While Traditional Retailers Falter, Why Are Off-Price Stores Still Doing Okay?

Image courtesy of Mike Mozart

Store closings and retail bankruptcies aren’t bad news for the entire retail industry. While the current turmoil in the business of department stores, toy stores, and clothing stores is bad for those is bad for those chains, it’s great for off-price retailers like TJX, Ross Stores, and Burlington.

The retail apocalypse is good news

Business for off-price retailers isn’t just good because shoppers are frugal and looking for bargains. According to CNBC, one investment analyst says that nationwide waves of store closings will put shoppers who aren’t interested in e-commerce up for grabs, and make closeout merchandise from closed stores available at super low prices to fill off-price store racks for years to come.

While Amazon is making a big push into selling clothing, it seems to be more fashion-oriented, not bargain-oriented like off-price retailers are.

The serendipitous browsing experience doesn’t translate well to the internet. The closest analogue might be flash-sale sites like Fab, Gilt, and Zulily, all of which have been acquired by other companies after an initial recession-era flash-sale boom.

“Difficult to replicate”

What exactly is it about these stores — like TJ Maxx, Marshalls, and HomeGoods — that lets them continue when just about anything can be purchased online? These retailers appeal to people who just like shopping — folks who enjoy going to the mall and coming away with purchases they probably didn’t intend on buying when they entered the store. As quickly as Amazon might deliver purchases, it still can’t deliver that instant sense of having found something special for a good price.

“The model is difficult to replicate,” one analyst tells CNBC, “with over 1,000 buyers worldwide currently sourcing from 18,000 vendors in 100+ countries.”

In fact, it looks like some more traditional retailers are trying to learn this lesson from their off-brand counterparts. At the same time as Sears and its sibling Kmart are shutting down stores around the country, the company is also snapping up pallets of bottom-dollar merchandise from other retailers in the hope of reaching the customers who are currently shopping at Ross or Marshalls.