Specialist
Former VP at TJX Companies Inc
Agenda
- Trends and developments in the North America off-price retail industry, including coronavirus impacts
- Comparative analysis of operators, including Ross Stores (NASDAQ: ROST) and Burlington Stores (NYSE: BURL)
- Profitability profile amid inventory tailwinds and supply chain bottlenecks
- 2022 industry outlook
Questions
1.
What key trends or developments have you been monitoring in the North America off-price retail industry?
2.
The first trend you mentioned during coronavirus was being able to pivot quickly. Could you break down the shifts that off-price retailers made that exemplified their flexibility?
3.
Could any longer-lasting or permanent impacts on the off-price retail industry arise from coronavirus?
4.
You discussed the merchandise shift. I assume you think it will be more of a home trend, perhaps athleisure or comfort clothes. Do you have any other top-of-mind predictions for 2022?
5.
At what pace has the North America off-price retail industry been growing? How much do you expect it to grow in 2021 vs 2019, and what might 2022 growth be?
6.
You broke out several categories in the merchandise shift such as pets, beauty, home and a few others. Do you have any sense of the percentage breakdown of these categories in the broader off-price retail industry?
7.
Could you break down the competitive landscape in the North America off-price retail industry? What was each player’s market share before the pandemic?
8.
Were there any notable market share shifts throughout the pandemic and up to now? Which players gained or lost market share during this period?
9.
How are off-price retail players thinking about expanding their physical footprints? At what point might the US reach saturation? Can these players keep opening stores without eventually competing with or cannibalising off-price revenue?
10.
One of the strengths of these off-price retailers is the treasure hunt experience you keep highlighting. You also mentioned some players experienced two- to three-digit growth in their e-commerce channel. Could you outline the off-price retail industry’s overall channel strategy? How are they thinking about digital investments going forward?
11.
What percentage of the off-price retail industry is sold via e-commerce? How do you expect the mix to evolve in the next 3-5 years?
12.
You said Burlington and Ross still have runway around their store footprints. Are any key markets missing in their portfolio? Are there any areas where they’re over-concentrated and consolidation makes sense? Are any areas under-penetrated?
13.
Do the stores across players have similar unit economics around initial CAPEX requirements and average location-build-out size?
14.
How long does it take to build out a fully functioning location on average
15.
Do you know what the average spend per visitor is at maturity, by location?
16.
What is your assessment of off-price players’ pricing strategies? Are there any differences across players? Do any lead or lag in pricing power?
17.
How do you expect pricing to evolve throughout 2022? Do you expect it to continue increasing, or how might players be thinking about that?
18.
How should we think about price competition from a player such as Macy’s?
19.
Could the e-commerce platforms for Nordstrom and Macy’s be held to the same restrictions as off-price players’?
20.
What is happening around inventory and freight challenges? How has the off-price industry’s supply chain been impacted and what is your assessment across players?
21.
I’ve heard about traditional retailers getting their own ships and how this gives them an advantage, but isn’t the issue at the port and isn’t there a lot of port congestion? It doesn’t seem to get around this problem, does it?
22.
Are any pressures impacting the business model more than others? How much have these inflationary costs increased over the past year, and for how long do you expect them to continue increasing?
23.
How high can off-price increase in terms of margins, or were peak margins already reached pre coronavirus?
24.
What are your expectations for the upcoming holiday season around the off-price retail industry?
25.
How does off-price retail perform in a recessionary environment, relative to other retail?
26.
What is your 3-5-year outlook for the North America off-price retail industry? What should we monitor? Might you be following any upstarts or potential consumer demand trends?
27.
What proxies, leading indicators and economic metrics might you monitor over the next 12-18 months to assess the relative health of the off-price industry?
