valley views Off-price retailers, too good to be true? M
ost of us love a Ross, known for carrying good bargain. an ever-evolving selection Price plays perhaps the of items at very affordbiggest role in purchasable prices. Shopping ing decisions there feels across nearly like a all domains. life hack: Nowhere is somewhat this more inconsisevident than tent, but in the fashion with the and apparpotential el industry to discover ben there where many substantial DONE that brick-andbargains Ben Stone mortar stores on nameMedia Production, Valley Journal have been brand subject to a items, financial pummeling in primarily clothing. Too the last decade. This “regood to be true? Are tail apocalypse” has been they putting other stores spurred by the explosive out of business? No, in and seemingly unstoppa- fact, the opposite is true. ble growth of Amazon. Actually, stores like these Yet, in a small tuckedplay an important role in away corner, a very spethe retail ecosystem and cific kind of retail store even have a role in aiding has been thriving in the other stores. The secret otherwise barren landlies in the three strategies scape: off-price retailers. these stores use to acquire First and foremost, their peculiar selection of what exactly is an offitems. price retailer? Think of The first and beststores like TJ Maxx and known method is pur-
chasing surplus goods from other retailers. This happens when a department store or more premium retailer wants to clear out excess goods to free up funds to invest in new product SKUs. In the retail world, vast sums of money are invested to create new items. Investment is only recouped once the created product sells through. If a given item doesn’t sell well enough, the primary retailer might choose to recover a part of their investment by selling the product, or “dead stock,” to off-price retailers at a very low price. The off-price retailers then sell the items at their famously low prices. TJ Maxx has the most advanced team of brokers who specialize in working directly with other stores to liquidate their dead stock. In the ‘90s when off-price retailers were just beginning to thrive, securing merchandise
was primarily done this way. However, the supply of surplus inventory from other areas of the retail system is finite. As off-price stores flourished, searches began for other ways to secure low-cost inventory to keep their shelves stocked. A second avenue for acquiring wares emerged: factory excess goods. When a retailer places an order with a garment factory, the factory will often produce more than the ordered amount. Why? Re-tool costs between production runs are very high. If a factory is already making 100,000 units for an order, several thousand extras are easy to make. The extra items can cover replacing any defective items, but often much is leftover. The factory will then sell this excess to the off-price retailers, sometimes with the original brand and sometimes with an off-brand. For
Special session will do more harm than good F
or the past eight years I have served on the Senate Energy and Telecommunications Committee, six as Chair. When combined with my eight years in the House, I have spent more time evaluating the Public 10 - February 2, 2022
Service Commission’s (PSC) regulatory duties and commissioners than anyone in the legislature. The PSC consists of five members, each elected from a distinct geographic Montana district, whose primary charge is
keeping your lights on and power costs low. Previous efforts made by the legislature to redraw the PSC district boundaries to correct for population imbalances as required by the Constitution (one man, one
vote) died in committee, as both parties sought to gerrymander seat boundaries to their benefit. Further, prospective PSC candidates, while still serving in the legislature, worked to ensure they had a favorable seat for
Valley Journal
a while, these first two methods satisfied the demand of off-price retailers. But alas, even this could not fully stock the shelves, leading to a third method. In recent years, offprice retailers have taken a page out of the other retailers’ playbooks by pursuing their own original product development. To lower costs, such goods are manufactured with low-cost materials and feature unsophisticated designs. TJ Maxx, Ross, and similar stores rely on a mix of all three methods to keep their stores stocked. With an ever-changing inventory, low prices mixed with strong perceived value, off-price retailers have prospered while most other physical stores have fallen on hard times. Nevertheless, their vital link in the retail world’s intricate ecosystem ensures the excesses of the market are
their upcoming race. Despite the growing population imbalance between Districts, the Chair of House Energy did not redraw district boundaries this session, perhaps because he planned to see page 11
managed. To the average consumer, bargain stores seem almost too good to be true. For savvy consumers, a treasure trove of bargains awaits-by discovering the higher tier retailer’s dead stock.
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