With impending inflation adversely affecting so many retailers, especially in the luxury apparel and home goods sectors, expect the off-price department stores to benefit with the lure of lower cost items. These types of stores, which carry sought-after brand name merchandise at steeply discounted prices, have a wide-ranging appeal to all customer segments from the penny pinchers to the aspirational middle-class audience, to the upper middle-class shoppers who have grown accustomed to brand-name luxury but are forced to curb their discretionary spending. These off-price stores allow consumers to engage in a guilt-free shopping experience, whether it’s for clothing, makeup, jewelry, shoes, handbags, toys or home décor.
Because the audience is so large for these off-price retailers, all forms of real estate in all types of markets are attractive to these brands. Look for grocery-anchored centers and neighborhood power centers in suburban areas to be especially sought after, in addition to standalone buildings, regional mall spaces and even urban street-front sites. Because so many of these off-price brands are in growth mode, expect spaces of struggling or recently bankrupt retailers, such as former Bed Bath & Beyond, Stein Mart, Tuesday Morning or Pier 1 Imports sites, to be ideal spots for new stores. The leaders in this category that are projecting strong expansion include Burlington, Ross Dress for Less and its sister brand, dd’s DISCOUNTS, as well as the TJX Companies’ brands: T.J.Maxx, Marshalls, HomeGoods, Homesense and Sierra.
Burlington, which primarily caters to the lower- to middle-income customer, anticipates opening up to 80 new stores in 2023, and hopes to increase its new store count to 100 in 2024 and beyond. All markets throughout the country expect to see store growth, with upcoming new unit expansion to be especially strong in Florida, Georgia, Pennsylvania, Michigan and untapped markets in California and Texas. To reduce operating costs, Burlington continues to shrink its store size, and now seeks space in the 25,000-s.f. range. Just three years ago, Burlington’s average store size was 35,000 s.f., and in 2017 it was 50,000 s.f. Because of its smaller sized stores, inline spaces of strip malls will be considered, as well as freestanding buildings and spaces in power centers or regional malls. Co-tenants can include other discount value-type brands, such as Hobby Lobby, Bob’s Discount Furniture and Dollar Tree, in addition to family errands brands, such as PetSmart or Aspen Dental. Burlington carries a wide range of reduced-price products, including clothing for men, women and babies, as well as footwear, accessories, toys, furniture and home décor.
Ross Dress for Less is anticipating opening 50 to 55 new stores for the remainder of 2023, and projecting 75 new stores for 2024. Look for Ross to open multiple stores by mid-2023 in Michigan, a new state for the brand, beginning in White Lake Township and Southgate.
Also, the brand will be building a new distribution space in Buckeye, Ariz., which hints at further growth into the greater Phoenix area, especially the growing regions in the West Valley portion. Ross will also target underpenetrated markets in states where it already has a presence, especially in Texas, where Ross completed another distribution facility in the town of Brookshire last year. Also look for Florida, California, Ohio, Illinois and Virginia to be hot for growth, especially the latter two states which were first penetrated in 2019.
Ross looks for retail space in the 25,000- to 30,000-s.f. range, in neighborhood power centers, traditional shopping centers, and regional malls in urban and suburban communities with a middle- to higher income population sector. Preferred co-tenants can include other discount-oriented brands, including Dollar Tree and Old Navy, as well as high-traffic retailers such as Ulta Beauty, Bath & Body Works and Barnes & Noble. Ross Dress for Less sells bargain priced popular label items, including clothing, accessories, jewelry, shoes, beauty products, bedding, kitchen, home décor and toys.
Ross’ sister store concept, dd’s DISCOUNTS, will continue to grow at a rate of about 25 new stores per over the next two years, with the brand especially focused on expansion into the new state of Wisconsin, in addition to further growth expected later this year in Indiana, which dd’s first expanded into in 2020. Later this year, expect San Jose, Calif., Canoga Park, Calif., and Laurel, Md., to all get new dd’s DISCOUNTS units. The dd’s DISCOUNTS spaces tend to be in the 18,000- to 25,000-s.f. range, in inline units of strip malls within densely populated suburban and urban areas where a large proportion of the population is in the lower to moderate income bracket. Co-tenants can include Ross Dress for Less, in addition to convenience stores, such as 7-Eleven, or other discount-oriented stores, such as Aldi or 99 Cents Only Stores. The budget-friendly brand, which features prices that are even more discounted than its Ross counterpart, sells fast fashion clothing in addition to bed and bath products, kitchen supplies and home goods.
Over the next eight to 10 years, TJX Companies will open at least 150 new stores per year. For 2023, TJX will open between 45 and 50 of its T.J. Maxx and Marshall’s stores, each, and open between 15 and 20 of its HomeGoods, Homesense and Sierra stores, each. TJX will be especially bullish with future growth in the upper Midwest region, as the company just finalized plans to open a new fulfillment center in Union, Ohio. Overall, Marshalls is showing expansion trends in states along both Coasts, with Florida, Georgia, North Carolina, Virginia and Oregon all seeing new units, in addition to untapped areas in Texas, Arizona, Pennsylvania, Kansas and Michigan. T.J. Maxx is also expected to open new units in many of the same states as Marshalls, with the additions of Colorado and New York on its radar. HomeGoods will expand in those states where it is still underpenetrated, including areas experiencing population growth in Idaho, Kansas, Kentucky and Texas. Homesense, which originated in Canada, will continue to grow new units along the Northeast. Sierra will continue to open new units in the Midwestern and Northwestern states, with Idaho, Kansas, Washington and Oregon all underpenetrated for the brand.
The TJX collection of stores tends to attract a more upper middle-class customer who is interested in finding brand name labels at heavily discounted prices, in addition to the lower- and middle-income audience. All of the TJX brands expect to continue to open in spaces between 20,000 and 30,000 s.f., in high-traffic power centers or strip mall locations, in urban and suburban communities near multifamily developments. The retail center should feature a good mix of popular stores and restaurants, such as Best Buy, Chick-fil-A, Starbucks and Rite Aid. The exception is Sierra, which prefers space in more rural communities in addition to suburban sites, especially retail centers that are close to outdoor lake and mountain activities.
TJX Companies expects to take advantage of the various brands under its umbrella by opening multiple stores in former big-box spaces, such as its HomeGoods and Marshalls brands that are both expected to open this year in the Northborough Crossing power center in Northborough, Mass., in a former Toys ‘R’ Us space. Elsewhere in the same power center, a Sierra store will also open later this year. All of its brands feature an ever-changing mix of merchandise, with T.J. Maxx and Marshalls carrying apparel in addition to home décor, kitchen supplies, accessories, gifts, bedding, shoes and toys. HomeGoods and Homesense both carry furniture, wall art, pillows, light fixtures and other home décor related items, while Sierra carries value-priced gear and merchandise for outdoor activities.
