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Ross Stores is benefiting from a growing consumer trend, unlike some of its competitors in the retail landscape. The off-price retailer is seeing heightened demand in stores, as economic uncertainty pressures the wallets of consumers nationwide. To capitalize on increased consumer momentum, the company\u2019s CEO is weighing a risky in-store change that shoppers may not be too fond of.\u00a0<\/p>\n
Toward the end of last year, Ross, which also operates DD\u2019s discounts, saw its comparable store sales rise by 9% year over year, while its operating income also spiked by about 11%, according to its fourth-quarter earnings report for 2025.\u00a0<\/p>\n
Additionally, recent Placer.ai data found that overall foot traffic at Ross locations increased by almost 12% year over year during the fourth quarter. This growth surpassed competitors TJMaxx, Marshalls, and Burlington, which all saw visits grow 2.8%, 3.3%, and 9.4%, respectively.\u00a0<\/p>\n
Off-priced retailers are resonating more with consumers compared to department store chains such as Macy\u2019s, Kohl\u2019s, and JCPenney, which all suffered declining foot traffic during the quarter.<\/p>\n
\u201cPre-COVID, department stores held a slight edge, capturing just over half of visits to the two segments,\u201d wrote Lila Margalit, content manager at Placer.ai, in an analysis. \u201cBut by 2025, that relationship had fully reversed, with off-price claiming a remarkable 62.9% share of visits.\u201d\u00a0<\/p>\n
\u201cAs consumers grow more price-sensitive and the retail landscape becomes more bifurcated, traditional department stores have struggled to articulate a clear competitive edge \u2014 while off-price continues to benefit from a straightforward, discovery-driven model,\u201d she added.<\/p>\n
Ross CEO considers in-store shift that could put customer loyalty to the test<\/p>\n
While speaking to investors during the company\u2019s earnings call on March 3, Ross CEO Jim Conroy said that sales and earnings in the fourth quarter \u201csignificantly\u201d surpassed the company\u2019s expectations.\u00a0<\/p>\n
\u201cEvery major merchandise category showed solid positive sales growth with shoes and cosmetics performing the best,\u201d said Conroy.<\/p>\n
Ross especially saw its ladies business accelerate during the quarter, especially in the junior section.<\/p>\n
\u201cWe are very comfortable saying that we have seen growth, very broad-based across income demographics and age demographics, including 18- to 34-year-old customers,\u201d said Conroy.<\/p>\n
Ross Stores’ comparable sales spiked by 9% year over year during the last few months of 2025.<\/p>\n
Shutterstock<\/p>\n
It is no surprise that young U.S. consumers have been flocking to Ross stores. A PWC survey a few months ago found that younger consumers are increasingly value- and price-conscious.\u00a0<\/p>\n
About 79% of Gen Z shoppers wait for products to go on sale before making a purchase, while ony 21% regularly pay full price. Also, searches for discount codes is up 14%.<\/p>\n
The increased consumer demand at Ross follows last year\u2019s price increases in stores due to tariffs. Conroy said price hikes during the fourth quarter were \u201cpretty modest,\u201d with the company\u2019s home category getting \u201chit hardest by tariffs.\u201d<\/p>\n
He also said that during the quarter, Ross had \u201cgained some confidence\u201d in introducing higher prices in stores.<\/p>\n
\u201cI think if we had a learning coming out of the quarter, it is that we probably have the ability to push for some either higher-priced goods or potentially taking some retails up,\u201d said Conroy.\u00a0<\/p>\n
Related: Kohl\u2019s makes bold store change to lure back customers<\/p>\n
Conroy acknowledged that \u201chaving the best bargains in retail\u201d has made the company successful and confirmed the company’s main focus on maintaining that reputation. However, Ross isn\u2019t afraid to ask customers to dress for more.\u00a0<\/p>\n
\u201cIf we feel like we have merchandise categories that are margin eroding, increasing AUR (the average selling price of an item) a little bit to recapture some of that,\u201d said Conroy.<\/p>\n
This potential change could be risky for Ross as many consumers across the country are feeling the pinch amid economic pressures, which has pushed them to cut their spending, a survey from L.E.K. Consulting Survey in October found.\u00a0<\/p>\n
Where Americans plan to cut spending:About 57% of U.S. consumers believe they are paying more than is acceptable for apparel, footwear, and accessories, and 50% feel this way about beauty products.Only about a quarter of U.S. consumer expect their financial situation and discretionary spending ability to improve in the next 12 months.Additionally, 74% plan to cut spending on apparel, shoes, and accessories; 68% on major household goods; and 63% on beauty products.\u00a0A whopping 83% said they\u2019ll purchase lower-priced household brands or products; 60% will buy lower-priced clothing, footwear, and accessory brands or products.
\nSource: L.E.K. Consulting Survey<\/p>\n
\u201cThe survey pointed to the apparel category as the most sensitive for consumers when it comes to price increases from tariffs,\u201d Laura Brookhiser, a managing director at L.E.K. Consulting, said in a statement.<\/p>\n
Rob Haslehurst, also a managing director at L.E.K. Consulting, added in a separate statement that companies should avoid increasing prices to match the market.\u00a0<\/p>\n
\u201cThe most effective brands and retailers will seek to set prices to reflect the benefits that consumers actually feel \u2014 rather than simply adding a cost mark-up or matching the market, which has been customary at some companies,\u201d\u00a0said Haslehurst. <\/p>\n
\u201cThey will work hard to thoroughly understand the essential qualities that define the value proposition of the brand so they can ensure the price is right,\u201d he continued.<\/p>\n
Ross hopes a bold strategy will attract more shoppers<\/p>\n
While Ross weighs potential price increases, it is planning additional bold changes to drive demand even higher.<\/p>\n
The company has recently been testing self-checkout in its stores, a change it plans to introduce to more locations this year.\u00a0<\/p>\n
\u201cWe have been piloting self-checkout actually for some time now, and we plan to expand to more stores given the positive results we have seen thus far,\u201d said Ross Chief Operating Officer Michael Hartshorn during the company\u2019s earnings call.\u00a0<\/p>\n
Last year, Ross opened 80 new Ross Dress for Less stores and 10 DD\u2019s Discounts stores, while expanding into new markets such as the New York Metro Area and Puerto Rico. This year, the company plans to accelerate its store openings, with some targeting \u201cmore populated, higher-rent markets.\u201d<\/p>\n
More Retail:<\/p>\n
Home Depot CEO raises alarm bells on consumer problem in storesKroger quietly reduces a vital store service for customersKohl\u2019s makes bold store change to lure back customers<\/p>\n
\u201cWe are planning to open 110 new locations this year, which represents 5% growth. Part of that growth reflects the reacceleration of DD\u2019s Discounts with plans to open 25 stores in 2026,\u201d said Conroy. \u201cFor Ross, we see an opportunity to open 85 new stores this year, slightly above last year.\u201d<\/p>\n
\u201cAs we continue to identify attractive real estate opportunities across our markets, we remain confident in the long-term potential to grow Ross and DD\u2019s chains to 2,900 and 700 stores, respectively, expanding our reach to even more customers over time,\u201d he added.<\/p>\n
As Ross plans to roll out these changes, it expects same-store sales growth of 3% to 4% for fiscal year 2026.<\/p>\n
Related: Home Depot CEO raises alarm bells on consumer problem in stores<\/p>\n
#Ross #Stores #CEO #eyes #change #risks #pushing #shoppers<\/p>\n","protected":false},"excerpt":{"rendered":"
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