TJ Maxx and other discount retailers such as Ross and Burlington are excellent resources for savvy bargain hunters who wish to purchase quality items at a more reasonable price. These stores wait until the ideal moment to acquire stock, snatching it up when there is an abundance in the market. Nevertheless, some brands have started withdrawing from TJ Maxx due to recent inventory-related successes that embolden them with fewer worries about carrying excess merchandise.
After experiencing an unprecedented surge in clothing purchases, brands like Steve Madden, Under Armor and Ralph Lauren have seen tremendous success. Usually, shoppers at TJ Maxx can easily find these products on the shelves; however, due to a global supply chain shortage caused by COVID-19, it is becoming increasingly difficult for customers to locate their desired items.
Multiple high-profile brands, including Levi’s jeans, are now actively shunning discounted “off-price” stores such as TJ Maxx. This is because these outlets do not provide much revenue for them and instead serve solely to liquidate excess stock at a fraction of its former value. Ultimately, they represent an unprofitable approach compared to more traditional retail strategies.
“Off-price is a last resort,” stated Susan Anderson, a retail analyst at B. Riley Securities.
Rather than offering their extra items to TJ Maxx and other bargain stores, these brands would prefer to offer them at premium outlets or directly online. This way they are able to keep more of the profits rather than having those earnings passed on as discounts for customers buying from discounted retailers such as Ross Dress For Less.
The coronavirus pandemic has disrupted the equilibrium between buyers and sellers. Consumer demand is high while companies struggle to produce large amounts of products, leading to a decrease in supply that cannot meet buyer demands. As such, businesses no longer need to sell their excess items through retailers like TJ Maxx who buy at lower prices; instead, they can get more money for higher-priced goods by selling directly to those willing and able to pay premium rates.
“We have reduced the amount that we’re selling to the third-party off-price channel,” Under Armor chief financial officer David Bergman said. “Those partners would like more product.”
According to Bergman, Under Armor still has the option of selling its surplus inventories to off-price retailers yet these companies would have to pay a bit more due to their limited supply. This is because the company isn’t stuck with excess stock but instead can focus on offering consumers fresh products without any leftover clothing.
“Our first priority is always feeding full-price channels,” Steve Madden CEO Edward Rosenfeld said.
