TJ Maxx, Walmart, and Target, and other big-box and deep discount retailers will likely boom say experts, thanks to a focus on value, safety, and efficiency
Experts say that a post-pandemic world will have more shoppers focused on value and efficiency. That's good news for deep-discount and big-box retailers like TJ Maxx and Walmart that offer products from a wide array of categories at lower prices. The safety factor will also play an important role in this trend, as people look to lessen the amount of time they spend shopping in stores. Visit Business Insider's homepage for more stories.
The pandemic has permanently altered the way people shop. But beyond a more obvious emphasis on e-commerce in general, experts say a desire for efficient and safe shopping is likely to become the norm — and that could be good news for deep-discount and big-box retailers like TJ Maxx, Walmart, and Target. For deep-discount — or off-price — chains like TJ Maxx and Ross, having diverse categories of merchandise will be a major benefit moving forward. Read more: Here's why department stores like Nordstrom and Macy's are banking on deep discount models as TJ Maxx and Marshalls emerge as winners in the pandemic "The assortment in a lot of these off-price retailers almost mirrors a mall within a store," said Brett Rose, the founder and CEO of United National Consumer Suppliers (UNCS), which globally distributes manufacturers' overstocks and closeouts to discount retailers. "Walk into a [TJ Maxx] and with a few exceptions, there's no categories you can't find. Food, lawn and garden, stationery, intimates — it's all there." To Rose, whose company sources merchandise to retailers like Home Goods, Macy's, and Sam's Club, off-price chains with a larger variety of merchandise in their stores will benefit from a new trend among consumers that will focus on shopping mainly for essential items.
In a livestreamed Zoom conversation with CEO of the National Retail Federation Matthew Shay, CEO of Tractor Supply Company Hal Lawton offered a similar analysis. He said that the retailers that offer products from multiple different categories will likely be the leading destinations for shoppers of the future. "Customers don't want to go to a retailer where they can only buy one category," he said, according to a CNBC report. Lawton, whose company has been a top-performing retail stock on the S&P 500 amid the pandemic, also said that the shopping trends picked up during this time are here to stay, namely the tendency to order online and opt for curbside pickup. Such options offer the dual benefit of saving time and allowing for less interaction in the store. More shoppers might not translate into more foot traffic This renewed focus on efficiency and away from a "browsing" mentality is likely to drive more people to opt for stores like Walmart and Target that conveniently offer a wide array of essentials. And while this trend could mean more business for these stores, the boon might not necessarily translate into heavier foot traffic. "I anticipate that traffic will be down but that conversion rates and average basket size will likely rise," Neil Stern, a senior partner at the consulting firm McMillanDoolittle LLP, told Business Insider in an email interview. "This could be a net positive for retailers best positioned to gain [from] these trips which does include the discounters." Stern said the rise in e-commerce could also contribute to a change in consumer habits and like Lawton, said he expects curbside pickup to become an important feature in shopping moving forward, thanks to its emphasis on safety and convenience. More shopping online and the tendency to come to the store for larger, less frequent trips translates to less foot traffic in these stores overall. Read more: Grocery stores, Target, and Walmart could save shopping malls by filling the void left by dying department stores Despite predictions for less traffic, data from a June report from the foot-traffic tracker Placer.ai shows that off-price stores like Burlington Coat Factory, Ross, and TJ Maxx have rebounded in foot traffic since the reopening process began in May, exhibiting a quick return to "normalcy" in terms of visits. "The combination of pent up demand, their value orientation, the excitement about an increased inventory from a missed season, and the continued pull from the 'treasure hunt' element of their offering is incredibly compelling for consumers," read an addendum to the report that was shared with Business Insider. However, the rush to return to stores that has characterized the off-price sector as of late might not be mirrored in other sectors. According to Vicki Howard, a retail historian and lecturer at the University of Essex who authored the book "From Main Street to Mall: The Rise and Fall of the American Department Store," people fearing for their safety will likely be a major theme in shopping habits moving forward and could also impact how and where people choose to shop. "For some, however, small or local retailers might seem a safer option," Howard wrote in an email to Business Insider. "It really depends on how the stores set up social distancing and handle crowds as well."SEE ALSO: Here's why department stores like Nordstrom and Macy's are banking on deep discount models as TJ Maxx and Marshalls emerge as winners in the pandemic Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
More like this (3)
September may seem early to be thinking about the holiday shopping season, but retailers are already...September may seem early to be thinking about the holiday shopping season, but retailers are already acknowledging that it will be transformed in fundamental ways.
Target, Kohl's, and Nordstrom are rolling out holiday deals before Thanksgiving, killing the shopping season as we know it
For many retailers, the holiday shopping season will begin well before Thanksgiving this year. Retailers want...For many retailers, the holiday shopping season will begin well before Thanksgiving this year. Retailers want to avoid crowds and large order volumes that could lead to delays. Complicating matters, UPS, FedEx, and the US Postal Service have all announced surcharges on holiday shipping that will go into effect later this year. Visit Business Insider's homepage for more stories. This year, shoppers might start to see holiday deals roll out alongside leftover Halloween candy. A growing number of retailers have said that due to the coronavirus pandemic, they will shift the timing of their holiday promotions to avoid the usual rush in November and December. Target recently said that it would close its stores on Thanksgiving and start rolling out its holiday deals in October. During the company's earnings call on August 19, CEO Brian Cornell said Target would have to "stay nimble" to adjust to a "very different holiday season." "We're going to put a big premium on ease and convenience, delivering great value, but will emphasize safety. And we'll also make sure that our guests knows that those top items and that great value is going to be available throughout the season," Cornell said, emphasizing that the store's same-day fulfillment options would give shoppers flexibility on the timing of their shopping. Black Friday as a shopping holiday has been declining in importance over the last several years as spending continues to move online and discounts become more prevalent year-round. Still, beginning holiday deals in October represents a big shift to a seasonal schedule that usually sees retailers double down on the period between Thanksgiving and Christmas. A number of retailers, including Walmart and Best Buy, have joined Target in saying they would keep stores closed on Thanksgiving. Nordstrom said in its own earnings call on Tuesday that while it would likely stop short of decorating stores for Christmas before Thanksgiving, it would make gifts available earlier in the fall than usual. "I think it's pretty clear that there's an opportunity for us to sell gifts prior to Thanksgiving," Pete Nordstrom, president and chief brand officer at Nordstrom, said during the call. The changes aren't just about physical stores, though. Shipping volumes have been unusually high as consumers opt to shop online and largely stay home amid the ongoing pandemic. Victoria's Secret and Bath & Body Works parent L Brands similarly said in earnings that it would spread its holiday promotions over a longer period of time rather than concentrate them in the fourth quarter, when it typically sees the "majority" of its annual sales and profits due to gift-buying. The company said it would do so because of "traffic constraints imposed by social distancing protocols in stores and capacity restraints in our direct channel distribution centers," adding that it had a "very cautious outlook about our ability to manage our typical holiday volumes." Complicating matters, UPS, FedEx, and the US Postal Service have all announced surcharges on holiday shipping that will go into effect later this year. Spreading deals out over a larger period of time could help retailers better manage the impact of those surcharges. In Kohl's earnings call, CFO Jill Timm referred to the surcharges as a "headwind" and said the company is working through alternatives to avoid them. Kohl's is also looking to get holiday shopping going in October. The pandemic has disrupted the usual retail calendar in more ways than one. The back-to-school shopping season, for example, doesn't seem to have provided the sales surge that certain retailers usually see, as distance learning has continued for many students across the country. Abercrombie & Fitch CEO Fran Horowitz told CNBC that she expects both back-to-school and holiday shopping to stretch on for longer than usual. She called the trend a "flattening of the curve." "Maybe the peak [around] Black Friday isn't as big, but there is still a lot of opportunity in December to do a lot of business," Horowitz told CNBC. SEE ALSO: Victoria's Secret parent L Brands warns it might not be able to handle the holiday rush, as retailers plan for a shopping season unlike any other Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid