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  • Published In : May 2024
  • Code : CMI6007
  • Pages :165
  • Formats :
      Excel and PDF
  • Industry : Smart Technologies
Challenge: Reliance on excess inventory from other retailers limits control over product assortment

Off price retailers are increasingly relying on purchasing excess inventory from other retailers rather than procuring goods directly from brands and manufacturers. While this allows them to offer discounts on branded goods, it also limits their control over the product assortment available in stores. When a retailer is dependent on other retailers' excess stock, they have little say in the types of products, styles, sizes or quantity of items they receive. This can negatively impact the customer experience at off price stores.  Customers visit off price retailers expecting to find a wide variety of fashionable and popular brands at low prices. However, if the inventory received is random and uncurated, they may not find their preferred styles or sizes in stock. With no control over procurement, off price retailers cannot tailor the assortment based on customer demand, trends, seasonality or feedback. They also cannot guarantee supply of perennial best-selling lines. This unpredictability in availability of goods results in an inconsistent and haphazard shopping experience for customers. It can diminish their confidence in the off price concept and reduce repeat visits.

Opportunity: Emerging markets like India, China, and Southeast Asia offer significant growth potential

Emerging markets like India, China, and Southeast Asia are experiencing rapid economic development and increasing consumer spending. With growing middle-class populations that are embracing Western brands and styles, these markets represent massive opportunities for off-price retail chains to gain new customers. As incomes rise across Asia Pacific and barriers to imported goods decrease, the demand for affordable luxury and name-brand fashion is surging. Off-price retailers are well-positioned to capitalize on this demand by offering designer and premium labels at significant savings compared to full-priced stores. International organizations project continued strong economic expansion in emerging markets over the next decade. For example, the World Bank estimates India's GDP will grow by over 6% annually through 2023. As developing countries industrialize and urbanize at a fast pace, more residents will enter the workforce with higher disposable incomes. This will drive further spending on discretionary items like clothing and accessories. Off-price retail offers excellent value that appeals to new consumers entering the middle class. Their treasure-hunt shopping experiences in stores mimic the enjoyment of full-price luxury, while staying within household budgets.

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