TJX Is Sticking to Brick and Mortar—and Customers Are Flooding In

Parent company of Marshalls, TJ Maxx and HomeGoods is sidelining ecommerce

tj maxx
Customers are returning to store like TJMaxx for a sense of hope, says TJX CEO Ernie Herrman. - Credit by Getty Images
Headshot of Kaila Mathis

Key insights:

After brick-and-mortar stores were forced to close beginning in March, retailers such as Walmart and Michaels have spent the last few months driving traffic to their ecommerce sites.

TJX, the company behind TJ Maxx, Marshalls and Homegoods, took the opposite approach.

The brand shut down sales on its sites during lockdown, didn’t offer curbside pickup and is still limiting online orders now to maintain social distancing within warehouses.

Bob Phibbs, better known as the Retail Doctor, believes it was smart for TJX to recognize the high cost of free shipping and returns, as well as the unrealistic vision of an ecommerce site for one-off products.

But the decision didn’t come without a cost: TJX lost $887 million last quarter, with year-over-year sales dropping from $9.2 billion to $4.4 billion.

Still, the brand isn’t worried. Prior to the lockdowns, ecommerce only accounted for 2% of its sales, and TJX is putting all of its efforts back into the 98% that is brick-and-mortar retail. Now, after reopening more than 1,600 stores in May, TJX is reporting higher sales numbers than this time last year.

TJX CEO Ernie Herrman said in a statement that he believes this success speaks to the company’s “compelling value proposition” as well as its treasure-hunt shopping experience and consumers’ pent-up demand.

He has high hopes for the brand’s opportunities for the rest of the year. Due to its “flexible business model and ability to adapt quickly to changing market conditions and customer preferences,” TJX will be free to pursue further buying opportunities to engage customers.

Phibbs agrees the company’s success is set to continue past initial reopenings, because it comes not from epic sales, coupon offerings or the fulfillment of specific product needs, but from “selling shopping as an experience.”

“When people go to JCPenney, they know what they want, they have their coupons in hand, and they leave once they buy what they came for,” Phibbs said.

This is entirely different from the TJX shopping experience, where customers arrive excited to roam the aisles for the perfect deal to brag about to their friends. This offers a different level of profitability for off-price retailers, winning them loyal consumers and extra purchases picked up while consumers explore the store.

Phibbs thinks off-price retailers will lose value if they choose to engage in constant sales or specific product fulfillment, and says the more they do so, “the more they are making themselves vulnerable to the bigger boys like Amazon and Walmart, and the more they’re minimizing ways they can make money.”

For some business models, a post-Covid shift to ecommerce isn’t the best path to success. As quarantine restrictions ease, customers are coming to brick-and-mortar stores looking for hope.

“Consumers hope to escape the news, have fun and enjoy the thrill of the hunt,” Phibbs said. “TJX stores give them that, and they could be pointing the way forward for a lot of other brands if they would just listen.”

The tactics differ between retailers: Burlington Stores shut down its ecommerce site in March and shifted all of its focus to brick-and-mortar stores, while Walmart introduced grocery pickup and delivery slot services, and Michaels added same-day delivery and curbside pickup.

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Kaila is an intern for Adweek in the Brand Marketing Department, and covers news in brand marketing and retail. She is a rising senior at Villanova University pursuing a degree in PR & Advertising and Journalism.
Publish date: June 25, 2020 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT