Amid a recovering, yet still “fragile,” economic landscape that is increasingly cluttered with off-price competitors, Ross Stores Inc. said there’s room to grow and that the conditions driving the segment have a lot of momentum left.
Speaking at the Goldman Sachs 22nd Annual Global Retailing Conference in New York, John G. Call, secretary, executive vice president of finance and legal at Ross Stores, told investors that there’s been “25, 30 years of structural growth in the off-price segment.” And he said the segment garners about 8 percent of the total U.S. apparel market.
“And certainly, in the last five or six years since the economic slowdown in 2008, there’s been a little bit of an acceleration in that market share gain,” Call said. “And we don’t see that ending anytime soon. We think there’s still growth left in the off-price segment. And I think there’s room for more off-price stores.”
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Call said the company currently operates 1,300 stores, “but we’re only in 33 states. So we feel like there’s plenty of opportunity for us to continue to grow.”
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Call was addressing a question that’s been raised in several corners of the market, not just on Wall Street: Is the off-price segment getting saturated? Pure-play off-price retailers such as Ross Stores and TJX Cos. Inc. have been expanding as other retailers have been muscling into the space with their off-price brands and/or new concepts. Macy’s Backstage rollout is one of the latest examples of the trend.
“I would say that when we open stores in our existing states, we haven’t yet come across a market where we are saturated; we haven’t yet come across a market where there’s no incremental business,” Call explained, adding that in new markets for the retailer such as the Midwest, “we were able to compete pretty well with the existing set of competitors.”
Regarding the economy, Call noted it is improving. “Gas prices remain low,” he said. “Unemployment seems to be on the way down. But the economic growth looks like it’s still fairly fragile, and that’s caused us to be relatively conservative in terms of how we’re managing our business.”