Which off-price retailers will withstand the test of time?
Many off-price retail chains are reporting same-store sales declines for 2017. Nordstrom Rack recently reported a sales decline of 0.9 percent and Hudson Bay’s off-price concept, Find @ Lord & Taylor, reported a 4.6 percent drop in sales in the past six months. In addition, Neiman Marcus closed 10 of its “Last Call” stores last year, leading MarketWatch to question whether off-price retailers are beginning to “cannibalize themselves” as a result of declining customer interest in the segment.
While on the surface the TJX machine appears to still be thriving, its consolidated same-store sales were stagnant in 2017. Compare this to a five percent increase in same-store sales last year and it looks like not even TJX is immune to the shifting retail tides.
And Nordstrom Rack? Despite the cautioning by retail analysts that the off-price segment is over-stored, CNBC reports that Nordstrom Rack is planning to open additional stores in both the U.S. and Canada in the coming year.
Many of the aforementioned retailers blame their sales declines on the recent hurricanes. Keeping cataclysmic weather events in mind, then, how these off-price retailers perform in Q1 of 2018 will give analysts conclusive evidence of whether the off-price segment’s heyday is coming to a close.
This begs the question of whether consumer interest in off-price concepts is indeed, on the decline. And, if so, which off-price retailers will be the last ones standing.
- Off-Price Retailers are Starting to Cannibalize Themselves – Market Watch
- The TJX Companies, Inc. Reports Q3 FY18 Results – Business Wire
- Nordstrom Shares Fall as Sales at Its Growth Engine Nordstrom Rack Stall – CNBC
DISCUSSION QUESTIONS: Has consumer interest in off-price shopping waned? How can off-price retailers differentiate themselves in light of increased competition for market share? If there’s a shakeout in the segment, which chains do you expect will continue to do well?