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Ollie's Bargain Outlet: Discounters are Evolving

Bracha Arnold
April 12, 2023
Ollie's Bargain Outlet: Discounters are Evolving

The discount retail industry is growing up. The sector is reaching far wider audiences and driving some of the fastest expanding brands in retail. Today, we take a closer look at Ollie’s Bargain Outlet, a closeout bargain retailer of discontinued, surplus, or overstock items.

Bargain Outlet Army

Ollie's Bargain Outlet began as an army surplus store in Mechanicsburg, Pennsylvania, in 1982. The chain, known for its irreverent approach to retail, sells a vast assortment of items, from home goods to toys and beauty products, often at steep prices that can dip as low as 70% off the original ticket value. The Ollie's shopping experience is a unique one, attracting customers who relish the excitement of the hunt and the satisfaction of scoring one-of-a-kind finds at low prices. 

And in the current inflation-market retail climate, budget-conscious shoppers are gravitating towards the chain, which is reaping the foot traffic benefits. Foot traffic to Ollie’s has been on a steady uptick, with visits increasing by 10.1% and 6.9% year-over-year (YoY) in January and February, respectively, and by 28.2% and 15.6% year-over-three-year (Yo3Y) in the same months. In contrast, superstores - faced with ongoing economic headwinds - struggled to exceed previous years' visits, with YoY visits declining by 3.9% in February. While dollar stores showed Yo3Y foot traffic growth in most months analyzed, Ollie’s was able to surpass even those impressive benchmarks. 

Ollie's impressive growth reflects its ability to differentiate itself from competitors, providing a unique shopping experience that resonates with consumers.

Christmas Spirit Spikes Visits

In addition to its year-round offerings, Ollie's sees significant seasonal visit spikes. The baseline change in visits from October 2019 shows that visits to the chain spike consistently every December. One reason for the holiday popularity is Ollie's positioning as a go-to destination for toys and gifts. In true closeout store fashion, the company even acquired the stock of Toys R Us and Babies R Us after the stores shuttered. And Ollie’s also invests back into the community during the holiday season, raising funds that the Salvation Army uses to purchase toys for underprivileged children.

Meeting Its Shoppers Where They Are

Ollie’s has been expanding its store fleet, growing from 330 stores in 2019 to 468 in 2022, and has no plans to slow down. The chain has plans to open 45 stores in 2023, with an eventual goal of doubling its current store count. And part of this expansion is likely driven by Ollie's value-priced merchandise, which attracts inflation-weary consumers who are trading down to more affordable options. 

Ollie’s strength is particularly notable in light of the demographic makeup of its visitor base.. The median HHI for shoppers within Ollie's trade area is $52,203, significantly lower than the nationwide median HHI of $62,843 – and lower-income consumers have been heavily impacted by the current inflation. But like other segments and brands that cater to lower-income audiences – including other dollar stores and off price leaders like Citi Trends – Ollie’s has increased traffic without losing sight of its core consumers. The current success of Ollie’s and of other retailers catering to lower-income shoppers indicates that companies that can maintain low prices and prioritize the needs of their consumers can thrive despite the economic headwinds.  

Bargain Basement Boom

Ollie's is betting that its ability to source products at a fraction of the price will continue to prove successful with its customer base. With continued store fleet expansion, Ollie's is poised to continue its success and evolve alongside the changing retail landscape.

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