S&P 500: So Long Sears…Where Do You Do Your Shopping?
The news that Sears is being dropped from the S&P 500*, was hardly earth-shattering. Even though the move doesn’t have to do with the performance or valuation of the company, Sears’ outlook is hardly positive, either strictly in performance or based on anecdotal evidence: when was the last time you saw a Sears store that was packed with people? I know the one in our area is always deserted and even finding a cashier becomes a “I see one! Grab him!” challenge. And with JC Penney being the last of the original retailers still in the S&P 500, and the other extinct retailers (Montgomery Ward, Gimbel Brothers, Woolworth) also long departed, I got to thinking about where most of the people I know do their shopping. I haven’t been thinking about shopping much since I cut that habit out over a year ago, but I know exactly where to go when I do need to buy something. In a nutshell, if I’m not buying it online (which I estimate at 25% of my total consumer purchases excluding food), this is where I do my shopping:
- TJ Maxx, Marshalls and HomeGoods (off-price retailer): I’d like to meet a woman who doesn’t like TJ Maxx.
- Ross Dress for Less (off-price retailer): I got it at Ross!
- Forever 21 (discount specialty retailer): I remember shopping at Forever 21 when I was 16 and thinking, “Man it would be weird to be older than 21 and still shop here!” Oh wait, I still shop here.
- Walmart (largest retailer in the world): Side note: They have done some really interesting things over the years, from driving a movement to more environmentally sound products and building practices, working with small farmers, and even its emergency response plans are cutting-edge.
- Nordstrom Rack (off-price chain of a department store retailer)
- The Limited (specialty retailer)
- Desert Hills Outlets (premium outlets)
Which means that besides The Limited (best pants ever), pretty much every place I shop is a discount or price-leader store. Even when I was an overshopper (my word for it: violent spender), I still preferred the finds of Nordstrom Rack or Marshall’s to buying something for regular price at the mall. I don’t know about you, but I can’t stand to buy anything that doesn’t have at least one slash or red sticker through its MSRP. I remember when my boyfriend thought he was being frugal and told me his favorite store was having a sale:
Me: What’s the sale?
Him: The whole store is 30% off.
Me: That sounds like regular price to me. Call me when it’s at 70%.
TJX Companies, which owns TJ Maxx, Marshall’s and HomeGoods, has had savvy management and great returns in the past few years, and capitalized on the loyalty of its core markets (female shoppers who would otherwise shop at department stores). They’re the ladies who like brand names but also love seeing those original price tags ($98) and buying it for $29.99. Sears, on the other hand, signed the Kardashians for a clothing line. Here’s a gratuitous Kardashian trifecta to let that sink in:
Call me Krazy, but I think TJX both as a stock and as a place to shop will provide a much better value for the next several years. The Kardashian Kollection reeks of aspirationalism overload, and I am still confident the people will get over it. But those Kooky Kardashian sisters (let me know if all the Ks are Kinda Killing you inside) have one great thing going for them: they are really, really good-looking.
So I have to know: What’s your favorite place to shop for clothes, home goods and other consumer items? Do you also think it’s the store that provides the best value? Does it hurt you to pay full price?
*Because its public float has been below 50% since 2008, due to the private hedge fund ESL Investments’ ownership of 62% of the shares.