Is TJX The Retailer Of The Future?
By Sam Lewis
Discount retail chain backs up confidence with growth plans
Lately, TJX — the parent company of stores like HomeGoods, Marshalls, and TJ Maxx — has been very happy with its performance. The company credits its success to many aspects of its business, including improving its supply chain and offering shoppers everyday values.
Perhaps even more influential to the company’s success and growth is its investment in e-commerce. TJX is convinced that e-commerce is the future of its business, and the key to continued growth in both brick-and-mortar stores sales, as well as online sales. “E-commerce is a substantial potential growth vehicle, and we plan to give customers many reasons to shop, both online and our brick-and-mortar businesses,” says the company’s CEO Carol Meyrowitz. The company quietly made its return to e-commerce back in mid-September, offering limited inventory to ensure the site could fulfill customers’ needs on a small scale before growing into a much larger presence. Meyrowitz continues, “Although we're in no rush, we can see e-commerce working for all our brands in the future.”
It also doesn’t hurt having a top-notch buying organization, employing more than 900 people, supporting its roughly 3,000 stores. TJX’s supply chain has been built to support its own model, which aids the company in targeting the right products, for the right stores, at the right times. “Our distribution network improvements should lead to more freshness in our stores,” says the CFO, EVP, and principal accounting officer at TJX, Scott Goldenberg. While the company has significantly invested in its staff, it continues to make improvements in other aspects of the business, like store remodels, new distribution centers, and new data centers and home offices. “Our home office investments can help us attract and retain top talent, the people who will drive our top line,” says Goldenberg. All of these make TJX confident it will experience substantial growth in the coming years.
The investments to distribution centers — recently the company opened one near Phoenix — also reflect TJX’s growth plans. In the last 10 years, the company’s store base has grown by 40 percent. Growth, accompanied by limited capabilities in distribution, speaks volumes about the company’s efficiency. “Our focus on value extends to how we invest. We are a low-cost operator at heart. We take an extremely prudent approach to how we spend our capital, and we measure returns whenever possible,” says Goldenberg. Still, a peak was reached, and expansion is needed. HomeGoods has shown significant growth and has sparked the need for another distribution center, which will open next year. New data centers will also open as the company’s second attempt at e-commerce grows.
TJX’s confidence is not only real, it is completely justified. By offering its name brand merchandise at lower prices than competitors, it already has an upper hand. Having the company invest in its supply chain, staffing, e-commerce, and omni-channel offerings will lead to keeping loyal shoppers, as well as gaining new ones. Meyrowitz recently told analysts in a call, “We're never complacent. Raising the bar on fashion brand's quality and value every day is our focus. Talent and teaching are our top priorities, and we have the bench to support our growth.” She continues, “Our management is focused on near-term execution and long-term strategic vision. We're confident we will achieve our plans, and we're passionate about surpassing our goals. In a nutshell, we see tremendous growth potential for TJX. We're convinced we are the retailer for today and for the future.”