Bad news for bargain hunters as it may be harder to snag designer clothes since noteworthy brands have been making moves to distance themselves from “off-price” stores. Is it still because of pandemic-era problems or product availability issues?
When there are extra clothes in the market, TJ Maxx and other discount retailers like Burlington buy them up and sell them to their shoppers at a discount. Most people prefer buying items from these stores since they’re a great place to find quality items at a very affordable price. Unfortunately, some brands are moving away from TJ Maxx and other bargain stores since they’re no longer having issues with their supply.
According to a CNN report, multiple brands like Ralph Lauren, Under Armour, Steve Madden, Carter’s, and Levi’s are among them—as having stated in some form or another over the past few weeks that they are pulling back from discount-minded retailers. Their reason is “people are buying a lot right now and clothing has been selling at a much faster pace than over the last few years.”
Another reason is they don’t make much money when their inventory goes onto the shelves at these retailers. In reality, these retailers are just the last resort place for these noteworthy brands to offload any extra supply they might have. As Susan Anderson, a retail analyst at B. Riley Securities said, off-price is a last resort.
These large clothing companies would prefer to sell their items at premium outlets or online directly to the consumer rather than working with TJ Maxx and similar retailers. They’re also able to collect a lot more profit from buyers this way rather than offering their extra supply to retailers at a discount that then gets passed on to the customers of those stores.
Indeed, this pandemic has shrugged off the balance between supply and demand. Nowadays, most people are anxious to get their hands on products; however, it is very hard for these companies to make large amounts of items. The number of people looking to buy is greater than items available to sell. Thus, these big clothing companies are not stuck with a lot of products at the end of the quarter that they need to offload to retailers.
By dissociating themselves from these “off-price” stores like TJ Maxx, these noteworthy brands are able to make more profit and get their goods to consumers who are willing to pay a premium for them.
Under Armor chief financial officer David Bergman said:
“We have reduced the amount that we’re selling to the third-party off-price channel. Those partners would like more product.”
Under Armor, CFO added that while they might still sell some of their extra stock to “off-price” retailers, these companies are going to pay a little more to them since Under Armor simply does not have as much stock available in their warehouses. They’re selling their clothing to consumers and are not stuck with leftovers.
Edward Rosenfeld, Steve Madden CEO also said on an earnings call this month that their first priority is always feeding full-price channels.
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