TJ Maxx Defies the Odds with Sustained Success

September 17, 2014

Although nothing in business is a sure thing, few industries are more volatile than apparel retail. In this unpredictable world, it can be almost impossible to guarantee success for a brand. For instance, Target and Kmart spent years dueling for dominance until the former won out with its more upscale marketing. However, long-term prosperity grants no safety net. Abercrombie & Fitch ruled the preppy clothing market for more than a decade, but now sales are falling as younger consumers view the brand as passé.

However, there’s one company that has been able to keep its ship steady amid retail’s choppy waters. Over the course of nearly four decades, TJX Companies has only seen one year of negative growth. As the owner of such bargain brands as T.J. Maxx, Marshalls and Homegoods, the Massachusetts-based business earned $2.1 billion in profits last year. TJX’s stock price has been a boon for shareholders, too: earnings-per-share growth has increased for 18 consecutive years while stock prices have ballooned by 200 percent over the past six years. Experts call the company the “the most consistent, most powerful apparel retailer in the United States,” a bold title that TJX has justifiably earned thanks to a sure-fire selling strategy.

First of all, the company doesn’t like to rely on sales or other gimmicky promotions. Instead, TJX focuses on quick turnover of its products so that more stuff can be trucked in to replace it. While other retailers take an average of 85 days to get rid of its inventory, TJX can move through a shipment in just 55 days. Some items receive a markdown if they don’t fly off the shelves, but the company doesn’t take much effort to advertise such discounts. That’s because TJX wants its customers to believe that they’re getting the lowest possible price for every product anytime they walk into the store. And sometimes people can find super low prices on unexpected items, such as designer dresses or accessories. That’s because TJX specifically plants high-end stuff among the standard stock so that people feel like they’re uncovering treasures. Along with its savvy buying strategy and dependable contacts, TJX could remain retail’s dominant entity for years to come.

 

Questions:

  1. What’s the reason for the long-term success of TJX Companies?
  1. Does including designer products strengthen consumer’s image of the company?

 

Source: Beth Kowitt, “Is T.J. Maxx the Best Retail Store in the Land?” Fortune, July 24, 2014. Photo by Steve and Sara Emry.

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