The Clearance Store Rules Cheapskate America
PORTLAND, Ore. (TheStreet) -- Consumers are still as thrifty as ever after the recession: They're just not cheap.
Back in 2009, Framingham, Mass.-based TJX was still reeling from a security breach that put roughly 46 million of its customers' credit card numbers into the ether. The company was bloated with superfluous brands, the trust of its customers was waning and it looked like an overall odd fit on the retail landscape. By post-recession 2010, however, it sold off its Bob's Stores chain, did away with A.J. Wright and had shifted its focus squarely onto HomeGoods, T.J. Maxx and Marshall's.
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By tightening up security and letting its stores do what they do best -- sell irregular, overstocked name-brand items at a discount -- it curried huge favor with consumers for showing them actual value. The pricing helped, but consumers' knowledge that they were getting discounted goods without stooping to discount-store quality made a difference. TJX saw its share price more than double in the last five years as its stores increased foot traffic and the company increased its U.S. presence. In the last year alone, TJX has watched comparable store sales at T.J. Maxx and Marshall increase 2% as same-store sales at HomeGoods jumped 4%. In the last quarter alone, TJX added five T.J. Maxx locations, 11 Marshall's stores and six new Home Goods outposts.
Meanwhile, Pleasanton-Calif.-based Ross Stores found similar good fortune with its off-price department stores just after the recession set in. Twenty years ago, the chain had just under 300 stores in 18 states and a share price hovering just below a dollar. Today, it's Ross chain alone has 1,172 locations in 33 states, D.C. and Guam. That doesn't count its 137 dd's Discount clothing and furniture locations, or the 30 new stores it opened in June and July of this year alone. As with the TJX shops, shoppers flocked to its spare stores not for the aesthetics, but for discounts on products they'd ordinarily find at Macy's or Dillard's.
That would be a concern for a retailer like Seattle-based Nordstrom if it hadn't already embraced the off-price concept on its own. Nordstrom opened its first Nordstrom Rack outlet in Seattle back in 1995 with the dual intention of keeping both its overstock and irregular goods and a discount customer base in house. The stores had modest success, but there were only about 26 in the U.S. by the mid-'90s.