malls and shopping centers change.
U.S. store closing announcements in 2017 are far outpacing previous years, with 2,880 closures announced as of April, according to a Credit Suisse report. The firm estimates there could be more than 8,640 store closings by the end of the year, higher than the 2008 peak of 6,200 closings.
In March alone, 35,000 workers at general merchandise stores in the U.S. lost their jobs, according to the Bureau of Labor Statistics. The sector has lost 89,000 jobs since reaching a high in October 2016.
But how are Tennessee-based retailers faring? Are they closing stores and in danger of sales declines or are they reinvesting and poised for growth?
Turns out some of the state’s largest retailers aren’t just weathering the storm — they’re expanding and hiring. Here’s a look at how five companies, from one of the largest dollar store chains in the U.S. to a major auto parts retailer, are responding to the fast-changing retail environment.
Goodlettsville-based Dollar General is a national leader in the seemingly recession-proof dollar store industry.
The discount retailer hasn’t wavered in the weak retail market; in fact, the company’s annual sales grew from $16 billion in 2012 to $22 billion in 2016 as the chain adds rapidly to its 13,600-plus store count.
Dollar General opened 730 new stores in fiscal 2015, 900 new stores in 2016 and plans to open 1,000 stores this year — creating some 10,000 new jobs to support growth of its stores and distribution centers.
Like many longtime brands, Dollar General is trying to stay relevant and tap into the tremendous buying power of millennial consumers with a new smaller-format concept called DGX. The flagship location of the quick-trip urban store opened on West End Avenue in January.
Also in the works for Dollar General: The company announced plans in April to buy all 323 Dollar Express discount stores in 36 states. This comes after Dollar General tried unsuccessfully to buy rival Family Dollar in 2014.
Brentwood-based Tractor Supply has proven it has staying power in the eight decades since it was founded as a mail order tractor parts business. Today, the rural lifestyle retail chain with more than 1,600 stores sells everything from clothing and lawn equipment to home goods and pet supplies.
Tractor Supply’s annual sales rose nearly 45 percent over the past five years to $6.8 billion in 2016. The company has boosted its store count by 136 percent in the past decade.
The retailer struggled somewhat in its most recent quarter. Sales rose to $1.56 billion, a 6.6 percent increase compared to the first quarter of 2016, but same-store sales dropped 2.2 percent largely due to challenging winter weather in the northern regions.
Tractor Supply CEO Greg Sandfort said the company is executing on several initiatives to respond to changing consumer expectations, including a buy online/pickup in-store program, a customer loyalty program and an in-store kiosk where customers can shop Tractor Supply’s entire online assortment.
“We believe these initiatives will enable Tractor Supply to address the current challenges in the retail industry and will be instrumental in driving comparable store sales in the future, as we look to realize our long-term target of high single-digit annual sales growth,” Sandfort said.
Cars on the roads are getting older and Memphis-based auto parts retailer AutoZone is reaping the benefits.
Already one of the city’s largest public companies, AutoZone is building new U.S. stores and making supply chain investments to get customers the products they need even faster.
Founded in 1979, AutoZone operates more than 5,800 stores worldwide with plans to open about 150 new domestic stores this year. That’s on top of the 156 stores added in the U.S. in 2016. The company reported net sales rose 4.4 percent in fiscal 2016 to $10.6 billion.
The company’s profitability was negatively impacted in the most recent quarter, with flat same-store sales, due in large part to timing delays in IRS tax refunds, according to an SEC filing.
Key initiatives for AutoZone include boosting profits by ensuring stores have more of the products customers need, when they need it. AutoZone has opened hubs and mega-hubs throughout the country, which stock tens of thousands of in-demand products and supply surrounding AutoZone stores multiple times per day.
Fred’s Inc. is undergoing a significant transformation that could catapult the Memphis-based retailer into the third largest drugstore chain in the nation.
The company founded in 1947, operating more than 600 pharmacy and general merchandise stores, plans to acquire up to 1,200 divested Rite Aid stores if the merger of Walgreens Boots Alliance and Rite Aid is approved by the Federal Trade Commission.
If approved, the acquisition would significantly boost Fred’s store count and also expand the brand into new markets across the U.S.
Fred’s CEO Michael K. Bloom said the deal is part of the company’s strategic shift to focus on its health care business. Fred’s pharmacy sales outpace consumables and household goods, accounting for 51 percent of sales in fiscal 2016.
Fred’s net sales for fiscal 2016 decreased 1.2 percent to $2.13 billion.
The company plans to “look opportunistically at other potential acquisitions” regardless of the outcome of the Rite Aid deal, according to an SEC filing.
The old-fashioned chain known best for Southern food and trinkets has slowly expanded its retail mix to lure a new, much younger demographic.
Founded 48 years ago in Lebanon, Tennessee, the 641-unit chain is trying to appeal to millennial shoppers while not alienating its longtime customers. Stores now carry fashion-forward apparel and vinyl records alongside rocking chairs and quilts.
Retail still accounts for a relatively small portion of sales — $589,000 of the company’s total $2.91 billion in revenue in 2016 — but the goal is to grow the retail business, where apparel and food goods are the top sellers.
Cracker Barrel plans to open eight new stores in fiscal 2017 in addition to four Holler & Dash restaurants, another attempt to appeal to a younger audience with a hip, chef-driven biscuit house chain.
Fiscal 2016 revenue increased 2.5 percent to $2.91 billion over 2015, while comparable store restaurant sales increased 2.2 percent and store retail sales grew 2.7 percent.
By the numbers: Tennessean retailers
- Store count: 13,601
- Plans to add 1,000 new stores in fiscal 2017
- Sales: $22 billion in fiscal 2016, up $20.4 billion 2015
- Store count: 1,617
- Plans to add about 100 new stores in fiscal 2017
- Sales: $6.8 billion in fiscal 2016, up from $6.2 billion in 2015
- Store count: 5,872
- Plans to open about 150 new domestic stores in fiscal 2017
- Sales: $10.6 billion in fiscal 2016, up from $10.2 billion in 2015
- Store count: 601 pharmacy and general merchandise stores and three specialty pharmacy-only locations
- Plans to acquire up to 1,200 divested Rite Aid stores if the merger of Walgreens Boots Alliance and Rite Aid is approved by the Federal Trade Commission
- Sales: $2.13 billion in fiscal 2016, down slightly from $2.15 billion in 2015
- Store count: 641
- Plans to open eight Cracker Barrel stores in fiscal 2017
- Sales: $2.9 billion in fiscal 2016, up from $2.8 billion in 2015
Reach Lizzy Alfs at email@example.com or 615-726-5948 and on Twitter @lizzyalfs.
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