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Why TJX Will Win the Off-Price Race in 2023

Off-price retail keeps chugging along as consumers mind their dollars and cents. After a relatively slow holiday season, off-price chains are seeing traffic pick up early in the year, indicating that higher sales might be on the way

Last month, five major off-price chains tracked by saw positive year-over-year foot traffic growth compared to a year prior. TJX brands T.J. Maxx and Marshalls saw the largest growth across the sector, at 14.6 percent and 15.2 percent more store visits, respectively.

Ross Stores‘ foot traffic grew a more modest 6.5 percent, while Burlington saw an uptick of 11.5 percent. Citi Trends lagged among the top five chains at just 6.1 percent. acknowledged that some of the increase probably comes from a favorable comparison to January 2022 when Covid-19’s Omicron variant was still making a mess of things. But with cash-strapped consumers cautious about spending as recession risks remain, the data likely reflects the appeal of off-price relative to other places people could shop. 

The location intelligence provider’s foot traffic data is supported by that of investment bank and financial services company Cowen, which calculated that January traffic across the major off-price players (not including Citi Trends) rose 14 percent. The firm also revealed that as many as 40 percent of 2,500 consumers surveyed said they visited an off-price retailer last month.

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Cowen said in a research note that the current buying environment most favors TJX. While the off-price shopper demographic largely skews toward 18-to-34-year-olds in general, followed by the age 35-to-54 cohort, income ranges vary from one retailer to the next.

TJX’s banners favor higher-income spenders, with 38 percent of “MarMaxx” shoppers earning an annual income of $100,000 and up, and 44 percent of Home Goods shoppers hailing from that demographic. Ross Stores and Burlington cater most to the shopper from a $50,000-and-less household, with a respective 37 percent and 36 percent of their consumers falling within that bracket.

“The divergence in income groups among these shoppers is likely to have growing implications within the current U.S. economic environment where lower-income consumers are feeling the inflationary pressures on food and fuel the greatest, pressuring their wallet share of discretionary spend towards apparel, footwear and home fashion categories but potentially also creating an environment for trade-down to off-price retail from traditional retailer,” Cowen wrote in the note.

For the quarter, Cowen models Q4 same-store sales at 3 percent growth for the MarMaxx banners, 2 percent growth for Ross Stores and a 5 percent decline at Burlington Stores. But the report indicated that the trade-down potential “has manifested itself in the biggest same-store-sales volatility between the three major retailers that we have ever seen.”

In particular, the investment bank said there is a wide range of expected outcomes for both same-store sales and earnings per share (EPS) into 2024 due to both the pressure on low-income discretionary budgets and the timing of margin recovery from distribution and supply chain deflation.

As such, Cowen raised its same-store sales and EPS estimates for TJX, Ross and Burlington, as well as the price target for all three retailers’ stocks.

According to, off-price’s strength is more noticeable when comparing foot traffic to pre-pandemic levels. Although the segment did see a slight three-year downturn in visits in November 2022, December visits exceeded 2019 levels for all nameplates analyzed.

On a three-year basis, T.J. Maxx saw visits increase 8 percent, while Marshalls had a 6 percent jump. Ross Stores’ traffic increased 3.9 percent, while Burlington’s visits grew 6.5 percent. Meanwhile, Citi Trends continued to reap the benefits of its aggressive expansion, having opened more than 40 stores since 2021. December 2022 visits to the chain soared 19.3 percent from December 2019.

The momentum continued in January 2023, with monthly traffic to all five chains increasing relative to January 2020, as the segment continued proving its resilience and ability to withstand a range of retail challenges.

This time, Burlington had the best performance on a three-year basis, with 12.4 percent traffic growth in the opening month. T.J. Maxx was the second-best performer compared to January 2020, with 9.1 percent traffic growth.

Even more promising for off-price sellers—it isn’t just overall traffic that is up. Over the past three years, these retailers have acquired new, unique consumers. In all cases analyzed by, change in unique visitors far outpaces the change in overall visits.

Ross Stores has the edge here, with 6.2 percent more unique visitors during the 2022 fourth quarter compared to the same period in 2020. T.J. Maxx scored 4 percent more unique shoppers in its stores, while Marshalls saw a 3.6 percent boost. Burlington gained 3.3 percent more new visitors in the three-year stretch.

Not all foot traffic is good foot traffic.

The increase in unique visitors could be due to inflation-weary consumers’ trading down behavior—and it could also indicate that expansions are helping these off-price retailers reach new audiences.

Trends haven’t been kind to every player in the space, with Tuesday Morning recently filing for Chapter 11 bankruptcy for the second time in three years. Citing “exceedingly burdensome debt” in its bankruptcy filing, the company is closing an undisclosed number of stores in low-traffic areas and pivoting to a third-party logistics model to cut costs.

The retailer closed out fiscal 2022 with an 8 percent sales decline in the fourth quarter, with net sales dipping to $162 million from $177 million in the year prior.

Another off-price player, Nordstrom Rack, has been a consistent weak point for the high-end department store, with the retailer’s nine-week holiday sales tumbling 7.6 percent. The disappointing close to the year comes after a third quarter that saw sales decline 1.9 percent. In an effort to boost profitability at Rack, Nordstrom is focusing on increasing its supply of premium brands at the off-price banner, improving the assortment mix and boosting brand awareness.