The National Retail Federation’s annual report on the Hot 100 Retailers is based on increases in domestic sales for the most recently completed fiscal year. The breakout charts look at sector leaders.
The hottest apparel retailers in terms of market share gains are TJX, Ross Stores and Burlington. It might be a coincidence, but these three retailers make little or no use of ecommerce. Burlington brought this point home with emphasis in March, when the company announced it would wind down its ecommerce operation.
In 2009, Burlington was among the first off-price apparel retailers to begin selling online. Yet after more than a decade, ecommerce accounted for only about 0.5 percent of Burlington’s sales.
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In reviewing the company’s business model, Burlington CEO Michael O’Sullivan said there are “very significant restraints” to taking Burlington’s treasure hunt merchandising approach online. “When you fully account for the cost of merchandising, processing, shipping, accepting returns, et cetera, it’s very difficult — impossible — to make it at those price points in the business that we compete in,” he said.
“We’re clearly taking market share. Of course, we anticipate ecommerce is going to continue to grow in many sectors of retail, but in the moderate off-price business, we believe growth is going to be driven by physical stores,” O’Sullivan said.
“While this move may seem counterintuitive in the connected world we live in today, for Burlington it just makes sense. The ‘treasure hunt’ category is one of the truly few concepts that simply doesn’t lend itself well to online shopping,” says Mark Ryski, CEO of retail analytics firm HeadCount Corp.
For most other apparel retailers, the year 2019 was not very good and, as it stands now, this year looks like it could be worse. The start of the New Year didn’t represent any sort of corner-turning, according to The State of Fashion 2020, the annual report generated by McKinsey & Co. and the Business of Fashion.
Listing challenges carried over from 2019, The State of Fashion 2020 noted, “The fashion industry faces challenges ranging from sustainability issues to generational shifts, many of which require investment at a time when top-line growth is under threat. The strain is starting to show. Vacancies in U.S. shopping malls are at a record high and a growing list of bricks-and-mortar players have filed for bankruptcy, hastened by digital competition.”