Burlington Retail Chain With No Website Thrived During Covid : The Indicator from Planet Money Burlington shut down its online store right as the pandemic started, but it still weathered 2020 well. In fact, its stock prices just hit an all time high! What's Burlington's secret to success?
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How Burlington Powered Through 2020 Without A Website

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How Burlington Powered Through 2020 Without A Website

How Burlington Powered Through 2020 Without A Website

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

SALLY HERSHIPS, HOST:

Hey, everyone. This is THE INDICATOR FROM PLANET MONEY. I am Sally Herships in for Stacey Vanek Smith, who is on vacation. And today I am with NPR business correspondent Alina Selyukh.

Hi.

ALINA SELYUKH, BYLINE: Hello, hello.

HERSHIPS: And you have brought us a story about a special kind of store.

SELYUKH: Yes, it is a store that seemed to make a totally insane decision right before the pandemic started.

HERSHIPS: Did they order too much toilet paper, not enough toilet paper?

SELYUKH: (Laughter) Of course it has to do with toilet paper. No, this is a nationwide clothing chain. Picture this. This is March 5, 2020. Everything around them is going into complete lockdown. Everyone's hunkering down, upgrading their Wi-Fi. This chain shut down its website. The company just said, you know what? We tried this whole online sales thing. Online shopping is just not for us. But a year later, March 2021, this company's stock price hit an all-time high.

(SOUNDBITE OF WILL GROVE-WHITE'S "FUNKY TOYSHOP")

SELYUKH: The company's name is Burlington, as in formally known as the Burlington Coat Factory.

HERSHIPS: Today on the show - how a retail chain without a website powered through the pandemic, a time when we were all shopping online.

(SOUNDBITE OF WILL GROVE-WHITE'S "FUNKY TOYSHOP")

HERSHIPS: Burlington stores used to be the coat factory.

SELYUKH: Now Burlington sells everything you might find at a department store except, you know, all discount items.

HERSHIPS: Like T.J. Maxx or Ross.

SELYUKH: Exactly. In retail lingo, these discount department stores are called off-price, and Burlington is actually the smallest compared to the other two.

HERSHIPS: The experience is generally the same in all of these stores, right? It's, like, a totally random selection. There's, like, a bedazzled Michael Kors belt next to, like, some kid's pajamas and, I don't know, like, old chocolate bars.

SELYUKH: (Laughter) Yes. The idea is to draw people in with this promise of a treasure hunt. That's the term the company actually uses. But, you know, the idea is you might not find exactly what you wanted, but you might also hit an amazing discount. And this idea, this treasure hunt idea is central to both the story of Burlington's success in the pandemic and its decision to shut down the website.

JAMEKA HOLLOWAY: If there's something specific that I'm looking for, Burlington is not the place that I go.

SELYUKH: That's Jameka Holloway (ph), who loves shopping at Burlington. And a big part of it is never knowing what kind of deal you'll find.

HOLLOWAY: Most times, I'll typically just, like - I'm browsing for whatever, or I go and get a lot of cheese and seasonings along with cookware.

SELYUKH: How often do you - I don't know - go in for some pants and leave with, like, a frying pan?

HOLLOWAY: Oh, my God, every single time (laughter). The other week, there was this miniature teapot there that was 6.99, and the regular retail price was, like, 24.

SELYUKH: That's a huge discount. And she says, for her, the prices, these discounts were exactly what kept her coming back even during the pandemic.

HERSHIPS: It's hard to overstate the draw of a discount during an economic downturn. When people's finances get tough, they turn to cheaper stores. And often, they continue shopping there even when things improve.

SELYUKH: But of course, we're talking not just about a recession but also a global health crisis. This was a time when people really cut back on shopping in person. And I want to make clear that these discount retail stores did lose a ton of sales during this past year. Burlington permanently shuttered 28 stores, but then it opened 62 more - 62 new stores in a pandemic. This year, it plans to open another hundred. A few weeks ago, Burlington actually reported sales basically back to pre-pandemic levels.

LAURA CHAMPINE: Things are progressively getting better at Burlington.

SELYUKH: That's Laura Champine. She follows retailers for investment firm Loop Capital Markets. And she basically says Burlington's business model, that whole approach to shopping like a treasure hunt for bargains, gave it a huge advantage over traditional department stores, like Macy's. She says for discounters, they sell whatever comes along.

CHAMPINE: If they have trouble finding, you know, black belts, then they just won't have any, whereas Macy's feels like it's always got to stay in stock in certain core categories that you might look for. Burlington - if they don't find the right goods at the right price, it's just not there.

HERSHIPS: To put it another way, even before the pandemic, Burlington was used to playing things by ear to constantly adjust based on a belt shortage here or great deals on frying pans or miniature teapots over there.

SELYUKH: And this became super-relevant when we hit that famous 2020 fashion pivot - out with the office clothes and fancy shoes and in with the stretchy pants and house dresses. Many stores had to really hustle in that moment because usually that kind of change of inventory takes them months or even seasons. But discount stores like Burlington - they're used to changing their selection in a matter of weeks.

HERSHIPS: Which is also how the store ends up feeling like a treasure hunt for shoppers.

SELYUKH: Yes. And of course, the only way to keep people interested in this whole dig-for-treasure style of shopping is to actually reward them with treasures. And this is where it gets interesting because during the pandemic, stores like Burlington got better treasure.

HERSHIPS: We are really leaning into this treasure metaphor now.

SELYUKH: The reason I'm doing that is because I want to talk about how all these off-priced stores find the products to sell in the first place. That's key to understanding the story here. Sometimes, stores like these place their own orders, asking labels to manufacture stuff just for them. But more often, discount stores take advantage of things going wrong with orders from other stores. And one of the ways is if designers make too much stuff or if a fancy department store cancels big orders, like, say, at the start of a pandemic. Then Burlington swoops in and buys up the extra stuff on the cheap.

HERSHIPS: Which is to say, when department stores scale back like they did last year, better stuff, more stuff winds up at stores like Burlington.

SELYUKH: And in a weird way, you know how like in nature, scavengers play this big role in maintaining the balance of life - I've been watching a lot of nature shows. Well, I think of discounters, like Burlington, as kind of like the scavengers maintaining the balance of stuff in retail. And retail analyst Laura Champine says the designer brands are totally happy to have this whole swath of off-priced department stores.

CHAMPINE: Usually, if you see something at T.J. Maxx or Burlington and it's a designer product, it's probably a mistake the designer made. So you'll see the odd colors, that sort of thing. Most vendors aren't proud of those products.

SELYUKH: Yeah, it's like where all of the strange things just go to disappear (laughter).

CHAMPINE: Right, it's kind of the retail island of misfit toys.

SELYUKH: No designer is out there creating things, thinking, oh, this will look good on a discount rack or worse, on a discount website.

HERSHIPS: And all of this is why Burlington decided to give up its website during the midst of a global viral pandemic.

SELYUKH: When the company actually announced the decision, people who follow it pretty much celebrated.

HERSHIPS: Right, think about it from the perspective of a designer brand. They don't want their misfit clothes to be the first thing that pops up in an online search. That can tarnish the brand and make it look bad. And they also don't want their expensive items showing up with a big 50% discount price next to it.

SELYUKH: And then from Burlington's perspective, it is a whole ordeal to run a website when you have a constantly changing, super-random selection.

CHAMPINE: What they have in one store may be completely different from what they have in another store. They might have one pink dress and nothing else from that designer, or they might have 13 size small and no large. I mean, it's a nightmare to try to run an e-commerce site with that kind of a setup.

SELYUKH: And Burlington's shoppers weren't even using it. Back when Burlington's website existed, it accounted for less than half a percent of sales. Burlington's biggest rival Ross also doesn't sell online. T.J.Maxx and its sibling Marshalls do sell online, but Laura Champine says their website is small and nonprofitable.

HERSHIPS: This all makes a lot of sense. I think one of the thrills of discount shopping is the serendipity, like, right? You walk in looking for a pair of pants, and you end up walking out with a teapot.

SELYUKH: Yes, and the prices - that's how our shopper Jameka Holloway feels anyway.

HOLLOWAY: It's sort of like a discount emporium, and that's something that I really appreciate.

(SOUNDBITE OF WILL GROVE-WHITE'S "FUNKY TOYSHOP")

SELYUKH: And of course, we know she's been walking out with stuff she didn't know she needed.

HERSHIPS: Which I think we can admit happens to the best of us - we can all relate. I'm Sally Herships.

SELYUKH: I'm Alina Selyukh.

HERSHIPS: Stacey Vanek Smith is relaxing on a beach, we hope, somewhere lovely. She will be back soon. This episode of THE INDICATOR was produced by Brittany Cronin with help from Gilly Moon. It was fact-checked by Sam Caiand edited by Alex Goldmark. THE INDICATOR is a production of NPR.

(SOUNDBITE OF WILL GROVE-WHITE'S "FUNKY TOYSHOP")

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