Four years later, I still say, \”The TJX business model is not easily copied.\” In fact, one could make the case that the specific differentiators and advantages that have been crafted into its DNA cannot be duplicated, period. With the exception of Ross Stores and Burlington, smaller and not pure copycats, TJX Companies, (T.J.Maxx, Marshalls, Sierra, Homesense and HomeGoods) with sales of about $27 billion in 2018 all but owns the so-called \”off-price\” space it dominates (Ross and Burlington sales, $11 and $7 billion respectively).
Hey, you guys in the other sectors, in the middle of the \”perfect storm\” of an overstored, intensely competitive retail environment, with omnipotent tech-armed consumers driving you into the insanity of the retail share wars, you can only dream of being in such a position.
There is no greater rush of the addictive brain chemical dopamine than the one unleashed when a loyal shopper pulls into the parking lot of one of the TJX Companies\’ stores. The jolt of anticipation is not just about one awesome experience in those stores. It\’s about five expectations, all within the four walls. Baked into the entire process is a \”sell low, buy lower\” mindset at TJX.
- It\’s about a \”treasure hunt.\”
- It\’s about affordable luxury brands (the largest purveyor of upscale brands in the world).
- It\’s about \”fast fashion.\”
- It\’s about localization.
- And all lumped together, it\’s about the best value you can find anywhere.
I originally wrote these opening paragraphs on May 11, 2015. I\’m repeating them because they are a perfect lead-in to TJX\’s recent commitment to boost their e-commerce strategy.
In 2015, I also referred to the \”elephant in their room.\” They acquired off-price internet retailer, Sierra Trading Post and launched T.J.Maxx.com in 2013. In my opinion, they were testing the space, particularly to learn if there was any real synergy to gain additional growth with an omnichannel model. Accordingly, they proceeded with caution, continuing to focus on managing their phenomenal brick-and-mortar growth.
Although though they have no real direct competition, other than the off-price chains Ross and a much smaller Burlington (whose e-commerce progress is even slower), TJX has decided that the time is now to satisfy the steady beat of the new consumer culture to be able to access brands wherever and whenever they wish.
They intend to launch Marshall\’s e-commerce business in 2019. On a call with investors, Ernie Herman, CEO of TJX, said, \”We have learned a lot from tjmaxx.com. We really believe it drives incremental store traffic. Our e-commerce businesses have another year of double-digit sales growth. tjmaxx.com added new categories and well over a thousand new brands.\”
While e-commerce sales are growing in double digits, it still only accounts for a minimal of about one percent of TJX\’s annual revenues of around $27 billion. Fourth-quarter comp sales increased six percent for the overall company.
The T.J.Maxx and Marshall\’s online strategy is to highly differentiate the product mix from what they have in the stores. I believe that part of this decision is due to the fact that some of the branded deals offered in the stores cannot be replicated online without alienating the brands that liquidate through this channel. Herman believes this will avoid cannibalization and they will not lose any store traffic. While they will may not benefit from the BOPIS traffic and impulse purchasing when the customer comes to the store for pick up, they will achieve a conversion lift in sales when the customer returns goods. So, they view the strategy as \”complimentary\” between the physical and digital channels.
A Final Check-Off for the Next-Gen
Not only is TJX demographically democratic, it attracts next-gen customers like crazy and has focused on selecting more contemporary brands and styles, marketing through social media sites such as Facebook, Twitter, Pinterest and Instagram.
Less than 15 percent of the merchandise in store is from previous seasons, a particularly important feature for younger consumers. The company changed its marketing to emphasize details like this because it realized its old strategy was talking to existing customers, when it really wanted to attract new ones. The price tags says \”past season\” if it is.
To accommodate the more rapid turnover and constant flow of newness, TJX\’s stores are easily adjusted. Since there are no walls formalizing a branded or category segment, they are continually resetting the floor to showcase the rapidly flow of new merchandise and brands. This also heightens the thrill of discovery and the hunt and provides a continually new shopping experience for consumers. The TJX Rewards credit card allows customers to accumulate points for expenditures that can be redeemed for reward dollars at TJX\’s stores, further cementing its relationship with customers, drawing them back into the store.
With the new digital strategy, next-gen consumers will be able to enjoy the treasure hunt wherever they may be and whenever they desire the experience.