Off-price apparel has been a retail bright spot over the past few years. With consumer spending intentions the highest they’ve been in a year, we checked in with the category to see how it is faring as the critical Back-to-School season progresses.
Visits: Growing Steady
Off-price apparel has been among the best-performing brick-and-mortar apparel segments over the past few years, offering shoppers budget-friendly options along with the thrill of the bargain hunt. The category has been outperforming the wider apparel segment, with leading off-price retailers seeing regular visit growth even relative to their already strong 2022 performance – and the ongoing Back to School season appears to be driving an even bigger boost.
T.J. Maxx and Marshalls, both part of the TJX Companies family, showed strong year-over-year (YoY) growth every month analyzed, and June and July visits were particularly elevated as Back-to-School shoppers drove traffic. Burlington and Ross also enjoyed steady visit growth throughout the analyzed period, with the YoY increases also picking up in June and July.
But even within this highly successful category, one brand stood out from the pack – Ross-owned dd’s DISCOUNTS, known for its moderately priced product assortment, outperformed the other four off-price chains in April, May, and June. The chain’s visit growth is likely partially driven by parent-company Ross’ aggressive expansion plan, which includes opening 25 new dd’s Discount locations in fiscal 2023.
Discount Demographics
Comparing the True Trade Areas of off-price stores with the trade areas of traditional apparel retailers can provide insights into the demographic characteristics of off-price shoppers. According to the STI: Popstats dataset, the median HHI in the trade areas of off-price venues nationwide in June and July 2023 stood at $68.0K/year – almost 10% lower than the median HHI in the traditional apparel segment. The trade areas of off-price venues nationwide also tended to have a larger household size – 2.68 people per household – than the trade areas of traditional apparel stores, where the average household size was 2.62. These metrics may help explain the segment’s success during Back-to-School shopping as larger, more budget-conscious families looking for deals on children’s clothes, backpacks, and other supplies drive off-price visits during this time of year.
Understanding who is more likely to visit an off-price chain can also help chains think outside the box to reach their customers, perhaps by offering steeper discounts on family necessities. And with many of these chains either expanding their store fleets or planning on doing so, adding units in areas with families who earn slightly less than the nationwide median can be a strategic business decision.
Off-Price Dominance Continues
Off-price shopping has become one of the most reliable ways for consumers to get their hands on great products for a fraction of the price. And while T.J. Maxx, Marshalls, Ross, and Burlington proved highly popular in times of rising prices, their strong visits highlight their staying power no matter the economic climate.
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