This is not a misprint: Burlington Stores will discontinue online sales on its website and sell only through its brick-and-mortar locations. Upon further review, this against-the-grain approach is not as strange as it sounds. Similar to merchant competitor TJX within the off-price retail category, Burlington attracts customers to its stores by offering an array of discounted name brands that are constantly changing.
So consumers keep coming back for the thrill-of-the-hunt customer experience. There’s also a sometimes overlooked advantage that physical stores have over online sellers. This would be significantly less labor and overhead spending on delivery and costly logistics involved with online returns. Time will tell if swimming against the tide for Burlington proves to be rewarding, but right now they have a winning retail formula. Further evidence of its optimism are plans to grow store count and not shrink it, something quite unusual in today’s retail landscape.
A Chain Store Age article, excerpted below, discusses more on the topic:
Burlington Stores is getting out of the e-commerce business.
After reporting fourth-quarter sales and earnings that beat Street estimates, the off-price retailer dropped a bombshell on its quarterly call with analysts. Company executives said that Burlington is winding down its e-commerce operations, which account for about 0.5% of total sales, and focus on growing its bricks-and-mortar business. The company currently operates 720 stores in 45 states and Puerto Rico.
“In our business, which is a moderate off-price business, the nature of the treasure hunt and the average price point that we operate at mean that bricks-and-mortar stores have a significant competitive and economic advantage over e-commerce,” CEO Michael O’Sullivan told analysts. “We intend to focus our energy and resources on driving profitable sales growth in our bricks-and-mortar stores. We will also continue to aggressively expand and upgrade this store network through our new store opening and remodel programs.”
In fiscal 2020, Burlington expects to open 80 new locations and close or relocate 26 stores. Its average new store size in fiscal 2020 will be 39,700 sq. ft., the first time the average will be less than 40,000 square feet, noted Burlington CFO John Crimmins.
Overview by Raymond Pucci, Director. Merchant Service at Mercator Advisory Group
