The chain hailed by Wall Street as a 'retail treasure' runs the most disastrous store we've ever seen

Business Insider/Hayley PetersonRoss Stores may look disastrous inside, but analysts call it a ‘retail treasure.’
  • Ross Stores, a discount chain that competes with TJ Maxx and Marshalls, continues to post strong sales.
  • It’s a rare bright spot in a struggling retail industry.
  • But a visit to a Ross store in Richmond, Virginia, showed products in complete disarray.

Ross Stores has been deemed a “retail treasure” and a “rarity” by Morgan Stanley analysts for its strong sales and earnings growth at a time of widespread distress in the industry.

The discount chain – which competes with stores like TJ Maxx and Marshalls – has opened more than 500 new stores since 2010. It now has more than 1,600 US locations and has reported soaring same-store sales as much of the brick-and-mortar retail industry is struggling.

In the company’s most recent quarter, overall sales grew 16% to $US4.1 billion, and same-store sales rose 5%, on top of 4% growth last year.

Much like warehouse chain Costco, Ross eschews the decor and frills of traditional retailers. The bare-bones philosophy allows them to pass savings of up to 60% on to customers.

We went to a Ross store in Richmond, Virginia, to see how this “treasure” is luring so many customers when department stores are seeing sales and traffic plunge.


We were surprised to find the store in disarray.

Business Insider/Hayley Peterson

It looked like a tornado had ripped through the shoe department.

Business Insider/Hayley Peterson

Shoes were strewn all over the floor and benches, and there was a bra hanging from one shelf.

Business Insider/Hayley Peterson

The hat display was equally jarring.

Business Insider/Hayley Peterson

The socks clearly needed some attention as well.

Business Insider/Hayley Peterson

And the rugs were a mess.

Business Insider/Hayley Peterson

Everywhere we looked, it was a disaster.

Business Insider/Hayley Peterson

Yet other parts of the store were empty.

Business Insider/Hayley Peterson

It looked as though the store were going out of business. (I checked, and it’s not.)

Business Insider/Hayley Peterson

Merchandise was loosely grouped into sections — like toys, shoes, and furniture — but it was hard to see any real organisation beyond that.

Business Insider/Hayley Peterson

In every department, there were empty shelves and items on the floor.

Business Insider/Hayley Peterson

Apparently, the tornado that hit the shoe department made its way over to the lingerie department as well.

Business Insider/Hayley Peterson

Bras covered the floor.

Business Insider/Hayley Peterson

The kids’ section was a sad jumble of random toys.

Business Insider/Hayley Peterson

And like the rest of the store, a quarter of the merchandise was left on the floor.

Business Insider/Hayley Peterson

Many products were also out of place.

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Throughout the store, we found several abandoned carts.

Business Insider/Hayley Peterson

Most of the lone carts were empty.

Business Insider/Hayley Peterson

We spotted only two employees in the store who weren’t working at the registers.

Business Insider/Hayley Peterson

They were both restocking the apparel department.

Business Insider/Hayley Peterson

Customers didn’t seem to mind the mess. There was a steady line of people checking out while we visited and more than 20 shoppers throughout the store.

Business Insider/Hayley Peterson

The messy environment is likely a product of Ross’s efforts to keep prices low by investing less in labour and infrastructure — like construction and display costs — than full-priced department stores.

Business Insider/Hayley Peterson

Those cost savings are passed on to consumers, who, based on Ross’ earnings, are willing to deal with a mess for the sake of discounts.

Business Insider/Hayley Peterson

Ross’ success is a bright spot in an otherwise gloomy retail industry.

Business Insider/Hayley Peterson

It has more than 1,600 stores throughout the US …

Business Insider/Hayley Peterson

… and the company plans to open 100 new stores this year.

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The new stores will consist of 75 locations under the Ross Dress for Less banner and 25 locations under the dd’s Discounts locations.

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Ross’ earnings for the most recent fiscal year grew 10% to $US14.1 billion.

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Same-store sales for the full year grew 4%, on top of 4% growth the previous year.

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Meanwhile, department stores like Macy’s, JCPenney, Sears, and Kmart have been closing hundreds of stores.

Business Insider/Hayley Peterson

While analysts are saying the department store closures are necessary, they say Ross has plenty of room to grow its physical presence.

Business Insider/Hayley Peterson

“Accelerating department store closures and weak fundamentals in remaining stores presents opportunity for Ross to continue to gain market share,” Morgan Stanley analysts wrote in a note last year.

Business Insider/Hayley Peterson

Unlike most other stores, Ross is “immune” to the growth of e-commerce because of the treasure-hunt experience and low prices it provides customers in stores, the analysts said.

Business Insider/Hayley Peterson

“Although there is some background noise in the industry, which talks down the importance of physical shops, we believe that these remain a vital route to growth for off-price players and see no reason why Ross should slow the pace of development,” Neil Saunders, the managing director of GlobalData Retail, wrote in May.

Business Insider/Hayley Peterson

So, American consumers, prepare to see a lot more stores like this.

Business Insider/Hayley Peterson

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