Are off-pricers discounting their online opportunity?
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
While many off-price retailers (TJX Cos., Ross Stores, Burlington, etc.) are looking to keep their main focus on physical stores, the online channel can complement the in-store experience.
“While [e-commerce] is a small part of our business, we see it as highly complementary to our physical stores,” said Ernie Herrman, TJX’s CEO in May as reported by Bloomberg News. “We are being methodical in how we grow this business.”
Yet T.J. Maxx’s e-commerce sales “hover at just one percent of the business’s total sales,” according to Bloomberg.
“I still think that the idea of finding personal treasures at the store is something [off-price retailers] need to capitalize on and that can drive e-commerce as well if executed in an online-friendly way,” said Mike Kim, Director at AArete, a global management consulting firm, in an interview with Retail TouchPoints.
Some ways off-price retailers can keep the fun of the in-store hunt alive include:
- Offering exclusive promotions from the e-commerce platform to drive people to the stores;
- Having an easy to navigate store locator; and
- Developing unique content that inspires consumers, such as how to style items, tips on finding treasures in stores, etc.
Mr. Kim also asserted that an imaginative retailer could create an online version of a treasure hunt.
Of course, there are challenges to having a seamless online and offline off-price business. Aside from the inventory’s velocity, the need to align prices across channels and show the levels of inventory at brick-and-mortar stores in real time isn’t easy for any retailer.
“I would suggest a hybrid approach, where a consistent supply of certain items utilized by an e-commerce approach, while also maintaining the personalized level of treasure hunting at the brick-and-mortar store for items that are highly fluid,” Mr. Kim said. “Focus on the distribution of brands that are high margin consistently over time and adapt that inventory to the omnichannel approach. That way, it minimizes disruption, given the speed at which items move.”
- The Off-Price Retail Boom: Lessons For All Retailers – Retail TouchPoints
- How One Huge American Retailer Ignored the Internet and Won – Bloomberg
DISCUSSION QUESTIONS: Do you see ways for off-price retailers to bring their in-store treasure hunt experience online? What challenges do they face in developing complementary e-commerce offerings? Should the main focus of off-price sites be driving customers to their physical locations?