Price-Conscious Consumes To Shape The Retail Sector

The retail sector has produced conflicting information recently, with most stores reporting better than expected holiday sales alongside announcements of store closures. J.C. Penney Co. JCP is one such retailer; the company reported a 3.7 percent increase in holiday sales, but plans to shut 4 percent of its stores by the end of 2015.

What Gives?

Retailers are dealing with shifting consumer preferences as more and more shoppers make their purchases online. In an effort to increase store traffic, many large changes deeply discounted their merchandise last year, something which increased margins and ate into profit. 

What’s To Come?

With new online options springing up, some major chains are making their internet presence known. Sears Holdings Corp. SHLD has signed on to offer goods through Jet.com, an up-and-coming rival to Amazon.com, Inc. AMZN. Other stores are beefing up their online offerings by promoting same day store pick ups or free shipping.

Despite the growing online trend, some stores are hoping to boost sales without losing their brick-and-mortar structure by developing outlet brands. Outlet shopping has gained popularity recently as shoppers become more concerned about their spending habits.

Shares of developer Tanger Factory Outlet Centers Inc. SKT gained 19.82 percent last year, while stores offering designer clothes at discounted prices like TJX Companies Inc.’s TJX TJ Maxx and Marshalls have seen impressive growth over the past five years.

Macy’s Inc. M is considering following in the footsteps of other department stores like Nordstrom and Saks Fifth Avenue and opening its own off-price stores. Stores like Off Fifth and Nordstrom rack have kept big department stores afloat in a time when consumers are frequenting shopping malls less and less, an opportunity Macy’s may consider in the coming year.