Can a failed department store find a second life as an off-price retail chain?
The headlines continue to tout off-price retail as the one space where department store retail can hope to thrive in a market that’s otherwise drying up. No doubt with that in mind, one longstanding traditional department store has decided to rebrand itself as an off-price chain.
In March, department store chain Gordmans was bought out of bankruptcy by Texas-based Stage Stores, according to Omaha World Herald. The new owners have said that they intend to turn the chain into an off-price retailer like T.J.Maxx or Burlington. The chain’s new owners plan to have the inventory in place for the coming back-to-school season. The chain is also planning on doing away with coupons, sales and promotions.
Gordmans is hardly the first department store chain to explore its options in off-price. Macy’s, for instance, rolled out its Backstage concept in 2015 to try to boost interest in the struggling chain (which had already grown deal-oriented in its mainline brand). And luxury retailers like Saks Fifth Avenue and Nordstrom have opened up off-price chains so customers can partake of the main brand’s luxury appeal at a lower price point.
The notion of getting a fresh start in off-price seems reasonable in light of research from the NPD Group last year which revealed that two-thirds of clothing shoppers shop in off-price outlets. But there are frequent criticisms of retailers making off-price moves.
One such criticism is that off-price concepts are bound to cannibalize a chain’s own customers, pulling traffic from the main concept and into the cheaper store. Committing fully to off-price rather than attempting to revive the chain’s mainline stores and add an off-price concept avoids this concern.
But there are other potential hurdles for Gordmans. The chain is entering into a market that’s getting more crowded as retailers recognize its popularity.
And the top names in the space are expanding their brick-and-mortar presences at a rate that’s surprising given the frequent observation that today’s retail world is over-stored. TJX announced last year that it was embarking on an expansion that would increase its store count from 3,700 up to 5,600, but did not give a timeline for when this would be complete.
- What’s left of Gordmans chain will become off-price retailer like TJ Maxx, new owner says – Omaha World-Herald
- Gordmans will face plenty of competition as it converts into an off-price retailer – Omaha World-Herald
- Are off-pricers immune to apparel’s challenges? – RetailWire
- What does it take to compete in an off-price retail world? – RetailWire
- T.J. Maxx, Marshalls and HomeGoods plan to open thousands of new stores – CNN Money
DISCUSSION QUESTIONS: Do you think Gordmans will find success rebranding itself as an off-price retailer? What will it need to do to pull it off? Do you expect other struggling department stores to follow Gordmans lead?