Sponsored Post: How Do Off-Priced Stores Get Their Designer Stuff?

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Full disclosure: I used to work at Marshalls – T.J. Maxx’s sister brand. Granted it was about, ahem, 20 years ago, but my experience working at the store gave me a front row seat to the inner workings of an off-priced store. When the store was quiet (usually during weeknights), I would roam the stock room because that was where designer merchandise was kept until it could be legally placed on the sales floor. I would secretly stash discounted – up to 60 percent off – Girbaud jeans (In the early 90’s everyone had to have a pair of Girbaud jeans with the little label in the front. In order to fully show off the label, you had to tuck your shirt in, (which made my Air Force Reservist father very happy) in the bins located underneath my checkout counter, until I could purchase them on my lunch break. I also observed how “regulars” shopped the store, always timing their shopping dates to when new merchandise was placed on the floor.

One of the most frequently asked questions on The BudgetFashionista and See Jack Shop is how off-priced stores like T.J Maxx and Marshalls can sell current season designer merchandise for less while department stores sell the same items at significantly higher prices. The answer? It’s a matter of simple economics, supply and demand (along with a little legal maneuvering), and having smart buyers with great vendor relationships. T.J. Maxx buyers travel the world to find the best merchandise at the best prices. In fact, off-price buyers meet with vendors 40 times a year, while department store buyers are only meeting with them four times a year. It is these up-to-the-season purchases that deliver the greatest savings to you!

Here’s some examples of how off-pricing works:

Designer A makes 300 pairs of shoes based on pre-season sales to XY department store.

Major department stores purchase merchandise several months prior to the actual placement of the merchandise on the sales floor. The department store calculates the amount of merchandise needed based on a combination of factors such as fashion trends, demographics, weather predictions, etc. Placing an order for merchandise several months in advance, called a purchase order, lets the designer know how many pieces they should produce for that season. This is one of the main reasons (along with giving magazines plenty of lead time) that fashion weeks are held several months prior to the actual season of the clothes.

XY department store realizes they over projected for the season. They have more shoes than they can actually sell and return the excess inventory to Designer A.

Major department stores have clauses in their purchase orders that allow them to return excess merchandise back to a designer/brand. Under this clause, XY department store could return some of the shoes back to Designer A. Multiple XY department store returns by the number of other stores making returns, and Designer A is now faced with a warehouse full of current season shoes, which is called overstock. The designer now has a choice- keep the shoes in the warehouse and while absorbing the production and storage costs or try to sell the merchandise to someone else, or they can return them to the vendor.

T.J. Maxx store offers to take the overstock off Designer A’s hands/ or gets them directly from the vendor at a significantly reduced price and sells the merchandise to you at a discount

This is called “opportunistic buying” (meaning T.J. Maxx knows Designer A is desperately needs to get rid of the excess inventory, so offers to buy it at a discount). Designer A, happy to be rid of the overstock and to make even a small profit, sells it to T.J. Maxx.

And that’s how you can discover a Maxxinista find everytime you shop at T.J. Maxx.

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  • Cortnie

    grlfrndz-

    I am interested in getting into the same field. Are there any tips, advice, experiences you can share about starting up your own business, how/where you found and formed these relationships with sellers/buyers? Any advice would be greatly appreciated. Please feel free to reply on here or email me @ [email protected].

    Thank you,
    Cortnie

  • grlfrndz

    In regards to buying off price you really do not have the complete picture of how this industry works. I am a previous off Price buyer of Childrens Clothing and there is more to it than what you have described above. Often they make a buy into a cutting ticket of an item or items are exclusively produced for discounters at a price.This business is far more intricate than you would know.

  • SlovakQueen2

    great article!!!  Thanks for explaining!

  • sohoaccessories.com

    Very interesting!