May 29, 2024
Off Price Retail

Rise of Off Price Retailing in The United States

The retail industry in the United States has seen massive transformations over the past few decades. The way consumers shop and the shopping channels they prefer have drastically changed. One major shift that has taken place is the rise of off price retail stores that offer brand name merchandise at significantly discounted prices every day. What started as just a few stores has now grown into a dominant force in retail, eating into the of traditional retailers.

Off Price Model Gains Traction

The off price retail model first took shape in the 1960s with stores like TJ Maxx and Marshalls sourced overstock and irregular inventory from major brands and sold them at 20-60% below regular retail prices on an ongoing basis. This novelty attracted many value-conscious customers who were able to get well-known labels at very low costs. Seeing the success of these early players, several other chains adopted the off price model in the following decades like Ross, Burlington, and Nordstrom Rack.

By the 1990s and early 2000s, off price retail had found its niche. Chains doubled down on their discounting strategy and inventory sourcing abilities. Stores were given makeovers to enhance the shopping experience. An entire generation of new customers grew up knowing these retailers as a go-to destination for great deals. According to industry reports, off price retail accounted for only 5-7% of the total U.S. apparel in the 1990s, but climbed to over 10% by 2010. Brands too saw value in partnering with these retailers to liquidate excess goods.

Dominating the Retail Landscape Today

Cut to the present, off price retail has truly come of age. It now commands an estimated 14-15% in the U.S. apparel industry valued at over $340 billion. Chains like TJ Maxx, Ross, and Burlington have thousands of stores across the country and generate annual revenues of several billion dollars each. Traditional department stores and specialty retailers have lost significant business to them over the years, struggling to compete with the deep discounts regularly offered.

The off price model has remained the same – offer constant assortment of top brands across categories like apparel, home goods, accessories at prices typically 20-60% lower than regular MRP. But, the scale, sophistication and experience of these retailers have increased multifold. Advanced inventory systems and logistics enable stores to deliver a wide range of constantly changing merchandize within days. Partnerships with major designers and brands ensure ready access to surplus and irregular inventories in huge volumes. Stores are given stylish makeovers to enhance the treasure hunt experience of finding great buys. Next-day delivery and BOPIS options further boost customer convenience. Robust loyalty programs and exclusive member perks have also helped increase customer retention rates.

Off Price Continues to Win Customer Hearts

What truly makes off price retail such an attractive business is it caters directly to the sweet spot of what consumers want. In today’s economy, value and discounts are highly sought after. People want great quality items from their favorite brands but do not want to pay full retail prices which are increasingly seen as inflated. Off price retailers satiate this need beautifully by delivering high-quality designs at significant savings on an everyday basis.

The thrill of the treasure hunt experience and finding unexpected bargains also makes shopping here highly enjoyable for many. Limited quantities mean items sell out faster, adding to the urgency. Great deals combined with a fun shopping environment work wonders in gaining repeat customer visits and loyalty. It’s no wonder that according to a recent customer survey, 81% of off price shoppers described themselves as extremely satisfied with their experience. The model clearly resonates strongly with a wide consumer cross-section.

Future Growth Drivers

With increasing popularity and dominance cemented in the U.S., off price retail appears primed for continuous expansion going forward as well. Several factors are expected to fuel the sector’s growth trajectory:

– Rising Popularity of Value Shopping: As inflation and costs of living increase, value and discounts will become even more important for shoppers. This benefits off price retailers immensely.

– Younger Generations: Millennials and Gen Z have completely embraced off price due to affordability and enjoyable shopping. As they gain more spending power, these cohorts will drive higher sales volumes.

– Store Network Expansion: Major chains are rapidly opening new locations in underserved to penetrate deeper into regions. International expansion is also on the cards.

– Omnichannel Presence: Digital initiatives like websites, mobile apps, BOPIS/BOGO are enhancing accessibility and convenience. This will attract more customers.

– Deepening Brand Partnerships: As inventory needs of retailers grow, off price is an appealing liquidation channel for brands too. Win-win partnerships will be strengthened.

– Supply Chain Agility: Advancing supply chain management will ensure uninterrupted flow of desirable inventories in stores nationwide.


  1. Source: Coherent Market Insights, Public sources, Desk research

2. We have leveraged AI tools to mine information and compile it