Retail Blog: Week of 10/9/2017

As digital shopping grows, online retailers such as Amazon have continued to grow and thrive off of low prices, and their unmatched breadth of product offerings.  Although this is causing a general decrease in brick and mortar retail sales, many off price retailers such as TJ Maxx, Burlington, and Ross seem to be immune to this downward trend.  Why is this though? Well, the answer seems simple, even huge corporations such as Amazon cannot compete with their lower prices.

            While other department store retailers are fighting store closings and reduced sales, off priced retailers are expected to see an increase in sales from an industry wide $18 billion to $19 Billion.  This boost will in part be capturing some of the lost sales from big department stores as well as beating online competitors in price.  Since 2011 department stores have lost roughly $25 billion in sales combined and are on pace to lose another $22 billion over the next five years, which may be a big opportunity for these off price retailers.  Not only are sales up for these companies, but the stocks are too.  TJ Maxx stock is up more than 1 percent while Burlington takes the cake with having climbed more than eight percent in 2017. 

            With off price retailers being such a niche market, they also do not have to worry as much about online giants such as Amazon viewing their model as a big opportunity, keeping their market share relatively stable and difficult to penetrate.  Not only do these stores offer low prices, but also a treasure hunt type atmosphere that generates excitement for the shoppers.  This hunting type of experience is difficult to replicate in the digital world, which is another reason that it would not be very sensible for large corporations to try to join in on. 

            Overall, retail is following a downward trend, however off price retailers seem to be the shining star of the industry.  With their treasure hunt type atmosphere, and drastically low prices, these retailers seem to be clear of the digital giants that are wreaking havoc on brick and mortar stores.  At least for now.