The Reject Shop's revenue has been going backwards... but now it reckons tough economic conditions are actually creating a huge opportunity.
👉Background: The Reject Shop is known for selling big name brands for a fair bit cheaper than you’ll find elsewhere. It first opened in Melbourne back in 1981, but now has over 300 stores.
👉 What happened: It hasn’t been smooth sailing for The Reject Shop. It has faced stiff competition in recent years from discount stores like Kmart, as well as COVID store closures. And now the company's revenue has actually gone backwards - down 0.5% year on year.
👉 What else: But The Reject Shop reckons tough economic conditions are actually creating a huge opportunity. More people will be looking for low-priced products - in other words they'll be 'trading down'.
💡When consumers are facing tough times, one of the first ways we respond is by 'trading down'.- ie. swapping out higher priced items for cheaper versions.
💡Trading down is one of the reasons that discount retailers tend to do better than other companies when economic downturns hit. Get this: shares in Walmart, a US discount behemoth, has outperformed the S&P 500 consistently during recessions.
💡Now with Australia's cost of living is soaring, The Reject Shop might just be right about getting a big break.
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