Off-price

The discount amount is 60-65% on average, reaching up to 90% of the initial price of similar products in brand stores of their respective trademarks and multi-brand boutiques.

[1][2] Off-price retailers sell products by popular brands, purchased directly from their trademark owners, distributors and manufacturers.

This model keeps off-price networks protected from goods of unknown origin, guarantees their quality and ensures competitive pricing when placed beside other points of sale.

[4] As a rule, off-price retailers purchase huge supplies consisting of various products from their respective brand owners, with no strict requirements to the depth of their lineup (having all sizes available in stock) and collection completeness, which enables them to get more profitable terms for deals.

Traditionally, shopping in off-price stores is referred to by the term "treasure hunt", reflecting the concept of the format: customers searching for original branded products at their lowest ever price.

The industry can be traced back to the year 1909, when a special shopping area was opened in a ground-floor at a famous Boston department store, Filene's.

In the 50s, a huge amount of clothing, footwear and other sewn products were manufactured locally, and by the end of the season factories were prepared to announce substantial cut-offs and sell the unsold remnants on their own.

Small business entrepreneurs would buy products out at wholesale prices and arranged their own retail sales in vacant factory workshops and other rooms that were cheap enough to rent.

[11] In 1956, U.S. businessman Alfred Marshall put together a think tank of entrepreneurs and suggested the launch of a start-up with the concept of “brands at lower prices”.

Having observed a post-war economic boom and the development of the American suburbs, they decided to capitalise on these phenomena to establish new business.

They opened a self-service department store in Beverly in order to propose clothing and household products at tempting lower prices.

Part of the area was given away to be subleased by third-party footwear, accessories and active sport product dealers, but that division wasn't visible to customers.

Zayre Corp, aware of this new concept store and its rapid growth, took over Hit and Miss in 1969 with a view to maintaining their own fashion aspirations.

[15] Due to the volatility of U.S. Economy in the 1970s and the recession that had brought about significant change in customers' attitude to expenses, the off-price industry was gaining considerable momentum.

These stores became popular overnight, offering quality clothes at reasonable prices and a constantly updated range of products to the USA’s growing population.

[16] A few years after these events, Zayre Corp began to develop yet another line of business, – by providing customers with the opportunity to purchase goods through catalogues via the postal service.

The then founder of the company, Remy Adrion, bought a huge supply of clothing directly from a factory on the brink of closure.

The global leader of the sector is TJX Companies, as of 2019 owning more than 4,300 off-price hyper malls (the total area is more than 110 million square feet), split between its six retail networks (TJ Maxx, TK Maxx, Marshalls, Winners, HomeGoods, Homesense) in nine different countries (U.S.A., Canada, Australia, Great Britain, Ireland, Germany, Poland, Austria and The Netherlands).

[31] Cumulative off-price retail turnover in Europe, including the revenue from network online shops exceeds 5 billion euros.

This segment is also represented by the networks of Burlington, Nordstrom Rack, Tuesday Morning, Century 21, Saks Off 5th and Macy’s Backstage.

TJ Maxx and Marshalls (as well as other networks included in TJX Companies) offer discounts of 20-60% compared to regular retailers.

Initially it only sold baggages, but it gradually widened its assortment to include clothing, footwear, jewelry, accessories and household appliances.

The latter network was founded in 2004 for consumers with a more moderate income than typical Ross Dress for Less customers, and it is represented by goods from more democratic trademarks.

[38] Century 21 closed all of its locations by Sunday, December 6, 2020 as a result of Insurance companies failing to financially support the chain during the COVID-19 pandemic.

Saks OFF 5TH network operates over 100 stores in the United States, and offers women's, men's and children's clothing and footwear, and also accessories and household products from over 800 premium brands.

A division of TJX Companies representing an off-price household goods’ network in the country operates under the brand HomeSense and has 117 stores as of early 2018.

Brands found in the network include Nike, Adidas, Puma, Superdry, Fenty by Rihanna, Ben Sherman, Billabong and Paul Frank.

[41] In the CIS area (Commonwealth of Independent States) the off-price segment as of the year 2018 is dominated by mostly Russian and Ukrainian retail networks.

[46] The company began activity in 2000 as a network of department stores providing sales for the whole family and a wide range of clothing and footwear from popular Russian and foreign trademarks.

An annual Off-Price Show takes place in the Philippines, for example, which reminds of the U.S. “factory sales” that date back to the mid 20th century.