What Off Price Retail Shows Us

There are a myriad of reasons why off-price retailers succeed and whether it is the cost or the experience, the impact is clear. Ross announced that it had successfully launched 100 new stores in 2019, even while other major brands were rapidly shuttering locations.

We looked into these two off-price retail leaders to analyze their true strength and understand what their data might mean for the wider retail space.

Strong Growing Stronger

T.J. Maxx and Ross aren’t just succeeding or holding steady in a difficult retail period, they are thriving. Both brands enjoyed Year-over-Year growth in the critical Back-to-School season. T.J. Maxx visits saw a 2.0% increase in visits during August 2019 compared with the same month in 2018, after seeing a massive 8.7% jump between December 2017 and December 2018. This marks major victories in two key seasonal periods. 

Ross, on the other hand, saw a massive 6.2% increase in visits in August 2019 compared to the same month in 2018. This jump is particularly important after the brand experienced a dip in December traffic in 2018, compared with 2017.

Wider Impact

And the success isn’t staying limited to the core originators. Macy’s Backstage and Nordstrom Rack are two concepts that are helping legacy retailers tap into the growing excitement around the space. Looking at Year-over-Year data for the critical August Back-to-School season shows Nordstrom Rack (red) enjoyed 5.2% growth. 

A Sign of Things to Come

These are significant boosts to the value of these concepts to the wider brands, but they also indicate something important about where retail is trending heading into the critical holiday season. A Commerce Department report showed that retail sales fell for the first time in since the start of the year, a worrying sign for many ahead of the holidays.

Yet, any consideration like this must also take into account the significant bump in August 2019. Considering a major growth sector like off-price saw such a distinct difference between August (better Year-over-Year) and September (worse Year-over-Year) could just as easily speak to a balance that a stronger than normal Back-to-School season had on consumers. In fact, the ability to garner interest during that period could speak to a potentially stronger holiday season if the same level of excitement and urgency can be generated.

Takeaways

Off-price is crushing in retail, and more brands are likely to get involved in order to take advantage of the trend. The critical question will be how the leaders compete with new players and whether this new trend impacts other elements of the apparel sector.

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