It’s safe to say that the off-price sector is a retail phenomenon, for both brick-and-mortar stores and for online. The industry is innovative, it’s exciting, and it’s disrupting the full-price retailers. Why? Because it seems new and fresh. Thus it may come as a shock to know that it’s a concept that has formally been around since WWII.
Though retail may be an untouched area when learning WWII history, it’s crucial while discovering how off-price retail came about. World War II caused huge goods shortages with no decrease in demand for the merchandise, consistently driving prices higher to an almost unaffordable level. Because of this, bargain hunting became trendy, especially for those big-ticket items such as appliances, TV, and radios.
Two WWII veterans caught on to this trend and created what is credited today as the first (and incredibly popular) discount store: E. J. Korvette. It was membership-based (think: Costco), allowing it to accept discounts from suppliers and thus undercut retail pricing.
Others quickly followed suit, with some creative entrepreneurs selling merchandise out of the backs of other business or in abandoned factories. Customers flocked to these stores, threatening full-price retailers, who in turn started to open outlets or look for other opportunities to sell some of their inventory at a lower price while keeping their full-price stores as well.
The off-price marketplace was booming. Many of the discount stores upgraded to take on a more luxe department-store look and feel. The 1960’s brought about some of the key players in today’s market, such as Target and WalMart. While they dominated the marketplace with their large facilities, key locations, and varied products, the industry kept expanding into different product categories, allowing multiple types of off-price stores to form.
The off-price industry never stopped growing in America, leaving us today with warehouses, full-line discount stores, off-price retailers, chains, outlets, online discount sites, membership clubs, box stores, and closeout stores. The industry seems modern and new, a re-branded 1940’s retail innovation. And new business models are forming every day to successfully sell off-price merchandise, not just in America, but also worldwide.
Since the late 1970’s, off-price retailers have been slowly opening stores across Europe and Asia. While this industry is still largely untapped, it is showing signs of massive potential. According to data from Euromonitor International, as of 2018 the off-price sector now accounts for 2% of European specialist retail sales.
Similarly in Asia the off price industry has been slow to grow, mostly due to marketplaces and factory stores offering discount prices on many products. However, the trend of moving to zero waste shopping could signal an opportunity for the off price industry to develop in Asia over time.
The Future of Retail in Asia <https://trendwatching.com/quarterly/2018-05/future-retail-asia/>