In a retail landscape shaped by inflation, supply chain disruptions and economic fluctuation, one sector continues to rise above the fray: off-price retail. Boasting strong consumer appeal, strong inventory positions and a business model well-suited to turbulent times, the off-price segment is increasingly proving itself as a dominant, resilient force.
But there is more to the segment’s success than meets the eye.
David Shiffman, head of consumer retail at financial services firm Solomon Partners, works with the top off-price retailers and told HGI that the off-price market is exceptional and has been for decades. “The off-price model has contributed to the demise of the department store sector, especially the mid-priced tier,” Shiffman said of the segment’s impact on the industry. “Off-price will continue to take share as consumers seek to ‘treasure hunt’ bargains of branded goods.”
Anjee Solanki, national director of the retail services and practice groups at commercial real estate firm Colliers, said the off-price tier strikes a key chord in the hearts and wallets of consumers. And its appeal is spreading.
“The off-price market remains resilient and in demand, particularly as consumers across income levels prioritize value,” Solanki explained. “For example, Dollar General stores have seen a recent uptick in middle- and high-income shoppers. These wealthier customers want to maximize value while still shopping for items they want and need. In May, discount and dollar Stores saw a 5.3 percent year-over-year increase in foot traffic, with steady dwell times signaling strong, sustained interest in value-driven retail experiences.”
R.J. Hottovy, head of analytical research at retail insights company Placer.ai, further underscores the sector’s success—even through the current challenges of tariffs and inflation. “Off-price retailers like T.J. Maxx, Ross Dress for Less, and Burlington have been top performers in year-over-year visits throughout 2025, benefiting from both a consumer focus on value and unique opportunities to acquire inventory from recent store closures and tariff-related disruptions,” Hottovy told HGI.
Ellis Verdi, founder and president of advertising agency DeVito/Verdi, also emphasizes the sector’s enduring appeal. “Value in general is an important benefit in these challenging times,” Verdi said. “True everyday value offerings make an important distinction, where the products—through brand names—provide quality cues and proof of value.”
The Allure of the Off-Price Value Proposition
At the heart of off-price retail’s success is its value-driven approach. By delivering high-quality, recognizable brands at reduced prices, these stores tap into a timeless consumer desire. “Fundamentally, it’s the ability to get known name-brand goods at better prices,” Shiffman noted. “Originally focused on unpredictable closeout inventory, the sector has evolved. Today, off-pricers have also formed direct sourcing relationships with many top vendors, so they reliably have inventory from recognized brands.”
The appeal of off-pricers also keys into specific generational cohorts seeking out deals. “These retailers offer affordable pricing, convenience, and wide product selection, making them attractive during periods of economic uncertainty,” Solanki said. “Their ability to deliver lower-cost essentials and discretionary items appeals to budget-conscious shoppers. According to Retail TouchPoints, 48 percent of Gen X and 37 percent of Baby Boomers prioritize price over loyalty—they’re looking for the best deals.”
This combination of quality and savings is crucial, according to Jordan Rudow, vice president of trade shows Magic and Offprice. “Consumers can purchase recognizable brands and often premium or contemporary labels at 20 to 60 percent off retail,” Rudow told HGI, adding that the segment “satisfies the desire for quality and status without paying full price. Shoppers feel a sense of excitement, urgency, and satisfaction from finding hidden gems.”
Hottovy agrees not just on the price appeal but also the emotional experience these retailers offer. “Off-price retailers combine competitive pricing with a unique ‘treasure hunt’ merchandising strategy, a combination that has resonated with consumers in recent years and helped these brands stand out,” Hottovy said.
Challenges and Opportunities Ahead
While the off-price industry is thriving, it comes with its own set of challenges—namely, inventory volatility and competition for real estate and market share. Rudow pointed out: “One of the biggest challenges in the off-price market is inventory volatility. While excess inventory from full-price retailers benefits off-price, it is not guaranteed or consistent.”
Shiffman observes that tariff pressures could also impact inventory sourcing, and said, “Cancelled orders or goods abandoned at the docks as a result of tariff uncertainty will result in more inventory opportunities for the sector. However, off-price retailers will face the same tariff pressure as other retailers for goods manufactured for them in various regions of the world.”
“Cancelled orders or goods abandoned at the docks as a result of tariff uncertainty will result in more inventory opportunities for the sector.
—David Shiffman, Solomon Partners
Solanki said other challenges include increased competition from mass merchants with improved convenience (e.g., Walmart’s rapid delivery network) “and looming tariff-related cost pressures.”
Yet amidst these challenges, opportunities abound. Rudow emphasized the sustainability angle and noted that off-price “can position itself as a circular economy hero by helping reduce fashion waste by absorbing excess inventory.” Additionally, Hottovy believes there is room for growth: “They still have meaningful opportunities to expand their store base—both domestically and internationally—and to move into additional product categories.”
Solanki and Rudow said another critical opportunity arises from the closure of department and specialty stores, which has created an influx of inventory. “As department and specialty stores close or downsize, their leftover inventory supplies off-price stores,” noted Rudow. “This includes premium inventory from shuttered doors or underperforming DTC brands.”
A key factor supporting the off-price sector’s success is robust inventory positioning. Shiffman highlights how industry leaders like TJX, Ross Stores and Burlington are capitalizing on opportunities. “TJX has $7.1B of inventory, which is up 15 percent year-over-year, versus 5 percent year-over-year revenue growth in their latest quarter. Similarly, both Ross and Burlington have seen double-digit increases in inventory, positioning them to thrive as supply chain disruptions create unique buying opportunities.”
A Counter-Cyclical Safe Haven
What also sets the off-price sector apart is its counter-cyclicality—its ability to perform well during periods of economic downturn. Shiffman said periods of economic dislocation and consumer stress “are typically a positive (on a relative basis) for the off-price sector as consumers ‘trade down’.”
Rudow agreed, and said during inflation and economic uncertainty, “value shopping thrives. Off-price is counter-cyclical—it gains market share when consumers pull back from full-price.” For Hottovy, this is due to its adaptable mode. “The category is insulated from broader economic uncertainty because its value-driven, ‘treasure hunt’ model attracts more budget-conscious consumers, and its agile business model allows it to capitalize on excess inventory from other struggling retailers,” Hottovy said.
Regarding the sector’s resilience in the future, Shiffman said it is important to look at the past. “Even in deeper downturns like the Great Recession, off-pricers, which were not completely immune to the impact, held in much better than broader retail,” Shiffman said.
The off-price sector’s unique blend of value, adaptability, and opportunity positions it as a retail juggernaut, both in today’s economy and in the face of future uncertainties. Whether by absorbing excess inventory, leveraging branding power, or delivering the joy of discovery to consumers, off-price retailers continue to thrive. Or, as Verdi aptly summed up, “These stores exist as competitively-based concepts—you can shop elsewhere, but you would be making a mistake.”
