Is Off-price a Fact or Fiction?

While the off-price phenomenon gains momentum, many traditional retailers try to dispel the price differential between themselves and the off-pricers by stating that the items offered for sale at these “bargain” retail outlets are second-quality, manufacturer rejects, end-of-season closeouts that have lost their luster, poor-quality copies of original designs, unwanted colors, or ill-fitting. Is the merchandise offered by the off-pricer the same as that found in the typical department store or specialty chain? Or is it some poor-quality, bargain items mixed together with the “real thing”? Is off-price fact or fiction?

The research of Kirby and Dardes, “A Pricing Study of Women’s Apparel in Off-price and Department Stores,” in the Journal of Retailing, indicates that there were, in fact, major price differences between the off-pricers and department stores. “Average prices for all twenty items during thirteen weeks were 40% greater in department stores than in off-price stores.” The 20 items in the study included shirts, blouses, vests, sweaters, jeans, slacks, skirts, dresses, suits, and jackets.

While this research does scientifically prove the reality of the price advantage in off-price stores, it is not the only indicator that off-price is fact not fiction. Today’s consumer is an educated one. He or she is generally knowledgeable about quality, timeliness of styling, prices, and other factors needed to make appropriate purchases. With enormous numbers of consumers visiting and buying from the off-price merchants, it is obvious that they have spoken and have determined that off-pricers provide the goods they want, and the prices are lower than charged by the traditional retail operations.

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