Trends In Retail: The Thrill Of The (Discount) Hunt

While some headlines might show bad news for traditional retailers, there are certainly bright spots. In particular, both home and apparel discount stores are thriving. TJX Companies, the umbrella corporation for T.J. Maxx, Marshalls, HomeGoods, HomeSense and Sierra Trading Post, is showing growth year after year. The company’s store count increased 7% in a 12-month period. Customer traffic at their stores rose for 15 straight quarters. In the last three years, Metro has brokered over 20 locations for TJX concept stores in the PA, NJ and DE markets.

It’s an impressive performance. But in an economy that is humming along, why is the discount category outperforming traditional retail? For some consumers, it’s a matter of dollars and cents. Their wages haven’t risen, their flat paychecks have lost some ground to inflation and their spending power has decreased. Therefore, retailers offering deep discounts on apparel and home goods are appealing. For other consumers, another trend is at play—the thrill of the hunt. Stores like Marshalls and Ross derive their inventory from a host of sources. So a customer looking for an everyday handbag might be thrilled to find a top-tier designer brand at a deeply discounted price.

This sense of discovery is one of the reasons off-price stores have been “Amazon-proof.”

The customer can probably find that same designed brand bag online, but if that person really wants to save big on its price, he/she have to shop the discount store. In the store! For many shoppers, that experience of hunting for treasure and discovering the super bargains keeps them coming back week after week to see what’s new. Retailers call it FOMO: fear of missing out.

Stores in the Ross Stores family and TJX stores are also finding themselves with an abundance of inventory. As department stores such as Macy’s close locations, liquidated inventory is snatched up by off-price retailers. As a result, inventory for these retailers is up 17%.  Opening new locations is one way of managing that inventory.

The popularity of discount home goods has attracted some new players to the category as well. Price club giant Costco has introduced Kirkland’s, an off-price store selling home products such as artwork and decorative shelving. At Home, a relative newcomer to the big box retail center is opening locations around the country. They lure in customers with the tease “Here today, gone forever.” It all proves once again that brick and mortar retail isn’t dead. It’s just reinventing itself yet again.

Copyright 2019 Metro Commercial Real Estate, LLC