Discount stores

Discount stores are killing department stores

shopper shopping harrods shoes

Shoppers queue before the opening of the annual Harrods Summer Sale at Harrods on June 28, 2014 in London, England.

John Phillips/Getty

Discount stores overwhelm department stores as growing numbers of Americans refuse to pay full price for anything.

Consumers began turning to discount stores during the recession, and many have not returned to shopping at full-price stores.

Off-price shoppers now make up two-thirds of all consumers, according to new research by industry research firm The NPD Group.

Their buying activity has hit the apparel market the hardest. According to the study, off-price shoppers are “hardcore apparel shoppers,” accounting for 75% of apparel purchases across all retail channels.

That’s bad news for big box stores like Macy’s, Nordstrom and Kohl’s. All three retailers have discount brands, but they are making less profit from their discount clothing and sales are falling at their full-price department stores.

Same-store sales at Macy’s fell 7.4% last quarter, Nordstrom’s fell 1.7% and Kohl’s fell 3.9%. Shares of Macy’s and Nordstrom have lost about 50% of their value over the past year, and Kohl’s stock price has fallen 40%.

Marshal Cohen, chief industry analyst for NPD, said in a statement:

“Off-price retailers are resonating with fashion and price-conscious consumers, and are stealing business from department stores for good reason. Off-price is second only to the online channel in terms of growth rate.”

Nordstrom Rack

A customer at a Nordstrom in Chicago.

Associated press

Shopping visits to off-price retail stores increased by 4% in the 12 months to April 2016, compared to the same period last year, according to the study.

Cohen said:

“Consumers are clearly looking for better deals and they know that if they buy from a discount retailer, they will get them. Clothing shoppers are finding exactly what they want from discount retailers at the right time and at the right time. price, and this is not always the case in department stores.”

Off-price shoppers are a difficult group to attract and retain because they aren’t very loyal to a single brand, NPD said. They tend to shop at several off-price retailers as well as other retail outlets.

In addition to looking for discounted merchandise, Overall, consumers are also starting to save more money while splurging less on clothes, shoes and other fashion items, studies show.

When consumers shop, they spend their money on “big ticket” items like cars, homes, and electronics rather than clothes and shoes.