More shoppers head to discount stores
— -- "I can find good-quality merchandise at lower prices than in some regular stores," Washington, a legal editor from Stone Mountain, Ga., says of the off-price retailers.
Her shopping habits seem to fit a broader pattern. The weaker the economy gets, it seems, the more some discounters benefit and the bleaker the outlook for their higher-priced competitors. That trend burst into view during the holiday season, when Wal-Mart and some off-price retailers outperformed full-price stores.
Now, with the economy sputtering, some analysts say, more shoppers have begun to ratchet down the price level of the stores where they shop.
Off-price retailers are in a "customer-gathering mode," says retail analyst Jeff Stein. "Department store customers are able to shop in a different venue and get the same brands. (T.J. Maxx and Marshalls) are gaining exposure to non-traditional customers."
The next year's outlook for some discounters — when compared with higher-end stores and full-price retailers — suggests Wal-Mart, TJX, Ross and others will continue to enjoy an edge. (See charts on left.)
Off-price stores typically sell some of the same name-brand clothing found at department stores but at prices that are often far lower, along with jewelry, luggage and other items. These stores buy merchandise that didn't sell at department stores in previous seasons, then sell it at deep discounts. They also buy from apparel makers when stores cancel orders or go out of business. Wal-Mart, on the other hand, sells discounted name-brand food, health and beauty aids, as well as private-label and other low-price clothes.
Changing attitudes
In recent weeks, some people who seldom shopped at Wal-Mart, for reasons ranging from a perception of low quality to poor customer service, say they've put aside those concerns in favor of saving money. Others who normally favor attractively displayed merchandise and a wide selection now say they find off-price retailers a way to shop down without sacrificing style or brands.
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