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Tajuk : This chain hailed by Wall Street as a ‘retail treasure’ is the most disastrous store we’ve ever seen
link : This chain hailed by Wall Street as a ‘retail treasure’ is the most disastrous store we’ve ever seen
This chain hailed by Wall Street as a ‘retail treasure’ is the most disastrous store we’ve ever seen
Business Insider/Hayley Peterson
Ross Stores has been deemed a “retail treasure” and a “rarity” by Morgan Stanley analysts for its strong sales and earnings growth at a time of widespread distress in the industry.
The discount chain last week reported same-store sales growth of 3%, which was driven by higher traffic and increases in how much customers are spending per transaction.
Ross also reported better-than-expected earnings of $321 million, or $0.82 per diluted share, versus the $290.6 million, or $0.73 per diluted share that analysts had predicted.
We went to a Ross store in Richmond, Virginia, to see how this “treasure” is luring so many customers when department stores are seeing sales and traffic plunge.
We were surprised to find the store in total disarray.
It looked like a tornado had ripped through the shoe department.
Shoes were strewn all over the floor and benches, and there was a bra hanging from one shelf.
The hat display was equally jarring.
The socks clearly needed some attention, as well.
And the rugs were a mess.
Everywhere we looked, it was a disaster.
Yet other parts of the store were completely empty.
It looked as though the store was going out of business. (I checked, and it’s not.)
Merchandise was loosely grouped together into different sections like “toys,” “shoes,” and “furniture,” but it was hard to see any real organization beyond that.
In every department, there were empty shelves and items on the floor.
The tornado that had hit the shoe department apparently made its way over to the lingerie department, as well.
Bras covered the floor.
The kids’ section was a sad jumble of random toys.
And like the rest of the store, a quarter of the merchandise was left on the floor.
Throughout the store, we found a number of abandoned carts.
Most of the lone carts were empty.
We spotted only two employees in the store that weren’t working at the registers.
They were both restocking the apparel department.
Customers didn’t seem to mind the mess. There was a steady line of people checking out while we visited and more than 20 shoppers throughout the store.
The messy environment is likely a product of Ross’s efforts to keep prices low by investing less in labor and infrastructure (like construction and display costs) than full-priced department stores.
Those cost savings are passed on to consumers, who — based on Ross’s earnings — are willing to deal with a mess for the sake of discounts.
Ross’s success is a bright spot in an otherwise gloomy retail industry.
It has about 200 stores throughout the US, and plans to open 80-90 stores each year over the next several years.
Meanwhile, department stores like Macy’s, JCPenney, Sears, and Kmart are closing hundreds of stores.
While analysts are cheering the department store closures as necessary, they say Ross has plenty of room to grow its physical presence.
“Accelerating department store closures and weak fundamentals in remaining stores presents opportunity for Ross to continue to gain market share,” Morgan Stanley analysts wrote in a recent note.
Unlike most other stores, Ross is “immune” to the growth of e-commerce because of the treasure-hunt experience and low prices it provides customers in stores, the analysts said.
“Although there is some background noise in the industry which talks down the importance of physical shops, we believe that these remain a vital route to growth for off-price players, and see no reason why Ross should slow the pace of development,” Neil Saunders, CEO of GlobalData Retail, wrote last week.
So, American consumers: prepare to see a lot more stores like this.
Read more stories on Business Insider, Malaysian edition of the world’s fastest-growing business and technology news website.
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