Not your Mother’s Discount Store // With off-price retailers becoming increasingly popular, sourcing also becomes more diverse. Is that “designer dress” you’re nabbing really such a great metziah?

A few weeks ago, I went to a store to get some new spring clothes for my girls. When I walked in, I noticed that a lot of winter coats were still hanging on the racks. Sale season was over, and customers were streaming in looking for merchandise for the warmer weather. It was only a matter of time until the store needed more space to display its new stock, and those coats would be packed away.
What a shame. Those extra coats represent a loss for the store owner. This made me wonder: What happens to merchandise when it hasn’t been sold by the end of the season?
By the time you get to the end of this article, the mystery will be solved. But first, let’s go back to the beginnings of the off-price retail market and its evolution over the years.

Baruch Hashem, we live in our own bubble of society, where retail is strong and there’s an ever-present demand for new stores and shopping centers to keep up with the growing Jewish population. But if we venture out of our immediate neighborhoods and head to the malls, it’s obvious that this is not the case everywhere. Department stores are not the bustling centers of commerce they were when I was growing up. Frankly, they feel eerily depressing.
In 2020, JCPenney, Lord & Taylor and Neiman Marcus declared bankruptcy and closed many of their stores; in fact, some 40 percent of all department stores in the country have closed since 2016. Even Macy’s and Nordstrom have experienced a sharp decline in sales, and another 800 department stores are expected to close by 2025. If you’ve walked through one lately, you can sense it. There’s a dearth of people and merchandise that makes you feel as if you’re looking at a relic of a bygone era.
This decline, however, has not been experienced by off-price retailers, which are actually in greater demand. TJ Maxx (which also owns Marshalls and Home Goods), the country’s largest off-price retailer, saw sales go up by 23 percent in the fourth quarter of 2021 compared to the same quarter in 2019. And other off-price retailers are experiencing similar bumps.

Gerald Storch is the CEO of Storch Advisors, a global business and management advisory firm. After starting his career with the consumer goods advisory group McKinsey & Company, he went on to serve as CEO of some of America’s biggest retailers—think Saks Fifth Avenue, Toys “R” Us and Target—before returning to the advisory business.
“Back in 1990, TJ Maxx was one of my clients,” he recalls. “They had conducted a thorough study and concluded that the maximum number of stores they could successfully operate in the country was 500. ‘Why is that?’ I asked them. ‘Because that’s all we think the market can handle. There’s only so much off-price merchandise to be had.’ Needless to say, they were wrong, and they now have thousands of stores. That’s because it used to be thought that off-price retail appealed only to certain demographics. But the truth is that value isn’t specific to income or class. Everyone wants to get a good deal.”

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