Ross Taps Lower-Income Consumers

By Cecile B. Corral -- Home Textiles Today, 2/26/2007 12:00:00 AM

PLEASANTON, CALIF. —

Discovering it has tapped an "underserved" customer, Ross Stores Inc. will more than double the number of its dd's discount units and expand to new markets this year.

During the off-price retail company's presentation at Citigroup's 2007 Retail Field Trip and Conference, evp and chief administrative officer Michael O'Sullivan said that since this concept launched during the third quarter of 2004, dd's has "proven to be a strong segment of customers."

The dd's discounts concept currently comprises 26 units in California. It serves younger, lower-income shoppers with national chain and discount brands, versus its sister — Ross "Dress For Less" stores — which serve middle-income customers with department stores brands.

"We see an opportunity in the lower end of the marketplace," O'Sullivan said. "It hits a large part of customers who are underserved. We've proved with dd's that this customer is different and distinct of the Ross customer."

The acquisition of former Albertson's grocery stores in fall 2006 will open up space for some of the new dd's stores.

Ross Stores Inc. is planning for 90 new units this year — 63 of them Ross and 27 of them dd's.

"Those new store openings include 40 of the [Albertson's] locations," O'Sullivan said, which he said, "are very attractive locations in our strongest markets, so we are very excited about these openings."

Gary Cribb, evp and ceo, added that the company sees a potential of 500 units for dd's down the road. "We're happy with top line," he said. HTT Research pegged home textiles sales at Ross Stores at $275.0 million in 2005.