Coronavirus changed everything. Except T.J. Maxx.
Shoppers are flooding reopened stores, pushing sales higher than they were a year ago
The coronavirus pandemic ushered in a surge in online shopping, and most retailers are scrambling to adapt. Not T.J. Maxx.
The discount chain isn't looking to quickly ramp up e-commerce beyond its minuscule level or add new features allowing American customers to buy products online and pick them up in stores. It stopped taking online orders during the lockdowns and even now is limiting the number of items for sale on its website.
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Parent TJX Cos., which also owns Marshalls, HomeGoods and other discount chains, is as focused as ever on drawing shoppers to its more than 4,500 stores world-wide, betting consumers are desperate to roam the aisles after months of being stuck at home. As of June 17, about 85% of TJX stores had reopened.
"Strategically, nothing will change," TJX Chief Executive Ernie Herrman told analysts in May. "We will not look to e-commerce as our major leveraging point to get us through Covid and out the other side."
Off-price retailers such as T.J. Maxx have found the economics of e-commerce unattractive, but they risk losing more sales should another lockdown occur.
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For now, though, shoppers are flooding reopened stores, pushing sales higher than they were a year ago, Mr. Herrman said in May. Meanwhile, other chains, including Macy's Inc. and Kohl's Corp., say sales are running below prepandemic levels.
Last Monday morning two dozen women waited outside a T.J. Maxx in Ann Arbor, Mich., before it reopened after months of lockdown.
"I love the deals," said Trina Meadows, a chemical dependency counselor who drove an hour north from Maumee, Ohio. Most Ohio stores reopened last month, so her local store "is very picked over," she said, and doesn't have a Runway section, T.J. Maxx's selection of discounted high-end designer brands.
Ticker | Security | Last | Change | Change % |
---|---|---|---|---|
TJX | THE TJX COS. INC. | 121.45 | +1.71 | +1.43% |
Many of the opening-day shoppers went to both T.J. Maxx and HomeGoods across the street, which sells houseware, food and seasonal decorations at a discount. "It feels like Christmas today," said one HomeGoods cashier, checking out a customer. "For us, too," the customer said.
"There is a lot of revenge spending," said John Kernan, an analyst with Cowen Inc. "People have been cooped up for so long they want to shop in stores."
TJX's approach contrasts with other retailers that are charting a post-coronavirus future less centered around drawing shoppers inside stores. The parent company of fast-fashion retailer Zara this month said it would permanently close as many as 1,200 stores and move more aggressively to selling online.
Others retailers have boosted investments in e-commerce. Walmart Inc. added online grocery pickup and delivery slots and quickly started shipping online orders from thousands more stores. Michaels Cos., a craft supply chain that closed many stores throughout the pandemic, added online pickup and same-day delivery service to most of its U.S. stores.
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TJX gets just 2% of its sales from e-commerce and shut its websites during the lockdowns. Even now, it is fulfilling online orders at a slower-than-normal rate, frustrating some shoppers, as it adheres to safety standards that require social distancing in its warehouses.
The company has long catered to shoppers who enjoy the "treasure hunt" experience of browsing aisles of constantly changing merchandise, Mr. Herrman said. "In today's environment, we believe this kind of shopping experience can serve as a break in the day, and as some 'Me time' for our customers, and in the future will continue to be a major draw for consumers to our stores," he said.
There are also economic reasons for the aversion to e-commerce by TJX and other off-price retailers such as Ross Stores Inc., which doesn't sell online, and Burlington Stores Inc., which stopped doing so earlier this year, according to analysts. It is hard for discount retailers to turn a profit when factoring in the cost of shipping and returns. Moreover, some brands that sell to discounters don't want their items online where shoppers can easily search for deals, analysts say.
"For a lot of companies, e-commerce is a blessing and a curse," said Janine Stichter, Jefferies Financial Group analyst, explaining that it comes with additional expenses and a reduction in shoppers visiting physical stores. "My advice is if you don't need a big online presence, don't do it. TJX is one of the few companies that doesn't need it."
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Mr. Herrman said e-commerce is complementary to stores, but added: "With more attractive financial metrics in brick-and-mortar versus online, we plan to continue growing e-commerce strategically."
For TJX, the risk is a second wave of infections that would force nonessential retailers to temporarily close stores again. Apple Inc. recently closed nearly a dozen stores in four states as coronavirus cases climbed.
TJX swung to an $887 million loss in the three months to May 2, compared with a profit of $700 million a year earlier. Sales fell to $4.4 billion from $9.3 billion the previous year.
TJX stores reopened with safety restrictions that are now becoming familiar to American shoppers. The T.J. Maxx and HomeGoods stores in Ann Arbor each had a capacity limit and a store worker counted guests coming and going. A worker disinfected cart handles and stores had plexiglass barriers at registers. Inventory was plentiful, and some items deeply discounted.
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Some shoppers bristled at long checkout lines. "You need more cashiers!" said one shopper waiting to check out at T.J. Maxx. "We know. We just have to practice social distancing," responded a store worker managing the line.
Most shoppers came to get out of the house and touch and see products before buying. "Isolation has been long," said Monica Rosu, a 23-year-old nursing student who lives 30 minutes away in New Boston, Mich., as she browsed a rack of dresses at T.J. Maxx. "This is the first time I've been in a nongrocery store."