Burlington, TJ Maxx owner TJX, and Ross Stores – the off-price retailers — are anticipated to see an incremental sales growth of $18 billion to $19 billion by 2021, according to the reports of JPMorgan. In a note to clients on Monday, analyst Matthew Boss wrote that this increment will primarily come from the fall of department store chains.

On a combined, department stores have lost around $25 billion in sales

Boss said that they expect off-price will be the primary beneficiary of this brick & mortar sales volume up for grabs and benefit from the plethora of close-out merchandise for several years. He added that the Street should not be worried about the off-price players losing market share when it comes to the increasing threat of the online retailing giant (Amazon Inc.).

On Monday, after the report of JPMorgan published, the shares of Ross Stores were jumping more than 3%. The stock of TJX was up more than 1% whereas shares of Burlington were close to 2.5% on the same day. Recently, Burlington has been the largest gainer of three. It has hiked up more than 8% this year.

Analyst Matthew Boss said that the encroachment of the e-commerce company into the apparel industry closely resembles a full-price department store, rather than a TJ Maxx or Ross model. Citing the Prime Wardrobe pricing structure of the online retailer as an example, he said that the fashion focus at Amazon seems to look similar to companies like J.C. Penney and Macy’s. The firm said that since 2011, off-price retailers have gained $14 billion. JPMorgan found that the department stores have, however, lost close to $25 billion in sales on a combines basis and are in pace to lose another $22 billion in sales over the next half decade if this downward trend continues.

JPMorgan upgrades Ross Stores to overweight

Giving the stock of Ross Stores a fresh price target of $74 per share, the firm upgraded the off-price retailer to overweight. The stock had a price target of around $65 before and was trading near $63 per share on Monday morning.

In his report, Boss emphasized just how hard the off-price model would be for the online retailer to copy online. He said, “The model is difficult to replicate with over 1,000 buyers worldwide currently sourcing from 18,000 vendors in 100+ countries.”

Earlier this month at an inventor conference, Micheal O’Sullivan, the chief operating officer of Ross Stores, said “If I was Amazon, I don’t think I’d be looking at the off-price space as my big opportunity.” He added about the online retailing site, “I think within the world of retail, especially given the economics … I don’t think off-price is really the place where I’d focus my energy. Doing a treasure hunt online is much more hit or miss, because you are not actually seeing — or you’re seeing it, you’re just not experiencing the product in a same way that you would if you were in a store.”

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