Americans are abandoning department stores for one of the ugliest stores in retail

Ross Stores is taking over retail. 

The discount chain — which competes with stores like TJ Maxx and Marshalls — has opened more than 500 new stores since 2010.

It now has nearly 1,600 US locations and has reported soaring same-store sales as much of the brick-and-mortar retail industry is struggling. The chain has the potential to expand even more, according to analysts at Morgan Stanley. 

What is Ross' secret? Being one of the ugliest stores in retail. 

Much like warehouse chain Costco, Ross eschews the decor and frills of traditional retailers. The bare-bones philosophy allows them to pass savings of up to 60% on to customers. 

ross stores mapRoss Stores' investor presentationBut racks of clothes, shoes, and purses can get messier than Costco's boxes of bulk goods. 

Business Insider's Hayley Peterson visited Ross Stores' location in Richmond, Virginia, and was shocked at the disarray she found. 

"It looked like a tornado had ripped through the shoe department," Peterson writes. "Everywhere we looked, it was a disaster." 

Yelp reviewers also commented on how messy and disorganized the store was. 

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The rise and fall of department stores
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The rise and fall of department stores

Founded in 1858, Macy's was one of the first American department stores. It started as a small dry goods store in New York City, but later expanded to 11 adjacent buildings to form a department store.

On its first day in October 1858, Macy's made $11.06, equal to around $300 today.

Wikipedia Commons

Before Sears opened a fully air-conditioned, retail store in 1925, it sold products through mail-order catalogs for 40 years. By that time, Sears was already a household name, known for its affordable prices.

By 1927, Sears had launched 27 stores, mostly in Chicago.

Cornell Publications

 

James Cash Penney launched his first store, called the Golden Rule, in 1902 in Kemmerer, Wyoming. By 1913, he had opened 34 (non-mall) stores, which he consolidated under the JCPenney Company name that year.

Source: The State Historical Society of Missouri

JCPenney

In 1874, Macy's opened its first holiday window display in NYC, which featured porcelain dolls from around the world and scenes from Uncle Tom's Cabin. Shoppers traveled in droves to see the display.

Corbis

A half century later, Macy’s employees started its famed Thanksgiving Day Parade (originally called the “Macy’s Christmas Parade”), which featured live animals from the Central Park Zoo and attracted 10,000 people.

Macy's spearheaded the one-price system that most American stores use today (which eliminated the common practice of bargaining). It was also the first department store to advertise full refunds when it opened.

Additionally, Macy's was the first clothing store to have a liquor license (which it acquired in 1862) and a Santa Claus during the Christmas season.

(Photo by NBC/NBCU Photo Bank via Getty Images)

Sears had more than 600 stores when World War II began in 1941. The chain ventured outside the US for the first time when it launched a store in Havana, Cuba in 1942. That store was followed by others in Europe, Central and South America, and Canada.

Getty Images

By 1941, JCPenney Co had expanded to 1,600 stores in 48 states (all except Hawaii and Alaska). Most of the stores were in outdoor shopping centers.

The State Historical Society of Missouri

In the 1950s, the three chains began anchoring indoor shopping malls, many of which moved from American cities to the suburbs.

Source: Forbes

Pleasant Family Shopping

They were phenomenally successful. Shoppers flocked to department stores, hundreds of which launched across the US in the midst of postwar financial optimism.

Source: The Atlantic

Nina Leen/Time

Sears, Macy's, and JCPenney became symbols of suburbia during this time.

IMX

In the 1970s, the three chains started focusing on fashion as more women entered the workforce. JCPenney Co rebranded as Penney's in 1963, and then again as JCPenney in 1971.

Source: Fortune

Pleasant Family Shopping

Sears was the nation’s largest retailer by revenue until the late 1980s, when Walmart surpassed it.

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Online shopping became popular in the 2000s, and department stores started experienced a slow decline. In 2008, retail sales decreased by a record 4.1%, and as much as 28% for some department stores.

From 2007 to 2009, at the time of the Great Recession, department store employment also fell by 132,000 jobs.

(Photo by James Leynse/Corbis via Getty Images)

Due to declining sales, Macy's, Sears, and JCPenney have collectively closed hundreds of stores in the past decade.

"We've reduced risk by eliminating a lot of our pension liability, reducing the size of our bank facility, we reduced the risk by closing stores and reducing the size of the company," Sears CEO Edward Lampert told The Chicago Tribune in March 2017.

"We're fighting like hell to change the way people do business with us."

REUTERS/Shannon Stapleton

Today, Macy’s still anchors Herald Square as the world’s largest store, and an upcoming renovation will bring its total retail space to 1.1 million square feet. At the same time, the chain plans to close at least 100 stores across the US.

Source: Architectural Digest and Business Insider

(Photo by Drew Angerer/Getty Images)

Since a department store often pays a large part of its mall's lease, a closure can cause smaller shops throughout a mall to shutter. Some analysts project that nearly 25% of American malls are in danger of losing their anchor stores.

Source: Business Insider

(Photo by Spencer Platt/Getty Images)

America's department stores could rise again if they manage to adapt to today's shoppers, many of whom want to shop online.

REUTERS/Brendan McDermid

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In some stores, the fitting rooms are "dirty," the service is "horrible," and merchandise is mislabeled, ink-stained, broken, or damaged, according to an analysis of dozens of customer reviews on Yelp. 

But customers will seemingly prioritize deals over organized shelves. 

"I LOVE SHOPPING AT ROSS!" one customer wrote on Yelp, adding that she feels like she's "robbing the bank" when she finds deals there. 

Hayley Peterson contributed reporting to this story. 

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