TJX grows as other retailers struggle or close
PHOTO/BRAD KANE
T.J. Maxx and HomeGoods, which share a retail space at Greendale Mall in Worcester, will offer surprise purchases to entice shoppers.
In a retail environment consistently squeezed by online sales, TJX has found just where it needs to be. It's an off-price retailer that doesn't need to compete for the latest fashions but instead offers surprises for shoppers.
“It's more of a treasure hunt,” said Kathy Debevec, an associate marketing professor at the Isenberg School of Management at UMass Amherst.
TJX, the parent of T.J. Maxx, Marshalls and HomeGoods, also doesn't try stocking every size and style, Debevec said. Combined with a high turnover in inventory, a shopper can walk into one of the company's stores and never know exactly what to expect.
50-percent expansion
That niche has allowed TJX to thrive as many other retailers have struggled in a marketplace increasingly dominated by Amazon and other online sales.
The company, which has its global headquarters split between Framingham and Marlborough, said in February it plans to expand by 1,800 stores in the long run, increasing its store count by nearly 50 percent.
It also plans a new home-good line separate from its 579 HomeGoods locations.
Ernie Herrman, the company's chief executive officer and president, said he sees enormous global store growth potential in the years ahead.
“We see ourselves as leaders in innovation and will never be complacent,” he said in a February investor call.
Growth plans include only existing chains and markets, Herrman said, alluding to the potential for opening in new countries or additional chains.
Avoiding the struggle
The discount retailer has been thriving as many other retailers have struggled since the Great Recession.
TJX added 198 stores in the past year, now totaling 3,812 locations internationally.
Macy's, on the other hand, spent its 2016 budget year closing 66 locations, and said it plans to close another 34 over the coming years. The company reported a 4-percent fourth-quarter sales drop and said it was projecting further losses in the next year.
Kmart and Sears, which share a parent company, said earlier this year they plan to close a combined 150 stores.
Only days after TJX announced its expansion, JCPenney said it planned to close 130 to 140 stores and offer buyouts to about 6,000 employees. Sales across its roughly 1,000 stores were flat for the year, the company said.
Those closures should only help TJX, which said it plans to open 250 new stores in the coming budget year alone.
Location, location, location
Victor Matheson, an economics professor at College of the Holy Cross, said he knew of no other retailer expanding today like TJX.
“I personally was really surprised by that because you're getting consolidation all over the place with retailers,” he said.
It may not be only what TJX has done and how, Matheson said, but where. A typical T.J. Maxx, Marshalls or HomeGoods is in an outdoor shopping plaza near a grocery store or a Walmart or Target with heavy traffic.
A Macy's or Sears, on the other hand, is likely to be an anchor store in an enclosed mall, which have suffered in recent years as shopping trends move away from that direction.
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