It was the best of times, it was the worst of times. For off-price retailers, the recession was a double-edged sword. While more consumers were flocking to their lower-price establishments, manufacturers were also cutting inventory.
Once manufacturers realized that they would need to slash inventory to reduce losses from the rough economy, the close out market started drying up, causing off-price retailers to look for other ways keep up with demand. For some, this means heading overseas. Many are scheduling quarterly trips to China to source and buy products, but the increase in travel could cause some prices to rise.
Others are diversifying their offerings to avoid negative effects from the inability to keep up with demand. Some are adding their own embellishments to plain clothing, creating value at a small price, while others are turning to licensing, to offer customers something different.
On top of the shortage of available inventory, higher cotton and gas costs have merchants taking on higher prices for goods, and needing to pass them on to the consumer.
Americans spent $18 billion on off-price clothing from March 2010 to March 2011 – a 1.5 percent increase from the previous 12 months. Off-price clothing sales account for more than 9 percent of the American retail market. But the new developments in the market could thwart the rise of these types of businesses unless manufacturers start bulking up their retail again (and leading to more close outs), which isn’t likely to happen any time soon.
Source: ApparelNews.net, April 2011
