Yes, new stores keep opening, but don't get too excited

Even in this recession, some businesses are making hay -- including retailers. Store chains recently have been announcing plans to open locations and hire new workers. It looks like a recovery on paper, but in reality, it's more of a wash.

The latest announcement came from Target Corp. (TGT) which said it will open 26 new stores in the next month, bringing on some 5,000 employees. Stores will open from Anchorage, Alaska, to West Palm Beach, Fla.That follows an announcement from Kohl's Corp. (KSS), which recently opened 37 new stores, expanding into new California markets. Dollar General has stepped up the opening of its dollar stores around the country. And 7-Eleven expects to open 200 new stores by year-end.

It looks like growth, but most of these new stores are stepping into a large breach. Retail sales are flat this year -- in the best of cases -- and overall retail employment is down. These new store openings won't close the gap.

The retailers that are expanding are taking advantage of quirks of recessionary shopping, such as the death of rivals and shoppers trading down. Best Buy Co. (BBY) is filling the vacuum left by Circuit City, Kohl's is using the demise of Mervyn's to nail rival J.C. Penney Inc. (JCP), and Wal-Mart Stores Inc. (WMT) is taking on all comers for downmarket shoppers.

Even Target's management, while discussing second-quarter profits with analysts, said it's being careful about when and where it opens new stores. Next year's plans call for opening only 12 new units and closing or relocating three, so the net gain for 2010 would be 10 new stores at best.

It's wise to take these announcements with a grain of salt. They're cold comfort to the droves of retail workers who have been laid off in this recession as merchants cut costs. According to the U.S. Department of Labor, 1.81 million retail workers were unemployed in September, up from 1.28 million a year ago, raising retail's unemployment rate to 9 percent from 6.2 percent.

And even as holiday sales forecasts have turned more positive, stores aren't ratcheting up seasonal hiring. According to a recent survey by consulting firm Hay Group, 57 percent of retailers are cutting back holiday help this year. That's worse than the 29 percent who did so last year.

So, expect fewer people working on crowd control in stores the day after Thanksgiving. But since most holiday projections expect weak overall sales, fewer people will likely be fighting for the doorbuster specials, anyway.
Read Full Story