Burlington Stores is doing something right amid the mess that retail has made for itself.
In a panel discussion at Cowen and Company’s Annual Future of the Consumer Conference in New York City Tuesday, Burlington CEO, president and chairman Thomas Kingsbury broke it down pretty simply.
“Looking at the numbers, there’s really two places where people want to shop today, and that is online and off-price,” he said.
Knowing that, and knowing brick-and-mortar’s present plight, the question for Burlington was: What does off-price know that everyone else doesn’t?
“I think the reason why off-price is different is because we’ve worked really really hard to deliver value every single day,” Kingsbury said. “We make it easy for the customer to shop in our stores. We work hard to deliver great brands at great prices and we really work at having the broadest selection we can have…we work really hard on the treasure hunt.”
Consumers tend to live in two camps: those who value the treasure hunt that off-price offers and those who give convenience more weight. Those who live in the middle will only go into a physical store if that store really compels them, and that doesn’t happen all that often in retail today. Off-price, however, seems to be capturing a lot of the foot traffic that might have otherwise gone to traditional retailers.
For Burlington, the disruption of traditional retail has helped pave the way to success in terms of inventory—and better real estate.
“There’s been a tremendous amount of inventory available for us. Anytime there’s this kind of disruption, it really helps in terms of securing inventory,” Kinsbury said, and, he added, “There’s so many store closures…if you’re looking for real estate, it’s really a great time.”
Burlington, which has seen its stock swell 295 percent since its IPO in 2013, according to Cowen, is bucking the consolidation trend and has hopes of nearly doubling its store count.
“We have 592 stores and we hope that over time we’ll have 1,000 stores,” Kingsbury said.
This year, Burlington will open 44 new stores, netting 30 after some are shuttered or relocated, up from the 25 net stores opened last year. And many of those stores will pop up in locations bankrupt brands have left behind.
“We can be really picky now [about where those stores are located] just based on the fact that there’s a lot out there and there continues to be even more out there,” Kingsbury said.
What else is Burlington doing right?
Shifting its merchandise strategy has also helped Burlington lure deal-hungry consumers. The company is adding more Better and Best brands and stepping up its housewares and beauty offerings as another avenue to get new brands in the store. It’s also ramping up efficiency both in the front and back ends of stores and leveraging store payroll to accommodate wage increases.
To ensure enough Burlington people are on the ground to uncover the latest and greatest of what’s out there in the market, the company has more than doubled the people in its merchandising team.
One thing Burlington is also trying to get away from is blaming the weather for bad sales.
“The more we de-weather our assortments, it’s really helped us in terms of traffic,” Kingsbury said. To drive that de-weathering home, the company plans to completely rid itself of the Coat Factory portion of its name in the next two years.
Despite the bloodbath that has been retail of late, Burlington isn’t playing in the acquisitions game.
“We can add another 400 stores in the U.S. under the Burlington label and we’re focused on that,” Kingsbury said. “We’re focused on executing the off-price model.”
Does off-price care about online?
For Burlington, the answer seems to be: not so much.
Online is currently less than 1 percent of Burlington’s business and the company has no set plans to really expand that.
“We think it’s important more from a marketing perspective,” Kingsbury said. “It’s hard to replicate the off-price model online…it’s just not really set up for off-price and we want to gain brick-and-mortar market share, so that’s where our focus is. We do have a site, we’ve had it since 1999, but it’s not a huge focus for us.”