Ross Stores expands aggressively, bucking retail contraction trend

Ross Stores Inc. is demonstrating remarkable resilience and strategic foresight within the retail sector, actively pursuing an expansion strategy even as many competitors grapple with market contractions and profitability challenges. This divergence signals a robust business model and a keen understanding of current consumer dynamics.

Strategic Expansion Amidst Industry Headwinds

In a notable display of confidence in its operational strategy, Ross Stores recently concluded its fiscal year 2025 store growth objectives by inaugurating thirty-six Ross Dress for Less and four dd’s Discounts outlets across seventeen states. This expansion drive is not a fleeting initiative; the company has ambitious plans to introduce an additional ninety new locations by the end of the current fiscal year. Richard Lietz, Executive Vice President of Property Development, highlighted the company’s commitment to strengthening its brand presence by opening stores in both established and new markets, indicating a calculated approach to market penetration.

Targeted Growth and Geographic Focus

The expansion strategy exhibits a dual focus. For Ross Dress for Less, the company is increasing its presence in the Midwest and Northeast, with new stores planned for Michigan, New Jersey, and New York, while simultaneously reinforcing its footprint in the sunbelt states. Concurrently, dd’s Discounts is expanding within its core markets of California and Texas. This targeted approach suggests a deep understanding of regional consumer behavior and market potential. Looking ahead, Ross Stores maintains a long-term vision, projecting potential growth to at least 2,900 Ross Dress for Less and 700 dd’s DISCOUNTS locations.

The Off-Price Advantage in a Shifting Retail Landscape

Ross Stores’ expansion stands in stark contrast to the prevailing trend of retail downsizing. Major players like Macy’s are planning significant store closures to enhance profitability amidst escalating costs, including tariffs on imported goods. Similarly, Kohl’s has been streamlining its operations by closing underperforming stores and fulfillment centers. Even essential sectors like pharmacies and grocery chains, exemplified by Walgreens and Kroger, are undertaking footprint reductions. This widespread contraction underscores the unique position of off-price retailers.

John Mercer, head of global research for Coresight Research, identifies off-price as a consistently growing segment, driven by consumer demand for value alternatives to mid-tier offerings. Retailers such as Ross, T.J. Maxx, and Burlington are identified as structural market-share winners. Their strong value proposition attracts a diverse customer base, including lower-income shoppers and those trading down from more expensive brands. Mercer further characterizes these companies as counter-cyclical, benefiting from increased consumer selectivity during economic downturns.

Business Model Driving Market Share Gains

Data from Coresight Research indicates that discount formats are leading new store openings in 2025, with the three major off-price retailers expected to open a combined 289 stores this calendar year. This follows a substantial 340 openings across these companies in 2024. Zach Warring, a CFRA analyst, attributes the continued expansion of Ross Stores and TJX to their superior business model and the sustained momentum of the off-price sector.

The core of this advantage lies in their inventory acquisition strategy. These retailers purchase excess or old inventory from other retailers at significantly reduced prices and offer them to consumers at substantial discounts, typically 30% to 70% below retail. This model not only allows for attractive pricing but also enables new store openings with minimal reliance on external capital, providing a distinct competitive edge in the current economic climate. As of the latest reports, Ross Stores operates 2,273 Ross Dress for Less and dd’s DISCOUNTS locations across 44 states, the District of Columbia, Guam, and Puerto Rico.