One week ago, when looking at the latest Fitch forecast of retailers most likely to file for bankruptcy next, we listed the hundreds of store closures already announced in 2017 between various bankrupt and still solvent retail chains.

Declining consumer demand for traditional retail venues and deteriorating financial results aside, we showed the simple reason for the persistent pressure on traditional "brick and mortar" stores to restructure with the following chart which showed that North America has a glut of retail outlets, as well as far too many shopping malls, something which is becoming apparent as sales per capita decline. On a per capita basis, the US has roughly 24 square feet of retail space per capita, more than twice the space of Australia and 5 times that of the UK.

But what about new store openings? After all, on a net basis the US retail industry has to still be growing. Here we have some good and bad news.

First the good news: according to a recent analysts by Bank of America's REIT team, in which the bank analyzes both store openings and closings for the same sample of 33 retailers that its have analyzed since 2007, it finds that the projected net new store count for 2017 is 1,041, which is lower than last year’s actual 1,109. While the net number of 1,041 openings this year is lower than the 10-year average of 1,386, "nevertheless the numbers are still positive" is how BofA spins the silver lining.

Some more details from the BofA report:

For the group of 33 retailers, we estimated 1,128 net new stores, but the actual figure was 1,109 (a negative variance of -1.7%). Projected net store openings were close to the actual count by year-end. As mentioned, this number is somewhat lower than the previous 10-year average, which we believe is due to historically low levels of ground-up development, as well as caution from retailers who remained focused on margin over market share. Table 2 shows projected vs actual net new store openings for 2016. In our analysis, net new store openings for open-air formats (strip centers) still appear stronger than malls for 2017. Open-air retailers plan to open a net new 1,111 stores, while in the mall space, retailers plan to decrease the net new store count by 70 stores. The decrease in the mall categories is primarily due to the closing of department store anchors. The stronger net store result of open-air retailers occurred despite a pick-up of store closings in the open-air categories. The store closings were mitigated by a number retailers which actually increased their “open-to-buy” (such as off-price apparel stores). See Table 3 for net new stores by retailer, by year.

Now the bad news: as the following tabl shows, of the 1,041 stores expected set to open in 2017, 80%, or 810, belong to the one retail chain that focuses exclusively on America's poortest, i.e., Dollar General.

Putting BofA's findings in context, US retail is still at least somewhat alive, but only thanks to America's poorest, seemingly a market of still largely untapped growth potential. In fact, of the nearly 7,800 net new stores opened since 2008 per BofA's sampled data, a whopping 76%, or 5,936, were Dollar General Stores.

It seems that in the otherwise gloomy US bricks and mortar industry, a source of tremendous growth continues to shine: catering to America's growing poor.

As for how Dollar General itself sees the US retail landscape, read "Dollar General's Startling Admission: Half Of U.S. Consumers Are Feeling More "Dire" Than Ever"

"Growth" reality aside, there is one potential saviour for US "bricks-based" retailers: e-tailers opening more stores. Here is BofA:

We would be remiss if we did not also mention the retailers that once sold their products exclusively online and now occupy their own physical space. This year we expanded our analysis of new store openings to include this group, which we refer to as e-tailers. We first looked at a list of 40 online retailers that once existed only online but now have over 280 stores in the U.S. Then we of those e-tailers that plan to add more stores in 2017 and beyond. These 12 e-tailers include names like Amazon, Warby Parker, Bonobos and Indochino. This group of 12 ended 2016 with just under 200 stores and plans to open another 175+ this year (Table 4). Amazon said it will open as many as 400 bookstores; Warby Parker co-founder Neil Blumenthal said he could envision a future with 800 to 1,000 physical stores, and Bonobos founder Andy Dunn said he plans to have 100 stores by 2020. Indochino, a men’s fashion retailer, currently has 13 stores, and CEO Drew Green plans to get to 150 stores by expanding in top-tier malls like SPG’s King of Prussia. These findings support our thesis that tenant demand remains high for bricks and mortar retail high across a variety of tenants, including those once found exclusively online.

It remains to be seen just how successful such "clicks-to-bricks" conversions will be.

h/t Adam Johnson