Retail discounters flourish as traditional department stores struggle
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Laura Icken showed off her shoe shopping haul outside a Nordstrom Rack in Burbank, California. She picked up sandals for herself and Nikes for sons, Wesley and Andrew.
Icken said she used to be a department store customer, but these days she buys primarily from off-price stores. “I just think it’s a bigger bang for the buck,” she said.
Shoppers like Icken now expect to pay less than full retail, explained Rob Greenspan, a consultant in the Los Angeles apparel industry
“Everything’s on sale,” Greenspan said. “There’s coupons, discounts. So people are waiting for the cheaper price.”
Off-price retailers have become a bright spot amidst the doom and gloom of widespread closures of brick-and-mortar stores and online shopping’s growing dominance.
T.J. Maxx, Ross and others are expanding at a time when legacy department stores are shuttering locations. And discounters and shoppers who feel like they scored a deal aren’t the only ones benefiting from the new retail landscape.
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Wholesale distributors that help stock the shelves of places like Dollar General and Marshalls are also reaping big rewards.
Brett Rose is CEO of United National Consumer Suppliers (UNCS) out of Fort Lauderdale, Florida The company sources products for retail stores and online merchants.
“There’s no arguing that the retail landscape as we know it is changing,” Rose said. “You see a lot of going out of business signs. You see smaller footprints.”
These days, Rose said, off-price retailers order some merchandise specifically made for them.
Laura Icken and her son shop for shoes at a Nordstrom Rack location in Burbank. Icken said she is a former department store shopper but she now chooses discount retail chains first for their value and quality.
But they also stock their racks thanks to mistakes by manufacturers and large department stores. There may be an issue with sizing, or overproduction. Or, increasingly common, a store may be closing and have extra product left over after a liquidation sale.
That’s when UNCS swoops in, finding a new home for the merchandise, often with an off-price store that can tempt customers with prices slashed as much as 60 percent.
According to Brett Rose, it’s a growing business.
“Volume-wise, we’re doing twice the amount of transactions this year that we did last year,” Rose said. “And we’re on track to triple over the next 18 months.”
The retail transformation boosting UNCS is only accelerating. Fung Global Retail and Technology forecasts nearly 9,500 retail locations will close in the U.S. in 2017.
At the same time, discount retailers are adding stores. TJX, the parent company of T.J. Maxx and Homegoods, plans to open about 165 U.S. locations this year.
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