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The supply chain crisis means tons of deals at TJ Maxx and Ross next year, according to experts

Business
TJ Maxx clearance racks
TJ Maxx discount racks.

  • Supply chain issues mean some products won’t arrive in time for the holidays.
  • This will create opportunities for stores like Ross and TJ Maxx, who buy excess stock from other retailers.
  • These stores thrive during supply chain disruptions. 

A breakdown in the global supply chain network has meant mountains of items destined for stores for the holiday season are trapped in containers sitting on port docks or on boats floating at sea.

Ongoing port jams and delays mean that some inventory may not reach shops in time for the holidays — and if it doesn’t, “off-price” stores such as TJ Maxx and Ross could capitalize, buying up excess stock from other retailers to sell at their own stores, experts say. 

“As goods arrive late and are canceled by the original importer, off-price retailers can capitalize on the excess inventory,” Brett Rose, CEO of wholesale distribution company United National Consumer Suppliers (UNCS), told Insider.

“We have seen $1.4 billion worth of retail overstock in the first three-quarters of the year alone, which far surpasses the same time period last year and 2019,” he said.

UNCS sends products to several off-price retailers including Ross Stores and some TJX-owned stores, along with full-price retailers such as Macy’s. TJX is the parent company for TJ Maxx and Marshalls, among others.

Current supply chain issues are related to transportation rather than shortages, Simeon Siegel, a managing director at BMO Capital Markets, said in a recent conversation with Insider. There is no lack of product — it just isn’t reaching the right place at the right time. This benefits off-price retailers because they thrive when the supply chain is disrupted. 

In the short-term, full-price retailers are cutting back on deals and discounts for the holiday season to keep key items in stock.

This also plays into the hands of off-price stores, which can continue to discount, and whose customers are happy with a varied assortment of goods, including last-season items.

The main risk for off-price stores is that best-selling brands hold on to stock to keep shelves full into next year. Under Armour and Steve Madden both said in recent earnings calls that they would sell less inventory to off-price stores for this reason. Ralph Lauren and Michael Kors have also said for years that they’ll sell less to these stores to protect their brand image.

But Siegel is skeptical of these announcements. “For every quarter where large brands talk about pulling back, the off-pricers are talking about having incredible availability and supply,” he said.

TJ Maxx works with more than 20,000 vendors in 100 countries; Ross Stores has around 8,000. These vendors like off-price stores because of their lower online profile, Siegel said. “The idea that you can’t search for a brand on TJ.com is what ingratiates TJ Maxx with their vendors because they can drop units at a store and no one will know,” he said.

“I think TJ Maxx becomes really important to the future of brands because of its invisible sales,” he said.

Read the original article on Business Insider
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