Two retailers are tied for America's favorite for value
As online sales continue to climb, many brick-and-mortar retailers are shaking in their boots. But some in-store experiences are simply irreplaceable, particularly when it comes to the discount, off-price sector.
“It’s a value-driven experience where people feel they are hunting, capturing a huge find, and there’s a sense of accomplishment that shoppers feel,” says Nicole Reyhle of Retailminded.com.
Affordability is by far the biggest driver in choosing where to shop, according to a recent retail study by Market Force Information. The full findings of this survey, with over 10,000 consumer respondents, will be released later this month.
In this survey, Yahoo Finance has learned that Target (TGT) and TJ Maxx (TJX) are tied as consumers’ favorite value retailer. Trailing them are Nordstrom Rack (JWN), Burlington Coat Factory (BURL), Marshall’s (TJX), Ross (ROST) and Walmart (WMT).
Shopping spree show-offs on social media
While it used to be more bragworthy to shop at premium high-end stores, millions of shoppers now show off their latest steals on social media, making it cooler than ever to pay less. Shopping in-store has become a kind of sport, digging for deals on items you never knew you needed, but now somehow can’t live without.
Posting a “shopping haul” or video blog (aka “vlog”) about your most recent purchases is all the rage, akin to those viral unboxing videos, in which vloggers open up new boxes of toys or gadgets to review. Just type in the word “haul” into YouTube’s search engine, and you’ll see over 26 million results.
Vloggers of all ages, both women and men, have posted more than 2.3 million Target shopping hauls alone, while TJ Maxx has just over half a million. Typically, a YouTuber will take you through every point of his or her shopping journey—from the drive to the store, through the store aisles, to the checkout before heading back home to try on their latest purchases.
Of course, there are paid promotions in this mix, in which brands collaborate with social media influencers to promote products. As millennial consumers prefer word-of-mouth product endorsements by their peers, advertisers are ramping up their budgets for influencer campaigns.
Influencer marketing on Instagram alone is a billion dollar industry, on track to double by 2019, according to estimates in a study by marketing agency Mediakix. It also estimates that the number of YouTube content creators earning six figures a year has increased 50% year over year.
It pays to keep shoppers satisfied
It’s not just the influencers and low prices that keep customers coming back. The same study that ranked Target and TJ Maxx at the top, noted the best ways to delight shoppers is to give them a good shopping experience. That can be done a few ways, like good store atmosphere and customer service, loyalty benefits, or mobile apps in which shoppers can unlock deals.
When it comes to value for your money and sales effectiveness, Market Force’s study points to Ross stores. Target’s at the top again for store atmosphere and speed of checkout. And Burlington Coat Factory takes a win for merchandise selection and the ability to find the correct sizes and create a look.
Nearly half of those surveyed said they shopped in-store more than 3 times at their favorite fashion retailer in the last three months. So while it’s tough to compete with online giants like Amazon, many retail analysts say off-price is the place to be.
“Chic cheap is in. People continue to want designer products, but don’t want to pay top dollar for it, and Target has always had a tie-in with high-end designers,” says Joe Hancock, a fashion merchandising professor at Drexel who used to work at Target corporate.
While Walmart is known for volume driving and lower margins, Hancock points to Target’s presentation and distribution of products so they feel exclusive and special. But with Walmart’s plan to step up its apparel category with more stylish and affordable low-cost brands, Target plans to compete with a $7 billion investment into better, more modern Target retail stores.
Target rep Liz Hancock told Yahoo Finance the brand is increasing its investment to reimagine more than 1,000 stores by the end of 2020 and enhancing the guest experience. “In addition to the 110 stores remodeled in 2017, Target plans to fully renovate 325 stores in 2018. The reimagined stores will feature Target’s most ambitious store redesign to date, featuring modernized design elements and bringing more technology and digital experiences to our stores to give guests an experience that’s easy and inspiring,” she said.
Today Target reported a miss on profits by a penny, but saw a 3.6% rise in comparable sales in the fourth quarter, helped by in-store traffic and e-commerce growth, and sales rose to $22.77 billion, topping the average estimate of $22.53 billion.
“A key metric with this store, and retail in general, is comparable sales, and those were up 3.6%, versus Wall Street estimates of 3.4%,” said Yahoo Finance markets correspondent Jared Blikre on Market Movers. Though the stock is down about 2% in early trading, Blikre points out the stock is up about 13% for the year.
TJ Maxx and Marshall’s parent company TJX reported earnings that beat expectations, with a rise of 4% in comparable sales. CEO Ernie Herrman attributed growth to the overall increase in customer traffic and eclectic mix of merchandise at affordable price points.
So while it’s tough to compete with online giants like Amazon, there’s solid growth in the off-price sector, as deal-obsessed shoppers continue to bargain hunt for their next big find.
Jeanie is a reporter at Yahoo Finance. Reach out by email jeaniea@oath.com; follow her on Twitter @jeanie531.
This story is a part of Yahoo Finance Presents: The Retail Revolution, March 5-9, 2018.
