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  • Published In : May 2024
  • Code : CMI6007
  • Pages :165
  • Formats :
      Excel and PDF
  • Industry : Smart Technologies

Market Size and Trends

The off price retail market is estimated to be valued at USD 342.62 Bn in 2024 and is expected to reach USD 606.49 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 8.5% from 2024 to 2031.

Off Price Retail Market Key Factors

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The sector has benefitted from consumers' attraction towards discounted designer and name brand apparel and accessories. Fast fashion trends that have made consumers switch wardrobes quickly and spend less on each individual garment has further stimulated market expansion. Increased disposable incomes and rising popularity of online shopping amongst younger consumers have additionally supported off price retail sector revenues. However, market players may face challenges from improving economic conditions that could see consumers switch back to full-priced stores again.

High Income Inequality Driving Demand for Off-Price Retail

Income inequality in developed economies has been steadily increasing over the past few decades and this trend will continue into the future. As the gap between high and low income individuals widens, the lower and middle class feel considerable financial pressure to carefully budget their spending. Off-price retail has emerged as an attractive option that allows value conscious shoppers to purchase brand name products at significant discounts compared to traditional retailers. By offering desirable fashion and lifestyle items from top designers and brands at 30-60% lower price points, off-price retailers enable more Americans to affordably indulge in conspicuous consumption without overspending.  The psychological need to perceived oneself and family as keeping up with latest trends drives many customers to off-price chains. Here they can find top season's styles and stay consistent with their peers without breaking the monthly budget. Particularly for those with children and young families, cost savings help allocate limited funds across other necessities as well like housing, education, and healthcare. The experience of shopping at outlet malls and big box discount retailers has also become a popular weekend activity and source of entertainment for lower income groups. While the products may not be brand new or in style for the current season, off-price provides sufficient selection and new arrivals to satisfy visual tastes on a constrained income.

Changing Shopper Preferences Stimulate Multichannel Growth

Customer shopping preferences and behaviors have radically transformed over the past decade with the rise of ecommerce and online platforms. Off-price retailers recognized this evolving landscape and proactively expanded their multichannel strategies. Where once shoppers would exclusively hunt for discounts at brick-and-mortar outlet stores, now off-price chains seamlessly integrate the in-store and digital experiences to meet consumers wherever most convenient. Features like buy online pickup in store, free shipping minimums, and mobile apps allow busy households to conveniently discover deals, plan purchases, and execute transactions however fits their schedule.  Retailers also gain invaluable shopper data and insights from robust websites and apps to better tailor assortments and messaging. Customers coming online initially for information gathering or inspiration increasingly complete transactions via the digital channels. During COVID-19 quarantines, off-price businesses with versatile ecommerce infrastructure were able to continue operations and maintain cash flows while many competitors shut down.

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