Why shoppers are flocking to off-price retailers like T.J. Maxx

By Suzette Parmley  |  October 24, 2016  |  Boston Herald

PHILADELPHIA — Tabitha Dardes dresses stylishly, holds a good-paying job and lives in a tony suburb.

So how come she’s a regular at T.J. Maxx?

“It’s more like treasure hunting,” she said.

As Dardes spoke, she looked at a mirror while holding up a suede, camel Calvin Klein knee-length dress with a $69.99 price tag; it originally retailed for $120. The dress eventually made it into her nearly full cart.

“I love the selection,” Dardes, 54, a public relations director, said, noting she visits a T.J. Maxx once a week. “It’s cheaper than department stores.”

Therein lies the not-so-subtle reason so many department-store chains — from Macy’s, J.C. Penney and Sears to Aeropostale, Victoria’s Secret and the Gap — are shuttering stores.

Internet shopping is one reason for their slide. The Pew Research Center said 68 percent of Americans now own a smartphone — an increasingly popular tool for shopping.

But retail experts say off-price retailers — such as TJX Cos. (which owns T.J. Maxx and Marshalls), Ross Dress for Less, Burlington Coat Factory and Nordstrom Rack — have replaced mainstream mall players and taken the hearts and wallets of middle-income shoppers.

“The challenge is that American consumers went into frugality mode during the recession, and though the economic news is much better now, they still have largely not emerged,” said Garrick Brown, vice president of Retail Research of the Americas at Cushman & Wakefield. “Luxury and high-end retail bounced back within about 18 months of the recession. Discount and off-price thrived” as well, Brown said.

“But mid-priced retail hard-goods players got hammered,” he said, “because so many of the goods they offered could be found online, as well with Amazon and other pure-play e-commerce players.”

Moody’s Investors Service predicts that the same four value-oriented chains will “continue to outperform the apparel retail segment over the next five years.”

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