Nov 20, 2019

Discount stores woo bargain-hunters

Off-price retailers are cashing in on consumers who are increasingly demanding more bargains.

Why it matters: The consumer is emboldened by a steady economy with a low jobless rate and spiking wages. But even with more money in their pockets, shoppers are increasingly turning to retailers that prioritize deals.

One example: TJX Companies — the parent of discount chains TJ Maxx, Home Goods and Marshalls — is drawing more customers into its stores now than in the past. Sales are growing, too.

  • The company has seen increased foot traffic for 21 straight quarters, per the latest financials released by the company on Tuesday.

Other retailers that traditionally haven't been known for deals are struggling to draw in shoppers. To fix that, they're following discounters' lead.

  • Urban Outfitters, which released quarterly results on Tuesday, blamed its profit drop on price markdowns on clothing it couldn't get customers to buy, per Barron's. It's at least the second quarter in a row the company, which also owns Anthropologie and Free People, said it had to cut pricing to entice customers to buy.
  • Kohl's, too, said it stepped up promotions to spur demand for its products.

Yes, but: This strategy isn't fool-proof. "...[M]uch of the discounting is occurring at the weaker retailers which consumers are not inspired to visit,” Neil Saunders, managing director of research firm GlobalData Retail, tells WSJ.

Of note: Analysts say off-price retailers are banking on lower-income shoppers' renewed economic confidence, who are likely to visit their stores.

  • That cohort, which has experienced the fastest pay increases, is opening up its wallets at a faster clip, according to Bank of America.

By the numbers: The report, which analyzed aggregated debit and credit card data of Bank of America cardholders, found that spending growth among consumers who make less than $50,000 a year jumped 5% year-over-year.

  • The uptick "significantly favors market share gains and customer traffic trends at value-oriented retailers," Bank of America analysts wrote.

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Holiday shoppers are unfazed by recession fears

Reproduced from an Experian chart; Chart: Axios Visuals

More Americans say they are worried about a recession next year and are getting more cautious about their spending habits and debt, but that didn't slow down their holiday shopping.

Driving the news: Data from Adobe Analytics shows Black Friday spending increased by nearly 20% over last year, rising to $7.4 billion, even as fewer retailers offered big in-store discounts. Brick-and-mortar stores saw an overall 6% decline in sales, according to preliminary data from ShopperTrak.

Go deeperArrowDec 2, 2019

Black Friday shoppers beat online sales record

Black Friday shoppers in Belarus on Nov. 29. Photo: Natalia Fedosenko\TASS via Getty Images

Americans spent a record $7.4 billion in online purchases this Black Friday, AP reports.

The big picture: Strong consumer spending has largely acted as the U.S. economy's backbone for the past two quarters and most of 2018. October's Q4 retail sales figures indicated solid, albeit slightly cautious, consumers.

Go deeperArrowNov 30, 2019

Cyber Monday's rise comes at Black Friday's expense

Illustration: Sarah Grillo/Axios

54% of American consumers said they will do most of their holiday shopping online this year, highlighting the rise of Cyber Monday, the Washington Post reports.

Why it matters: Consumers' tendency to stay at home is forcing retailers to rethink how they offer deals on Cyber Monday and Black Friday — two of the biggest shopping days of the year — especially since the former offers loads of data that can allow for companies to make on-the-fly decisions about their offers.

Go deeperArrowNov 27, 2019