Posts Tagged 'Ross Stores'

Is the off-price space already overcrowded?

Any student of retailing has seen segment after segment get overcrowded with imitators and then go through a period of consolidation — from department stores to discounters. Here’s a recent RetailWire comment that elaborates on this issue:

Every time a retail segment gets overcrowded with “me too” brands, a shakeout is inevitable. Between the key players like TJX and Ross, the luxury retailers’ outlet brands, and the new entries like Backstage and Off/Aisle, the market is ripe for consolidation. It’s no different from the waves of brand closures that swept the department and discount store industries, but I do expect TJX and Nordstrom Rack to be among the survivors.

Meanwhile, off-pricers keep expanding their brick-and-mortar footprints (often in other retailers’ closed sites) at the same time that most other big chains are working on omnichannel initiatives. You can argue that the “treasure hunt” appeal of off-pricers doesn’t lend itself easily to e-commerce, but this segment of retail needs to figure it out in a hurry.

Does Gordmans have a future as an off-pricer?

Stage Stores bought the Gordmans Midwest-based chain out of bankruptcy earlier this year, and announced plans to convert it from a promotional department store to an off-pricer. I commented on a RetailWire panel discussion about the game plan along with Stage Stores’ decision to maintain multiple nameplates:

From my recollection shoppoing a few Gordmans stores in the past, they were a Kohl’s wannabe without the geographic footprint to be sustainable. Now they are aiming to be a TJ Maxx wannabe but will still be saddled with the same problems. It’s tough to enter an increasingly crowded sector without the physical footprint or the buying power to compete against TJX, Ross Store and now Backstage.

Stage Stores is trying to maintain multiple concepts and brands (Peebles, Goodys, Bealls and now Gordman). Why not operate one concept under one brand-name umbrella? It’s the “Bon Ton syndrome” where none of the individual brand names is strong enough to overcome the lack of scale.

Macy’s jumps onto the off-price bandwagon

Macy’s announced in early 2015 that it was developing an off-price concept, and it provided more details about the concept this month. (And in another RetailWire discussion this month, panelists discussed the phenomenon that department store “sale” prices are often lower than outlet store prices anyway.) Here’s my skeptical point of view:

It’s not simply a question of how Macy’s Backstage differentiates itself from a space crowded with competitors like Nordstrom Rack, TJX and Ross Stores. Rack in particular has the brand cachet that Macy’s and the others can’t touch, especially in markets where Nordstrom is very deliberate about placing its full-line stores.

More importantly, how does the off-price concept differ from Macy’s full-line stores, with their constant barrage of sales and coupons? How is the merchandise content going to differ from what customers can find on the clearance rack at their local mall? Will Macy’s develop product specifically for Backstage? (Tough to do initially for only four stores…)

Plenty of questions needing answers before Macy’s ends up cannibalizing its core business. I still believe a “Bloomingdale’s Rack” type of concept might be more viable.

Nordstrom Rack expansion is accelerating

Most of the discussion on RetailWire about off-pricers centers on TJX and Ross Stores, but attention should be paid to Nordstrom Rack too. Nordstrom is stepping up the pace of store openings and seems to have a well-differentiated formula. Here’s my comment:

Rack stores have some of the hallmarks of Nordstrom stores — plenty of “better” apparel and especially dominant shoe departments compared to the competition — but nobody would mistake the presentation in these stores for a full-line Nordstrom store. I would rank the “store experience” somewhere between a TJMaxx and an Off 5th store, where Saks has taken a more distinctive position on presentation and product development.

Rack outlet stores are an important growth vehicle as Nordstrom continues to be very deliberate in the expansion of its anchor department stores. And the credibility of the Nordstrom brand allows the outlet concept to expand into virtually any city, even those who will never see a full-line store being built.

What killed Syms and Filene’s?

Following the announcement that Syms and Filene’s Basement are shutting their doors, RetailWire panelists had a chance to comment. I noted that there are a lot of external factors to blame but (most importantly) it’s always worth a look in the mirror at times like these:

To blame one’s demise on the department stores is probably not accurate. After all, traditional department stores are arguably less promotional since May Company left the scene. It’s more realistic to acknowledge that the major players in the off-price world (TJX and Ross Stores in particular) outperformed Syms/Filenes by benefiting from national scale, brand recognition and good execution. Does the name “Filene’s Basement” mean anything to consumers who don’t remember Filene’s in the first place?

Finally, the article mentioned flash sales sites but ignored a bigger factor: The explosive growth and evolution of outlet malls around the country.

Off-pricers: Happy days are here to stay?

Off-pricers like TJMaxx, Ross Stores and others are benefiting from some key trends right now:

1. Value-oriented retailers in general are gaining share at the expense of higher-priced stores. The best examples right now are Walmart and the dollar stores, but the trend is also leaving more aspirational luxury retailers behind.

2. Off-price stores stand to gain when department stores find themselves with a glut of inventory and open orders they can’t use. This product needs to go somewhere, so the vendor community finds off-pricers a more viable option than in the past.

3. Many national chains (Macy’s, Target, JCPenney as examples) are devoting more open-to-buy and floor space to exclusive and private labels. National brands are being squeezed out and their own outlet stores can only absorb so many goods.

Do these short-term changes represent long-term shopping behavior changes? Not necessarily: At some point both retailers and vendors will learn to ratchet down their inventory levels (if they haven’t done so already) in response to slow demand, making access to product more difficult for off-pricers. And the off-price stores themselves need to make sure they are differentiating from each other — otherwise you can foresee a wave of contraction and consolidation in this segment just as in so many other areas of retailing.