Discount stores

Why people aren’t shopping at outlet stores and discount stores this summer – footwear news

Outlets and other low-cost stores may have been hot spots for consumers for much of the recent tough times in retail, but a new report highlights a slowdown in the industry this summer.

According to a report by financial services and research firm Cowen & Co., traffic to low-cost stores has been on a downward trajectory in recent months, while visits to outlet stores have seen the biggest drop ever. recorded in the company’s June survey of 2,500 consumers.

“Point-of-sale and non-price channel visit penetration rates deteriorated from March to June 2017, with June representing the largest year-over-year decline in visit penetration in exit channels. that the investigation ever recorded, “Cowen analyst John Kernan wrote in the report. “[Visitation declined] 750 basis points, while 19% of survey respondents visited outlets in June compared to 26% last year, implying an even larger percentage change in potential traffic.

Meanwhile, the penetration of non-price tours recorded its fourth consecutive monthly decline, Kernan added.

As the fashion retail industry as a whole grapples with the shift of consumers towards digital and experiential spending, experts noted that outlet stores and discount retailers appear to be the great place for the more price conscious shoppers who had recently become averse to buying clothes and shoes.

Now, Cowen’s report suggests that these consumer shifts may finally trickle down to the low price sector.

“Shopping center attendance has been under pressure for some time now, but the slide in monthly visitation rates from year to year in shopping centers and price declines is a more recent phenomenon, perhaps reflecting the fatigue of buyers before the start of the school year, an increase in experiential demand associated with summer vacations, [and] a slowdown or change in consumer spending around clothing and footwear. Kernan thinks.

Popular low-cost sellers TJ Maxx & Marshalls may have offered earlier signs of a potential downturn in the discount industry when their parent company – The TJX Companies Inc. – posted earnings in May.

TJX said sales at its discount stores improved only 1% in the first quarter, missing analysts’ bets for a 1.5% improvement. Overall, first-quarter sales rose 3% year-over-year, to $ 7.8 billion, but also missed Wall Street estimates for sales of $ 7.9 billion.

The company had also provided a disappointing second quarter outlook – forecasting diluted second quarter EPS of around 81 cents to 83 cents, lower than diluted EPS of 84 cents last year and significantly lower than analysts’ bets. for 92 cents EPS during the period.