Dive Brief:
- Ross Stores on Monday announced the recent opening of 22 Ross Dress for Less and eight dd’s Discounts stores across 12 different states and Washington, D.C. in June and July.
- The new locations are part of the off-price retailer’s plans to add 75 Ross and 25 dd’s locations this year, according to a company press release.
- The company already runs 1,680 off-price apparel and home fashion stores in 38 states, the District of Columbia and Guam, according to the release.
Dive Insight:
While in-store purchases last year declined 3% compared to 2016, online apparel sales rose 7% to $46 billion, according to a report from NPD Group. But Ross doesn’t seem too worried about the burgeoning shift of apparel sales online.
In fact, the retailer may be finding better merchandise thanks to that e-commerce growth, which has spurred a high rate of returns. “[T]hat could be, I underline the word ‘could,’ one of the additional things that’s contributing to the abundant availability that we are seeing,” Ross President and Chief Operating Officer Michael O’Sullivan told analysts earlier this year, according to a transcript from Seeking Alpha.
Mostly, though, Ross operates in an off-price market with robust sales no matter the state of the economy, as confident shoppers go into stores for discovery, and financially strapped ones go hunting for deals. Thanks in part to solid fundamentals like a robust merchandise pipeline, a healthy consumer base and plenty of runway for brick-and-mortar expansion, the segment is on pace to reach $18 billion to $19 billion of incremental sales by 2021, according to a September note on the sector from JPMorgan analysts. Around the same time, Moody’s Investors Service released a note saying much the same thing, crediting the retailers’ significant scale, flexible purchasing, strong and expanding vendor relations and adaptable real estate strategies, for their endurance.
But the pressure to sell online and the decline of department stores are also bringing new challenges. So far, most off-price retailers, including Ross, have given digital sales short shrift — the discovery-based treasure hunt atmosphere seems predicated on going to stores. Marshal Cohen, chief industry advisor of retail at the NPD Group, calls them “the last of the online holdouts.”
The new stores announced Monday are part of the company’s strategy to build in new and successful markets, President and Chief Development Officer Jim Fassio said in a statement. “Ross grew in its newer market — the Midwest — as well as existing markets, including California, Texas, and Florida,” he said. “In June, dd’s also expanded into its newest state of Delaware. Looking ahead, we remain confident in our expansion plans and continue to see plenty of opportunity to grow across all of our markets.”
