One of the few ways to thrive in retail during the prolonged and severe downturn has been to offer consumers a bargain, preferably lots of them.

Other than dollar stores, no retail segment's business model is aimed more squarely at bargains than closeout stores, so chains that scour the world for deals and share them with shoppers have stayed strong and kept growing through the slump.

That has brought new major closeout players to southern New Jersey, including Tuesday Morning, which first opened in Atlantic County in 2009 and then in Cape May County last year, and Ollie's Bargain Outlet, which opened in the English Creek Shopping Center in Egg Harbor Township in 2010.

They joined another closeout giant, Big Lots, that had the market to itself for decades and established stores in Somers Point, Egg Harbor Township, Cape May Court House, Lower Township, Bridgeton and Barnegat.

Closeout merchants say their success depends on hitting the sweet-spot of price for value, which means a relentless focus on finding quality products at well below normal wholesale costs.

On quality, representatives use the B-word repeatedly to reassure customers that a lot of their inventories are what they'd find in regular department stores.

Ken Sauer, district manager for Ollie's Bargain Outlet, said the chain is all about "brand names at deep discount prices."

Ross Manning, senior vice president of marketing for Tuesday Morning, said the chain has "35 years experience in acquiring first-quality, brand-name merchandise. We work constantly with brands in the United States and around the world to bring the best in upscale, branded product to our customers at unparalleled values. We take pride in the longstanding relationships we have with these brands."

Closeout store ads are emblazoned with brands such as Dyson, Clorox, Panasonic, Black & Decker, Rayovac and V8.

Tuesday Morning, which has stores in the Festival at Hamilton across from the Hamilton Mall and in the ShopRite shopping center in Rio Grande, has a robust e-marketing operation that informs about 9 million customers of new merchandise and clearances.

Notice of a monthly special event is sent by mail, and to reach new customers the event is announced in Sunday newspaper supplements, Manning said.

The challenge, of course, is getting companies to part with their brand-name products for less than they had hoped.

"It's always about the art of the deal for us," Sauer said. "Our buyers scour the globe looking for deals."

Manning said the relationships with manufacturers and the resulting deals are mutually beneficial.

"Tuesday Morning is able to help the brands by taking their overruns and excess inventory, great product that maybe is undergoing a style change. It may be something as simple as the packaging, an outdated box," said Manning, from Tuesday Morning headquarters in Dallas.

Developing those relationships - including showing manufacturers you can help them move product in the closeout market without undermining their main retail channels - takes time.

New entrants into the segment would find it difficult to catch up with the relationships built since Tuesday Morning started in 1974, Ollie's in 1982 and Big Lots also in 1982 (initially as Odd Lots).

Size also matters, because a large number of stores can take advantage of just about any wholesale opportunity and find the buyers for a specific product within a much bigger shopping audience.

Manning said Tuesday Morning opened another 48 stores in the past 12 months, giving it 828 stores in 43 states.

Big Lots had 1,505 stores in the first quarter, and plans to open another 50 stores this fiscal year and close 43.

Ollie's, a regional player based in Harrisburg, Pa., has 141 stores.

Sauer, based in Allentown, Pa., said Ollie's is big enough now to routinely do multimillion-dollar merchandise deals, but still small enough to do "regionalized deals" to stock a particular group of stores.

"Proximity to the shore is important for our Egg Harbor Township store, so we'll have more water-related items and beach goods, in keeping with the flavor of the community," he said.

Manning said Tuesday Morning has stores in many tourist-destination areas along all three U.S. coasts, and takes them into account in its inventory selection.

"There are some areas where we concentrate on luggage and roll-aboards, and other areas on pool and aquatic supplies, as well as toys for young people," he said.

Closeout retailers, too, saw sales slow during the severe recession started in 2007, but revenue has been steady and strong since.

For 2009, Tuesday Morning (NASDAQ: TUES) had revenue of $801 million. For its fiscal year ended June 30, it was $838 million.

Net income has bounced around, from a small loss in 2009 to a $3.9 million profit in 2012. Income for 2013 will be part of Tuesday Morning's full report in August.

Big Lots (NYSE: BIG) has seen revenue rise from $4.7 billion in 2010 to $5.4 billion for the 2013 fiscal year ended Feb. 2. Net income this year was $177 million, down from $201 million in 2009.

Financial data isn't available for privately held Ollie's Bargain Outlet, but Sauer the company's revenue has been growing at better than 20 percent per year.

Sauer said there isn't a retailer further down the chain to handle Ollie's overstocks. Ollie's is a product's last stop in the retail universe before finding a shopper.

"We sell everything we buy. We firmly believe that if we do a great job sourcing the deals, which is evident by our growth and customers, the reality is we don't get left with a lot of merchandise that doesn't sell," he said.

If a product lingers on the shelves too long, "we mark it down until it sells," Sauer said.

Contact Kevin Post:

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