Ross Pricing Analysis

Pricing Objectives:
Ross’s pricing objective, as the largest off-price apparel and home goods retailer, is profit oriented. Their objective is “to pursue and refine their existing off-price strategies to maintain and improve both profitability and financial returns over the long term” (Form 10-K, 2016). Ross purchases their merchandise at a low cost and sells it to consumers for a lower price than that of specialty and department stores. Their merchandise is priced at a 20-60% savings off department store prices. This offers consumers consistently low prices at a desirable value. This off- price strategy has given the company effective results. Over the last few years, Ross’s earnings have grown steadily. According to Ross’s 10-K form, their

Ross offers in-season, quality, name brand and designer apparel, accessories, footwear, and home goods at a savings of 20% to 60% off department store prices every day. They use comparison pricing on all their products. Their price is displayed adjacent to the manufacturer’s price of the same or similar product, showing the consumer the difference in savings. In comparison with other off- price retailers, Ross is the retailer with the best bargains. According to an article on Nasdaq.com, the average price for apparel purchase at Ross is $10. The average price through its competitors, Marshals, and T.J Maxx are $14 and $15 respectively. “This makes Ross an affordable place for almost anyone” (Nasdaq, 2015). Kimberly Greenberger, an analyst at Morgan Stanley states, ‘That kind of "thrill" of finding a bargain on a "fabulous brand" keeps shoppers coming back’ (Nasdaq,

Ross purchases a majority of their merchandise from manufacturers. They have a team of buyers that use several different methods which allow them to offer customers brand name and designer products at a great discount. Ross generally does not require that manufacturers provide promotional allowances, co-op advertising allowances, return privileges, split shipments, drop shipments to stores, or delayed deliveries of merchandise. This helps strengthen its relationship with its suppliers. Most of their orders are delivered once to one of its five distribution centers. This allows buyers to obtain significant discounts on in-season purchases. Most apparel merchandise that’s offered is obtained through manufacturer overrun and canceled orders during and at the end of the season. These purchases are also referred to as “close-out” and “packaway” purchases. Close-out purchases are shipped to stores in-season, allowing the retailer to get in-season goods into its stores at lower prices. Packaway merchandise is stored in warehouses until a later date, which is usually at the beginning of the same selling season in the following year. For example, the retailer will purchase coats during the spring and will put them away until October. The purchase of pack-away merchandise helps Ross increase the amount of popular national brands in its merchandise at competitive savings. The only disadvantage with packaway merchandise is