With off-price businesses booming, retailers that specialize in this arena are planning to increase their door counts significantly while traditional mainline retailers are scrambling to open and expand their own concepts.
As illustrated in the infographic below, in some cases the number of off-price stores for traditional department stores far outpace their initial concepts. For the original stores in this space, the projected rate of growth is substantial.
These retailers are responding to consumers who are bargain hungry. “The opportunity accelerated during the recession, but then people have come to expect and appreciate that type of value,” said David Jamieson, executive vice president and chief operating officer at Kimco Realty.
[Read more about the opportunities and pitfalls ahead for off-price: Follow the Leader: Off-Price Gets Crowded]
While mall-based stores are suffering from slow foot traffic and general shopping malaise, Jamieson said stores like TJ Maxx, Ross and Marshall’s are continuing to heat up, as evidenced by the by the 97.3% occupancy rate for anchor spots his company’s open-air properties enjoy.
But as more off-price locations crop up, it will be important for retailers to remember what makes these store so attractive in the first place: that element of surprise.
“I wonder if [department stores] will fall prey to the Filene’s [Basement] scenario by just taking their private-label stuff and moving it in there and not do as well because it’s not as exciting,” said Ken Morris, founder and partner at Boston Retail Partners and former Filene’s executive.
And while it may seem odd to see retailers pursing brick-and-mortar in our e-commerce driven world, Morris says he understands it. “I don’t see people buying off-price as much online as in store,” he said. “It’s theater. It’s fun. You can’t replace it.”
ª Off-price count includes Last Call and Last Call Studio.
* U.S. locations only. There are seven additional full-line stores outside the U.S. and nine more Off 5th locations in Canada. Off 5th is set to grow by 18 stores internationally in 2017.
† U.S. locations only. There are 122 full-line stores total. One Rack store is slated to open in Canada this year.
** U.S. TJ Maxx and Marshall’s only. Does not include HomeGoods or Canada, Europe and Australia locations. The total including all of these doors globally is 3,812 with plans to scale to 5,600.
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