While speaking at a recent investor conference in New York City, Macy's CFO Karen Hoguet said off-price chains have proven a bigger long-term challenge to the company than the internet. Indeed, TJX's U.S. revenue is expected to surpass Macy's this year, according to Citi Research.
Off-price stores' constantly changing merchandise and bargain prices have appealed to new and existing shoppers alike. Meanwhile, excess inventory that failed to sell at traditional shops — or was left in the market when a store closed or went bankrupt — has helped them fill their racks.
Ronen Lazar, CEO of Inturn, told CNBC he doesn't see either of these things changing anytime soon. His company owns software that makes it easier for vendors and retailers to do deals.
"Excess inventory is just a fact of the business," Lazar said.
Even as companies like Ralph Lauren and Hugo Boss say they're shipping fewer products to off-price stores, there is an endless stream of others willing to take their place. Some brands even create products meant solely for these stores. And if a certain vendor decided to cut out off-price chains, they could also acquire inventory from third-party sellers, Lazar said.
"They're going to continue to find brands to feed them," Murali Gokki, a managing director in AlixPartners' retail practice, told CNBC.
Yet as these stores grow their footprints, they'll need more inventory to fill their racks. Already, TJX has 2,800 U.S. locations through its T.J. Maxx, Marshalls and HomeGoods stores. Management has said it sees potential to add another 1,300 stores in North America long term.
Despite these chains' aggressive targets, off-pricers' expansion plans remain reasonable, Brown said. Their stores are typically located outside of malls, where they aren't saddled with the additional costs of maintaining the common areas. They've also invested little into e-commerce, saving expenses and making their stores destinations.
At the end of the day, Citi analyst Paul Lejuez said off-pricers' size is one of their most attractive characteristics for vendors. Often, when a company makes too much product, it doesn't want to dilute its brand by packing the excess inventory into one location.
Instead, vendors prefer to have their merchandise spread across the country, where it's easier to make it "disappear," Lejuez recently told investors.
"Every year somebody says, 'Have they peaked?'" Gokki said. "Every year they have proven to find avenues for growth."
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