Top U.S. retailers put the brakes on construction spending | Dump Trucks Charlotte NC
Columbus Ohio Dump Truck Company Brief:
- A new report quantifies how much the coronavirus pandemic has slowed the construction of new retail stores.
- An analysis of the 10 retail chains that spend the most on construction shows that seven experienced declines in construction spending in the first nine months of 2020 compared to the first nine months last year. Only three of the 10 — Publix, AutoZone and Dollar Tree — increased construction spending, according to Dodge Data & Analytics 2021 Construction Outlook.
- In total, the top 10 chains reduced construction starts 15% to $1.876 billion, in a move away from brick-and-mortar retail that has been ongoing for years but accelerated by the pandemic, Dodge said.
Dump Trucks Columbus OH Insight:
The coronavirus pandemic has been one more nail in the coffin for some of the country’s top brick-and-mortar retail brands. In the first eight months of 2020, 66 brands closed 13,262 stores — more than in all of 2019 — and the list is expected to grow by the end of the year, according to Dodge. Of the companies closing stores this year, 26 have declared bankruptcy, including brands such as Neiman Marcus, Pier 1 Imports, Sears, J Crew and JC Penney.
This chart details the U.S. retail chains spending the most on construction starts:
| Retail Chain | Jan.-Sept. 2019 | Jan.-Sept. 2020 | Percent change |
|---|---|---|---|
| Walmart | $916.2 | $782.7 | -15% |
| Dollar General | $215.3 | $194.3 | -10% |
| Publix Super Market | $189 | $190.4 | 1% |
| Aldi Food Store | $211 | $153.4 | -27% |
| Target | $215.7 | $123.9 | -43% |
| Costco Warehouse Store | $132.4 | $108.9 | -18% |
| O'Reilly Auto Parts Store | $86.5 | $84.5 | -2% |
| AutoZone Auto Parts Store | $65.8 | $80.8 | 23% |
| McDonald's Restaurant | $104 | $79.6 | -23% |
| Dollar Tree | $62.4 | $77.3 | 24% |
In millions of dollars. SOURCE: Dodge Data & Analytics
As brands falter and shoppers turn increasingly to e-commerce, investment in new retail construction has shrunk, according to the Dodge report. Last year, the top 20 U.S. retail chains broke ground on roughly $3 billion worth of construction, a decrease of 10% from a year earlier. In 2020, retail starts among all brands are expected to drop another 25% to$12 billion and square footage slashed 28% to just 55 million square feet, almost one-third below levels of the Great Recession.
The decreased emphasis on brick-and-mortar stores has somewhat been offset by online shopping and with it, construction spending for warehouse spaces. After two decades of slow but steady increases, e-commerce sales jumped 44.5% in the second quarter of 2020 compared to the same quarter a year earlier to a seasonally adjusted $211.5 billion.
This year, consumers turned to online shopping to deal with the restrictions of COVID-19, with e-commerce sales gaining 31.8% from the first to second quarter of the year. Early data from Adobe Analytics forecasts last weekend's Black Friday online sales to hit up to $10.6 billion, which represents growth of 42% year over year.
In fact, the data firm expects 2020's Black Friday and Cyber Monday to be the two largest online sales days in history as consumers shift more spending toward e-commerce amid the COVID-19 pandemic.
“If this sea change in consumer behavior becomes a permanent phenomenon, the long-lasting effects of COVID-19 could mean further deterioration in retail construction starts in coming years,” the report said.
Besides warehouse construction, another bright spot for columbus oh dump truck company that columbus oh dump truck company in the retail sector is renovation activity, which has grown steadily since the end of the Great Recession. COVID-19’s impact on the retail industry has caused the renovation share of construction to grow even more, increasing to a record 51% of total retail starts in the first nine months of the year, Dodge said.
For instance, of the 1,916 projects that Walmart broke ground on last year, just 12 were either new construction or additions to existing structures. The remainder were alterations/renovations to existing buildings, which averaged just $500,000 per project. Only one new store that Walmart started last year was more than 100,000 square feet.
“This shift tells an important story about the changing retail landscape: Since 2016, retailers have only tentatively expanded their footprints, but have instead focused on updating and improving existing facilities to remain competitive. With online shopping making further inroads and the economy on unsure footing, this condition is unlikely to change over the next few years,” the study said.
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