Discount Stores: Staying Competitive in a Post-Recession Marketplace

DiscountsIf you were a discount retailer in 2009, chances are it was a good year for you. A weak economy ensured that many customers were more bargain-conscious than ever, and for many independent retailers this meant a boom in business, as consumers came to them as an alternative to the full-price stores. In fact, in some cases, even high-end items from major labels could be found on the shelves of discount stores. But with the economy on the upswing, discount stores may find that a little more creativity is in order to compete with the big boys for the consumer buck.

When boutiques and department stores found they couldn’t move their inventory, they cut prices, and eventually unsold merchandise was unloaded to the discounters. For thrifty, savvy shoppers, this meant top-shelf items could be had for bottom shelf prices, in many cases. For this reason, many insiders have speculated that 2009 was one of the best years ever for off-price and discount sellers.

But now that the major department stores and retailers have slashed their inventory so much, it’s far less likely that the outlets will be able to rely on runoff from the big chains as a significant source of product supply any longer. Mainstream retailers minimized product orders and cut down on the excess. In the wake of the recession, the number of off-price stores has dramatically risen, yet some $25 billion worth of merchandise has disappeared from shelves. Competition is heavy for prime retail runoff.

Experts have suggested that independent retailers seek out a niche and stay aware of trends if they wish to remain competitive in this environment. These days, some outlets are reporting that leftovers only make up about one-fifth of the merchandise offered. In some cases, outlets are even operating more like full-price stores. Some designers are even creating apparel specifically for discounters, since that’s where many of the customers are.