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Off-price retail is growing faster than any retail sector. But what is it and what makes it so successful? In this brief guide, we’ll take you through off-price and explain exactly what makes it so appealing to brands and consumers alike.

INTURN is the win-win off-price solution for brands and retailers. To find out about this new way to do off-price, read about our platform features, or find out more about our solution here.

What is off-price retailing?

Off-price is when retailers sell branded or designer items to consumers at significantly lower prices than full-price stores.

Brands have excess product that they are unable to sell at full-price (or even at a slight discount) in stores, and in order to have proper cash flow and be successful in business, they have to sell off this inventory. They typically look to off-price retailers to purchase their product at 40-60% discounts off of the wholesale price, usually taking whatever they can get for their unwanted goods. Excess inventory can occur for many reasons, such as cancelled orders, off-season product, overproduction, manufacturing errors, among other things, and is inevitable in the retail industry.

Because these off-price retailers buy product at such a low price, they can still turn a profit by selling it to consumers at significantly lower prices than those found in boutiques, department stores, and other full-price retailers.

How does off-price retail work?

Excess inventory is inevitable in retail - no matter how popular a fashion trend or how successful a particular season is, there will always be items left over that haven’t sold. This dead stock, or excess inventory, naturally poses a number of problems for businesses.

Off-price retail is essentially made possible by excess inventory in the retail market. Though businesses carry out extensive product planning to try and avoid this issue, their forecasting is generally based on previous season sales and assumptions, making final production numbers very rough. As a result, manufacturers are often faced with the issue of overproduction, leaving them in need of a way to shift this excess inventory.

Excess inventory can happen at any stage in the product cycle for a number of reasons, such as:

Economic Instability

Economic Instability

Unpredictable Demand for Product

Demand for Product

Changes in Consumer Spending Habits

Changes in Consumer Spending Habits

Purchasing Setbacks, Credit Issues

Purchasing Setbacks, Credit Issues

Unexpected Weather Fluctuations

Unexpected Weather Fluctuations

Excess inventory means a loss of revenue, not only because the manufacturer will have to sell stock below MSRP, but also because excess products quickly lose value the longer they are held in stock. As demand for this stock decreases, it begins to take up shelf space that could be better allocated to newer products with higher profit margins.

Holding costs like warehousing, insurance and taxes also cut into revenue, with moving or storing excess inventory costing US retailers approximately $50 billion a year. What’s more, slow monetization of inventory affects a business’s freedom to take out loans at the best rates, further inhibiting their financial situation.

This is where off-price retailers come in. They operate by buying products from thousands of different designers, capitalising on the unpredictable nature of consumer demand and errors made in the production process by outlets looking to ensure that their stores are always stocked.

Holding costs cut into revenue

However, this is hugely beneficial for manufacturers looking to shift excess units in order to recover some of the money that would have otherwise been tied up. The amount of money regained can make all the difference to the success of the business that year and is thus essential to a working brand.

Off-price retailing is therefore made possible and acts as a solution for manufacturers.

What are the benefits of off-price retail?

With off-price retail comes many benefits to a number of different groups:


It makes sense that consumers are big fans of off-price retailing. After all, off-price retailers sell brand name and designer products for a fraction of their original price, enabling customers to browse bargains whenever they want and eliminating the need to wait for annual sales. And for consumers, part of the original attraction is that they have no idea what they are going to end up buying when they enter the store. It’s like a treasure hunt for the best deal, price, or item.

Off-price retailers

The off-price retail business is entirely dependent on excess inventory and is thriving more than ever before, as buyers have become accustomed to discounts and enjoy hunting for the best deals available. With an ever-changing stock, off-price retailers are in a much stronger position to keep their customers engaged than traditional retailers. In many ways, the off-price retail business plan takes the volatile nature of the retail industry and converts it into a steady model for off-price retailers.

Original brand manufacturers

Off-price retail gives brands the opportunity to turn their inventory over and maintain a healthy cash flow. Since excess inventory ties up cash, the advantage to sell it to off-price retailers allows brands to hit their margins by shifting stock and recovering revenue that would otherwise be tied up in goods form.

What is the difference between off-price vs. full-price?

There are many other ways to differentiate off-price and full-price aside from the obvious cost differences.


Off-price retailers negotiate on discounted prices, whereas full-price retailers negotiate for better payments terms and gross margin deals.

Buying timeline:

While full-price retailers buy products 6-9 months in advance of being sold in stores, off-price retailers buy products only 1-3 months in advance.


Full-price retailers get their pick of particular styles and quantities to stock. On the other hand, off-price buyers buy whatever is left over, choosing from the remaining selection still available.


While full-price buyers need to be in touch with what consumers want and what items are on trend, off-price buyers need to be strategic with how they price their items to increase demand for their items.

Examples of off-price retailers

Off-price is increasingly becoming the bright spot in what used to be an unspoken sector of the retail industry. As more customers are increasingly favoring off-price, here are two of the most well-known retailers:

Off-price is becoming a bright spot in the retail industry

TJX Companies Inc.

With over 3,800 stores across the globe, TJX is the largest off-price retailer in the USA. Some of the company’s seven businesses include Marshalls, HomeGoods, T.J. Maxx and T.K. Maxx. Each of these retail chains offer off-price goods in different niches; however, all share the same brand mission of delivering good value to customers. Founded in 1976, the company is one of the best known off-price businesses in the world and boasts over $33 billion in revenues.

Ross Stores Inc.

As the second largest off-price retailer in the USA, Ross operates the chains Ross Dress for Less and dd’s DISCOUNTS. With over 1,500 stores in 37 states, Ross, while a smaller business than TJX, finds success with a similar off-price retail business model. With plans to open 80-90 stores annually over the coming years, Ross abandons the more polished finish of traditional retailers in favour of offering the best possible discounts for customers.

What are best practices for off-price retailers?

It can be difficult to know where to start when optimizing for off-price. You don’t simply want to sell your products to buyers who will purchase the most; you also want to optimize the value of your inventory to help hit your margins. Here are some best practices in doing so:

1. Updating your backend systems

While it can be easy to let this drop down the priority list, ensuring that you have a solid internal infrastructure is integral to your success. Updating legacy systems, such as your inventory management, image management, markdown optimization and invoicing/PO, is key. And it’s important that you replace any outdated processes as well as systems to ensure that you’re bringing improved visibility and structure to your inventory tracking and overall off-price business performance.


Aggregate and provide all available product information to buyers in a clear, comprehensive manner in order to increase buyer confidence and purchasing prices and enhance existing relationships.

2. Determining what inventory needs to be marked down and sold

Products can reach a range of locations during their selling lifecycle as a result of unexpected returns, cancelled orders and changes in shipping processes. Poor reporting systems only worsen the situation, leading to further misjudgements over inventory levels.

Having a clear and up-to-date reporting platform is therefore essential. Take full stock of products across all wholesale, retail and e-commerce stores and ensure that you collate this information to help you locate the places where your cash is tied up in.


Get all of  your reporting up-to-date and aggregated for each channel of purchase to give you a clear real-time view of the inventory situation and where you cash is tied up.

3. Optimizing your buyer network

Timing is everything - a huge element of your success is finding the right buyer for your inventory in the right market at the right time. The ideal buyer isn’t always the one with the highest market demand for your product, with there being a number of other factors to consider like ease of communication and whether they have a customer base that fits with your brand.

Review your current buyers and reach out to new ones in domestic and global markets. Doing so will help you work towards your ultimate goal of selling inventory with the highest profit margin.


Vet your current buyers, and reach out to new buyers in both domestic and global markets in order to sell your inventory with the highest profit margin.

4. Providing buyers with detailed product information

No one wants to blindly commit to a purchase. Detail is everything, and buyers who are purchasing items based only on a text description are likely paying a much lower price for those products because they’re not entirely sure what it is they’re buying.

Save buyers the trouble of Googling style numbers in search of more information by ensuring that your product listings include images, product descriptions, measurements, fabric content, material codes, product origin, color codes and country of origin. There’s no such thing as too much information, and providing such detail will increase buyer confidence and in turn boost your profit margin.

The proof is in the numbers - global apparel brands have seen an increase in recovery value of +50% on product listings with rich content. Multinational off-price retailers also project that they can save 100 hours per buyer per month with simpler access to inventory offers rich with product data.


Aggregate and provide all available product information to buyers in a clear, comprehensive manner in order to increase buyer confidence and purchasing prices and enhance existing relationships.

5. Understanding your market demand

Offers that are curated for specific buyers in specific markets are much more likely to see products sell at a higher price as this means that buyers will also be able to sell products to their end customers at a greater price.

Determine the location and market where there is the highest demand for and lowest supply of your merchandise to allow you to sell your items for more. Through curating product listings for particular markets, multinational brands have reduced the time that off-price retailers spend on buying by 80%. Off-price retailers have bought 25% more units from these curated product listings, so it’s well worth doing your research to help buyers out!


Find the location and market where there is the highest demand for and lowest supply of your merchandise in order to sell your products at the highest price.

6. Supporting a robust internal communications system

It might sound obvious, but strong internal communication is the key to your off-price success. Transparency and internal oversight allows for better management, informed decision-making and more efficient processes.

Employees spend 2.5 hours (over 30%) of their workday looking for existing company information. Optimise your work efforts by supporting a strong internal communication system. Collaborating saves time and money, streamlining processes and helping you turn over more inventory.

Want to learn more? We have more off-price resources for you here.


Improve teamwork and internal insight in order to create a streamlined and efficient process for turning over your inventory.

What is the future of off-price retail?

While department stores like Sears and Macy’s are losing sales and being forced to close hundreds of locations, off-price businesses like TJX have opened almost 200 new stores in 2016 alone.

Off-price is growing faster than any other retail sector, with chains like T.J. Maxx, Ross and Burlington seeing consistent growth using this ‘treasure hunt’ style business model. With over 16,000 brands taking part in the $3 trillion global retail market for apparel, footwear and accessories, excess inventory is an inevitable part of the industry, and off-price is flourishing from this.

Increasing department store closures present a strong opportunity for off-price retailers to continue gaining market share, protected by their ‘more value for less’ business structure. Though off-price retailer Burlington saw top-line growth of 9% in fiscal 2016, department stores like Macy’s actually had sales declines of 4.8%. Off-price is constantly hailed as the future of retail, with the model meeting rapidly changing consumer tastes and customers having become accustomed to the low prices on designer brands.

"I believe we will start to see a moderation of growth in the off-price sector, mainly given the large number of stores being opened and the growing intensity of competition. A strong economy may also cause more customers to "trade up" to more expensive product offerings." - Steven Dennis

“Consumers today not only look for a bargain, they're looking for an immersive experience. The treasure hunt experience that the off-price model offers has led two-thirds of all shoppers to their stores. Off-price gives shoppers the opportunity to find the latest trends and brands they know and love at an attractive price. Consumers love to share the great deal they found with family and friends. This excitement encourages others to hunt for a great deal. We are confident that the off-price sector will continue to thrive, evolve and increase their footprint worldwide.” - Katy Albrecht, www.offpriceshow.com

If off-price’s success until now is anything to go by, the future is bright. Consumers appreciate the value for money on branded products, with the constant discounts meaning that customers feel less inhibited with their spending. The ever changing stock and excitement of finding a bargain play a huge part in off-price’s appeal, with continued growth in the sector seeming inevitable.