In a recent article by Forbes, an interesting trend emerged: the surge in off-price store openings in 2016.

“Based on third quarter reports about 604 off-price units were opened in 2015, a surge that will continue in the New Year. Nordstrom opened 27 Rack stores, Macy’s opened 6 Macy’s Backstage Stores, Saks 5th Avenue opened 14 Off Fifth Stores, Ross Stores opened 66 units, Bloomingdale’s opened one store, Kohl’s is testing one unit, and Lord & Taylor is dabbling with the concept by opening one store.  TJX, the industry’s dominant player opened 320 units in the United States.  Collectively there are now 4,245 off price stores in the U.S., a 12% increase in one year!”

As reported by The Wall Street Journal in late 2015, off-price stores had their sales grow 44% to $39 billion from 2009 to 2014. By comparison, sales at Macy's, Kohl's and Nordstrom (excluding Nordstrom's Rack, of course) increased 3.5% between 2009 and 2014.

The broader retail industry is not experiencing such double-digit growth; hence, not surprisingly, the off-price channel is rapidly taking market share from traditional retailers. That shift to off-price is obviously hurting the traditional retailers requiring them to review their cost structures including stores and staffing.

When speaking with MarketWatch, Jerry Storch (CEO, Hudson’s Bay Company) eluded to a silver lining – at least for the retailers that operate both full-line and off-price stores. According to Storch, the relationship between off-price and full-line department stores as “synergistic,” where one provides a pathway for the other:

“The off-price business appeals to a younger, millennial audience who might not normally shop at Saks or Lord & Taylor,” he added “They go to the off-price store, get familiar with the brand, then get a credit card, join the loyalty program and then try the full-line department store.”

This is either extremely optimistic or accurate - only time will tell.

In retail, traditional or eCommerce, it is challenging to be aware of the copious trends affecting overall sales. Being able to nimbly respond to outside threats requires business agility. As a retailer, what have you done to stay on top of your game? Hopefully in 2016, you have aligned your practices to take balanced measures that are both proactive and responsive to maintain and improve performance and profit. The most efficient way to identify what is compromising your sales performance is connecting data across your organization. Cloud based prescriptive analytics offers such capability that will garner you access to the near real-time information to diagnose what happened and why, but most importantly the proper action to take.