Posts Tagged 'TJX'

Department stores expand off-price concepts

Macy’s reported in its year-end earnings call that it plans to expand its Backstage off-price concept to 100 more stores this year. (And Backstage is located inside existing Macy’s locations.) Here’s what I had to say on RetailWire about the wisdom of this trend:

There is a big difference between what Nordstrom and Kohl’s are doing (building out freestanding Rack and Off/Aisle stores) and what Macy’s is attempting by locating its Backstage concept inside its full-line stores. Either way, department stores are jumping on the off-price bandwagon because it’s a hot segment with the “treasure hunt” experience that some shoppers are looking for. But at what point does the segment get overcrowded?

Macy’s may feel strongly enough about Backstage to roll it into more locations, but from my experience it does nothing to enhance the overall store “brand.” (Bob is dead-on regarding the housekeeping.) And the merchandise content is not compelling, since Macy’s “upstairs” brands feel safer dealing with TJX than having their goods show up in Backstage. From what I’ve observed, there is a lot of closeout product from brands that you might find at JCP or Kohl’s but not on the main floor of Macy’s.

Advertisements

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.

Are off-pricers bulletproof?

Off-pricers represent the hottest segment of brick-and-mortar retail right now, even more so than “fast fashion” retailers. RetailWire panelists discussed whether they are invulnerable to challenge, especially in a soft demand cycle for apparel. Here’s my point of view:

The “wheel of retailing” is a longstanding premise that new formats overtake old ones….only to be overtaken themselves when a newer innovation comes along. Off-pricers are playing a hot hand right now: Customers like the values and the “treasure hunt,” However, the category runs the risk of oversaturation even though the segment is gaining apparel share at the expense of more traditional models, and it faces the ongoing competitive threat of e-commerce.

Given all of this, hats off to TJX for continuing to develop new formats (especially in the home store) as one way to inoculate itself against these challenges.

Outlet malls aren’t “overstored” yet

In light of the troubles at the regional mall, and the wave of 2017 store closings, it’s worth noting that outlet malls continue to flourish. RetailWire panelists had a recent chance to weigh in, and here’s my theory:

The growth of outlet malls over the past several years flies in the face of the conventional wisdom that brick-and-mortar retail is dead. Outlet malls provide the same kind of focus on “treasure hunt” and value that have kept companies like TJX and fast-fashion retailers performing well. They have the added cachet of multiple designer brands, at the same time that those brands are trying to clean up promotional activity in their department store accounts.

In fact, the proliferation of outlet malls (and their upgraded appearance and tenant mix) is one more issue making it harder for the traditional regional mall to tread water. But outlet mall developers need to be careful about overexpansion: There are up to a half-dozen outlet malls around the Chicago area where there used to be one. Part of the appeal of “destination shopping” will be lost of these malls become too commonplace.

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.

More on “Black Thursday”

I published the following comment on RetailWire a couple of weeks before Thanksgiving. In hindsight, it’s apparent that early openings only cannibalize Friday sales. (More on a later post.) My point of view:

The relevance of earlier (and earlier) openings will fade as more stores provide ways for shoppers to “buy online, pick up in store” in the future. (Not to mention, the continued growth of e-commerce and m-commerce to begin with.) But, for now, the stores racing to beat the clock are just gearing up their BOPIS efforts. As long as there is peer pressure to open earlier and earlier, we will inevitably see stores open all day on Thanksgiving in the near future.

The stores choosing to stay closed on Thanksgiving Day are making a more vocal effort this year to align their decision with their brand. Costco has always led the way, since they also close on several Federal holidays throughout the year, but it’s significant that stores across the retail spectrum — from Dillards and Nordstrom to TJX to big-box stores — are keeping them company.


Advertisements