TBF Tool: Retail Definitions

This tool provides a little lesson in the basic differences between your favorite retail stores. Understanding these differences (like pricing strategy, sale structure, etc) can help you save money and time.

Off-price stores (T.J. Maxx, Marshalls) sell a wide variety of quality brand name, designer apparel for men, women and children at 20-60% off department and specialty store prices, every day.  These stores buy merchandise in large volumes, do not have fancy store fixtures, and maintain company-owned distribution facilities which ticket and ship the merchandise to the stores (saving the vendor/store/designer money), which keeps prices low. Also, off-price stores rarely have sales, but offer every day values on quality, designer and brand name fashions.  Shopping off-price can be compared to a fun, treasure hunt . . . you never know what merchandise will be there.  Some shoppers feel this is a negative, especially if they have something specific in mind (plain black skirt, size 8), as there is no guarantee they’ll find that specific piece.

Discount department stores (K-Mart, Wal-Mart, Target) primarily sell private label merchandise (names they have created).  The difference between brand name/designer names and private label is in the relative value and quality of the merchandise.  For example:  a discount department store sells their own private label blouse for $16.99, where a comparable style at a major department store sells for significantly more. However, what you receive in discounts, you often pay for in quality, as the fabric/blouse was manufactured as inexpensively as possible to sell at the lower price.

Department stores (Macy’s, Nordstrom’s, Marshall Fields) also offer a wide variety of brand name and designer apparel.  They charge premium prices for the merchandise and often have sales and clearance sections to more stock and compete with other stores.  The store may return the merchandise to it’s original price after the sale period has ended. Department stores must also pay the vendor/designer advertising costs to promote the name brands in their advertisements. This, along with the ability to return unsold merchandise to the designer, both can contribute to the higher price tag at this type of store. Unlike off-price stores, you can pretty much guarantee you’ll find a particular item if you are looking for it.

Specialty stores (The Gap, Ann Taylor, Banana Republic) sell their own name brand label merchandise at premium prices. Specialty stores have a variety of costs to pay; all which eventually add to the cost of the garment. They are usually located in enclosed malls, which have high rents.  Also, the store design is generally fancier with customized merchandise displays. Like department stores, they only conduct sales on select items at certain times of the year and often have a clearance section. Again, like a department store, the advantage to shopping a specialty store is the variety of merchandise and sizes.

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