Beauty brand Glossier may be officially expanding beyond its own stores and website for the first time with Sephora, but savvy shoppers have taken to social media to report they’ve found the sought-after brand elsewhere — and at a discount to boot — at TJ Maxx and Marshalls.
Other social media users have also recently found good deals at a mix of off-price retailers on high-end brands including: Laneige, Briogeo, Supergoop, Fenty Beauty, Smashbox, Estée Lauder, First Aid Beauty, Kylie Cosmetics and Nars, just to name a few.
Although beauty has been an off-price category for a long time, TJ Maxx and Marshalls have been increasing their access to high-demand products in the past five years. There are several reasons why.
“Off-price retailers are the most opportunistic whenever there’s any sort of dislocation and clearly there was major dislocation in 2020, so they got their hands on a lot of inbound inventory, which allows them to stock into those sections with more consistency. It looked more like a traditional merchandising assortment than it did this rummage sale one off,”Steph Wissink, a Jefferies analyst, said.
“Stepping forward even one level further, you now have brands that are open to the concept of actually selling into off-price,”She continued. “The channel has been legitimized just like the club channel or the dollar channel, and you’re finding brands are building strategies. If you walk into a Nordstrom Rack store today, you will see bold displays of beauty brands and those aren’t inventory overrun. Those are products designed for the off-price channel — just like fashion companies. The evolution is exactly the same.”
Glossier is one example. TJ Maxx and Marshalls, both part The TJX Companies Inc. have recently stock items such as Generation G matte lipsticks and Cloud Paint liquid blush. There are reports that they are selling fast.
TJX Cos. spokesmen declined to comment. A source familiar with the matter confirmed Glossier, which recently appointed Kyle Leahy its chief executive officer, will open a store at Williamsburg, Brooklyn, New York. It is currently available in off-price retail outlets for a limited period.
Wissink claims that more brands have been selling directly through the off-price channel due to increased access to high-frequency customers with higher incomes who are now challenging department stores.
“For a lot of these beauty companies, it’s not only an inventory remediation destination, but in some cases it’s a strategic growth destination in terms of where the consumer is going,”She added. “It’s not so much a negative as it once was. When we would find products from brands at off-price five, six years ago, we were worried about their inventory management. Now, it’s a byproduct of the supply chain, but also it’s because the off-price retailers have built more robust customer databases that actually legitimizes their customer frequency, and their average household income.”
Wissink explains that when it comes to the planned buy model, retailers and brands sit down with buyers in the off-price segment and create a strategy around the products that make the most economic sense.
Recently, another factor has been added to the mix. After months of delays caused by the COVID-19 global epidemic, there was a large influx of orders. This led to an oversupply. Anecdotal evidence suggests that this is more of problem for retailers than it is for brands. This has resulted in more products being sold through the off-price channel.
In an earnings call with analysts to coincide with The TJX Cos.’ second-quarter fiscal 2023 results, when describing the favorable buying environment, president and CEO Ernie L. Herrman said: “I hesitate to use the word unprecedented but it is at a different level I would say than we’ve seen and it’s across our good, better and a best zones….for Q4 gift giving I think we’re going to have some of the best branded content we’ve had in a while.” And on another earnings call, Burlington Stores’ CEO Michael B. O’Sullivan told analysts that the buying backdrop now “is better than it has been for years.”
“Many retailers and vendors overordered and overproduced versus what they’re now seeing in their sales trends,” O’Sullivan said about the increase in supply. “Also, I think that retailers and vendors probably built in a cushion to their orders to account for shipping delays, and those shipping delays have now eased, so they have too much merchandise. And finally, the mix of merchandise that the consumer is buying has really shifted, and I think that’s taken some vendors by surprise. So, there are some categories where there is now what I would call a glut of supply.”
When asked if he thinks this buying environment will continue, he replied that it was hard to predict. “If the economy weakens, then we could see even more merchandise sustainability. The other complicating factor though is the COVID[-19] situation in China. It’s hard to know what impact the recent shutdowns there could have. But they could create shortages later in the year. That’s possible. But on the other hand, if vendors overcompensate, then they could add to merchandise availability. We’ll have to see.”
With an oversupply, there are also concerns about a gray market where items are traded through unofficial distribution channels. This could lead to counterfeit products or products nearing expiration. To avoid this, experts advise consumers to always check labels carefully — especially expiration dates — before purchase.