Off-Price Retailers need not fear Amazon

All manner of retailers are losing sleep over Amazon — but not the off-price players.

These days, two-thirds of consumers buy their duds at off-price retail chains likeT.J. Maxx and Nordstrom JWN -0.56% Rack, according to a new report from The NPD Group, the global market research firm.

Indeed, off-price merchants, which sell high-profile brands and designer goodsfor 20% to 60% percent below department and specialty store prices, represent 75% of apparel purchases across all retail channels, according to NPD’s receipt mining service Checkout Tracking, which analyzes store receipts and tracks consumer-purchasing behavior over time.

“Off-price retailers are resonating with fashion and cost-conscious consumers alike, and are stealing department store business for good reason,” said Marshal Cohen, chief industry analyst for The NPD Group, in a statement. “Off-price is second only to the online channel in terms of growth rate.”

Shopping visits made to off-price retail stores — whether a purchase was made or not— increased by 4% in the year ending April 2016, compared to 2015. In the same period, off-price retailers converted 50% of consumer shopping visits into a purchase, according to NPD’s Shopper Insights Service, which tracks where and how consumers shop, measuring traffic, shopping conversion, demographics, and other variables.

And the appeal of these stores is only poised to grow. Shoppers ages 45 and above account for more than half of the sector’s apparel buyers. This age group as well as older Millennials ages 25 to 34, which account for 16% of off-price apparel buyers, both increased their share of the sector’s clothing purchases, Checkout Tracking says.

No doubt Amazon’s “explosive growth” and online shopping are eating into sales and margins at both brick-and-mortar stores and malls, said Oliver Chen, retail analyst with Cowen & Co., in a July research note. But stores such as T.J. Maxx,Burlington Coat Factory and Ross Stores ROST +0.26% are “un-Amazonable,” he said.

From: Forbes