Off-Price Retail Positioned for Growth, Analysts Say
Retail experts project above-average growth for the off-price sector in 2026, citing nimble supply chain management and opportunistic buying as key advantages. The sector's decentralized sourcing model and diversified vendor base make it more resilient to freight volatility and supplier delays. Analysts note that off-price buyers are increasingly sought after by brands looking for channel expansion after an acquisition or a DTC slowdown.
- The global off-price retail market is projected to reach a valuation of approximately $413.95 billion in 2026, with a forecasted compound annual growth rate (CAGR) of around 8.7% through 2035. This growth is partly fueled by value-conscious consumers and an increasing preference for sustainable shopping, as off-price channels help reduce inventory waste. - Competitor Ross Stores is pursuing significant expansion with a long-term goal of 3,600 stores, seeing a clear path for over 1,300 new locations, particularly in the Midwest and Northeast. In 2025, the company completed its plan to open 90 new stores and is expanding the use of self-checkout, which it aims to have in more of its high-volume locations in 2026. - Burlington is also in a strong growth phase, with plans for 110 net new stores in 2026 and is remodeling its entire 1,115-store fleet to be completed by the end of 2026. A key part of its real estate strategy is acquiring leases from bankrupt retailers like Jo-Ann, which will account for over 40% of its 2026 openings. To support this growth, Burlington is opening a new 2 million-square-foot, highly automated distribution center in Savannah, Georgia, in 2026. - The trend of prestige and luxury beauty brands entering the off-price market is expected to grow, partially in response to potential import tariffs. This follows a pattern of "trading down" where brands like By Rosie Jane have entered Target and E.l.f. Cosmetics expanded into Dollar General. - Major beauty conglomerates are actively acquiring high-growth independent brands, which will likely increase the availability of their products in off-price channels. Notable 2025 deals that will influence the 2026 landscape include E.l.f. Beauty's $1 billion acquisition of Hailey Bieber's skincare brand Rhode, and L'Oréal's acquisitions of skincare brand Medik8 and hair care brand Color Wow. Unilever also acquired the plastic-free personal care brand Wild. - To navigate ongoing supply chain volatility, off-price retailers are diversifying their supplier bases and using technology for greater agility. Ross Stores implemented a predictive AI suite in 2025 to analyze regional demand and optimize inventory allocation. Burlington's "2.0" merchandising initiatives provide buyers with better tools to manage the impact of external factors like tariffs. - Supply chain disruptions are expected to continue in 2026 due to geopolitical tensions, climate events, and cyber threats. In response, 76% of trade professionals view new U.S. tariffs as a long-term factor, leading to strategies like changing sourcing patterns (65% of companies), renegotiating supplier contracts (57%), and nearshoring (51%). - The retail real estate market in 2026 is favorable for off-price expansion due to the struggles of other sectors. Macy's, for example, plans to close 150 stores by 2026, freeing up prime retail space. This trend allows off-price retailers like Ross and Burlington to acquire locations from bankrupt or downsizing companies.
