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
Shoshy Ciment/Business Insider
- 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.
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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.
“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.
Shoshy Ciment/Business Insider
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.
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.”