TJMaxx: Designer brands walk away from discount stores like Marshalls and Burlington amid supply chain issues, increased demand

TJMaxx: Designer brands walk away from discount stores like Marshalls and Burlington amid supply chain issues, increased demand

Bummer for bargain-hunters: It may be more difficult to find designer clothes at TJ Maxx or Burlington.

These discount chains thrive when there’s a surplus of clothing on the market. They can purchase excess stock of premium apparel and shoe companies for cheap and then sell it to their customers at bargain prices. The problem right now is that there’s very little unsold clothing.

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The supply chain is clogged and brands don’t have much extra stuff to dump. Brands don’t need to sell merchandise at full price because of their low inventories and high customer demand.

Ralph Lauren, Carter’s, Steve Madden, and Ralph Lauren are just a few of the brands that have stated in recent weeks that they’re withdrawing from discount chain, sometimes called “off-price” stores. Levi’s is also closing its discount stores.

These brands had been trying to move away off-price businesses even before the pandemic. Off-price stores are the least profitable for brands. Too many products at a discount can also dilute brands’ image and reduce their pricing power over customers. These brands want their products to be sold through their factories, wholesale partners, stores, and websites. They are more profitable.

“Off-price is a last resort,”Susan Anderson, a retail analyst from B. Riley Securities, said that. She stated that discount stores could suffer long-term if they have less stock.

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Fashion and footwear brands have been able to increase their efforts during the pandemic to move away from discount stores. Because of the large imbalance between supply & demand, they’re able pull it off now.

“We have reduced the amount that we’re selling to the third-party off-price channel,”David Bergman, Under Armour’s chief financial officer, stated this on an earnings conference this month. “Those partners would like more product.”

If Under Armour sells to discount chains, they will be “going to pay a little bit more to us”Bergman stated that Under Armour has less product available to ship.

Carter’s is shipping less baby items to TJ Maxx Marshalls Burlington and Ross this yea. Carter’s sales to off price stores have decreased by nearly half compared with 2019, CEO Michael Casey stated on an earnings call last week.

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Carter’s will no longer deliver to discount chains. Instead, Carter’s will use its own stores and website to unload excess inventory. Or it will keep the products and sell them during a different season. A spokesperson for Carter’s stated in an email that Carter’s will not be delivering to discount chain customers. Carter’s is also reducing the number of products it sells, making it less attractive to off-price retailers.

Ralph Lauren has “significantly reduced”A spokesperson said that it is sending TJ Maxx a large amount of inventory. Ralph Lauren has rescinded its commitment to TJ Maxx by limiting the number of products it makes.

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Steve Madden is also reducing the amount of inventory it sells to off-price shops because it must allocate its limited supply.

“Our first priority is always feeding full-price channels,”This month, CEO Edward Rosenfeld spoke on an earnings call.

TJ Maxx tells you not to worry: Stores are coming! “frequently updated with new and on-trend items”Customers will find a wide range of home decor and gifts during the holiday season at its website. “ever-changing mix of merchandise,”A spokesperson for the company stated this in an email. Burlington declined comment. Ross Stores declined to comment.

Still, “quantities of seasonal goods look lower than normal”Jay Sole, UBS retail analyst, stated in a November 8 research paper that there were off-price chains at Ross and Burlington. He noted that sportswear from top brands was less readily available than usual.

The stocks of off-price chain stores have been slower than the S&P 500’s retail market index, which has increased 18% since 2021. TJ Maxx parent TJX has a flat stock this year, Burlington has risen 2%, Ross has fallen 6%

Outlet stores of some companies are less likely to stock certain goods, such outdoor equipment retailer REI.

REI is seeing strong outdoor product demand, so there’s plenty of opportunity. “very little product leftover”Ben Johns is REI’s general merchandise manager for action-sports and he told CNN Business that REI would sell at its outlet stores.

Half of REI’s bicycle business – including helmets, apparel, parts, maintenance products, and bikes for cyclists, as well as car racks and accessories – has been derived from full-price sales. This year, it has risen to over 90%.

Johns said: “What we have we just simply sell full price.”

The-CNN-Wire ™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

The video in media player above was used in an earlier report.

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