- Discount stores such as TJ Maxx and Ross Stores are known for being one of the few bright spots in retail.
- The two chains have a similar offering, selling well-known brands at 20-60% less than regular stores and offering customers a bargain-hunt shopping experience.
- Here's how the shopping experience at TJ Maxx and Ross Stores compares.
The American retail industry isn't dying — it's divided.
According to a survey by management-consultancy firm Deloitte, the most successful areas of retail are currently at the two extremes of of the spectrum: high-end and price-conscious stores. Stores that are trying to follow a "jack-of-all-trades" model are missing out.
The survey of 2,000 people showed that only 20% of consumers were better off in 2017 than they were in 2007, and 80% have less money to spend on shopping than they did in the past.
Consumers are hungry for bargains, and low-cost dollar chains and off-price stores are booming.
After comparing two of America's biggest dollar chains — Dollar Tree and Dollar General — we decided to put two of the best-known off-price chains in the US to the test.
Ross Stores and TJ Maxx have a similar premise: to offer well-known brands at discounted prices. Their wide selection of mismatched products means that they provide customers with a treasure-hunt shopping experience, which is hard to replicate online. In both cases, it's all about shopping in the store. While TJ Maxx has built out its online offering somewhat, Ross Stores has not — the only way to shop this store is on foot.
Despite their similarities, Ross Stores has outpaced TJ Maxx in terms of same-store sales growth. Same-store sales were up 4% in 2017, while Marmaxx – Marshalls and TJ Maxx – reported a modest 1% increase.
And this may well come down to price. According to investment-management firm Cowen, Ross Stores is cheaper overall. The average item at TJ Maxx costs between $14 and $15, compared to $10 at Ross, Bloomberg reported.
Here's how the shopping experience compares:
Our first stop was Ross Stores in Center City, Philadelphia. Ross is the largest single off-price retailer in the US. It has 1,432 locations in 38 states.
Ross has been hailed as a "retail treasure" by analysts, but our first impression wasn't great. The entrance to the store was blocked by construction work.
This store was split into two separate sections: women's on one side, and men's, kids, and homewares in another.
At the front of the store, there were signs that gently reminded shoppers not to open packages. It's instantly apparent that this is not going to be a high-end shopping experience.
Ross Stores has a tighter handle on inventory levels than department stores do. This means there are fewer markdowns, and new items hit stores more frequently.
Source: Morningstar
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