by Peter Giannetti
Off-price retailing for years has been an immovable brick-and-mortar object against the irresistible force of e-commerce.
Such physical store reliance, though, was put to the test when most off-price stores had to close—without a meaningful digital commerce fallback—during the early months of the pandemic.
Burlington Stores announced suspension of its e-commerce site in early March 2020, only days before nationwide physical store lockdowns struck the off-price segment. TJX Companies at the time was still calibrating fledgling Marshalls and TJ Maxx e-com sites. And Ross Stores had yet to dip into e-tailing.
The pandemic, yet another online shopping accelerator that converted masses of previously reluctant adopters, raised a key question about whether the best off-price store operators could grow share at pre-pandemic rates without a robust omnichannel sales strategy.
Unabashed physical store focus by the top off-pricers in an increasingly virtual shopping sphere draws energy from a captivating, ever-changing, in-person “treasure hunt” experience that has been difficult to simulate digitally despite the efforts of flash sites and other bargain-hunting online platforms.
Opportunity buys still make up a good portion of the mix at most off-price stores. And that contributes to the impulse-driving perception among many consumers that if they find something today in such a store, they might not find it there tomorrow or maybe ever again. Although some loyal off-price shoppers have probably figured out many brands have a regular facing in these stores, that doesn’t mitigate their delight in such extraordinary finds.
Indeed, off-price selections these days are more programmed than many consumers might realize. Such increased programming of the off-price supply chain— if it creates national or regional merchandise matrices without homogenizing the look and feel from store to store— might be the key to developing a workable omnichannel solution for the segment that doesn’t marginalize store traffic while providing the type of on-demand home and mobile shopping option more consumers expect.
E-commerce opens the off-price segment to added central distribution infrastructure that runs counter to its lean, deep-discounting margins. However, the synchronization of inventory and e-commerce technology has so progressed on a granular level that replicating the local store hunt online and fulfilling through those stores is an advancing possibility for these retailers.
All off-price eyes—all retailer eyes for that matter—will be on TJX’s HomeGoods unit this year when it launches what is expected to be the company’s most comprehensive e-commerce platform connected to one of its primary store brands. Meanwhile, who would be surprised if Burlington is already plotting its e-commerce reentry? Of if Ross Stores is ready to loosen its staunch brick-and-mortar devotion? Or if other off-pricers are poised for a deeper e-commerce play?
Spring sales gains among leading off-price operators are, to little surprise, off the charts compared to a period of shutdowns a year earlier. TJX this week reported a 129% year-over-year sales increase for its quarter ended May 1. Triple-digit year-over-year sales surges for the quarter are also expected from Burlington and Ross when they report later this month. A more detailed view of “open only” same-store gains during the latest quarter—comparing sales on days stores were open during the quarter in 2020 to sales the same days this year—confirms these off-pricers weathered the pandemic well.
Reopened off-price stores bounced back nicely during the second half of 2020, powered by home, beauty and activewear.
Broader apparel and footwear demand has snapped back this spring, to go with continuing strength in home and housewares.
Supply chain snags and related rising costs are frustrating suppliers and retailers in all channels. Even so, for the goods off-price stores can secure—programmed or opportunistically—such physical outlets are well positioned for a re-emergent society eager to resume in-person treasure hunts for deeply discounted popular brands and products.
A key question remains, however, after a year that altered the courses of all retailers. Can off-price retailing continue to resist e-commerce?