TJ Maxx Shouldn’t Ignore Lessons from Department Stores

TJ Maxx Shouldn’t Ignore Lessons from Department Stores

TJX Cos., the parent company of TJ Maxx, Home Goods, and Marshals, shouldn’t take lessons learned from the American department stores’ demise lightly. One of the chief lessons among them is how building many brick and mortar stores is a dangerous way for stoking growth.

TJX Cos. talked about its plan to grow their off price store count over time by 50% on Wednesday, adding about 1800 more stores to their current base of about 3800 stores across the world. 1300 of the proposed stores would be opening in North America. Ernie L. Hermann, the CEO of the company, sounded completely giddy when he talked to the analysts at Wall Street saying that he didn’t close even one of their stores last year even after the Armageddon that was unfolding in the retail sector all round this seller of discounted goods.

TJ Maxx, parent TJX Cos., plans to add brand new locations as other retailers are closing a large number of their stores. This move clearly seems out of touch as all the other American retailers are doing something completely opposite to what they are doing, including Sears Holding Corp., and Macy’s Inc. Other American retailers are either completely halting new store growth like Home Depot Inc. or slowing it like Wal-Mart Stores Inc. or closing the locations that are being hit hardest by the declining traffic of shoppers due to competition from the ecommerce players like Amazon.com Inc. and eBay Inc.

TJX Cos. has had a really steady growth as compared to other retailers. Therefore, they are planning to ramp up their new stores faster. TJX has stolen the market share unlike other department stores that are struggling as the off price chain system continues to be attracting new shoppers who are looking for bargain shopping. The annual sales of established TJX stores have shown rise for a straight 21 year streak. 

But if TJX is ignoring the American department stores history then it is at their own peril.

Sales of TJX Cos., the parent of TJ Maxx, have surpassed America’s largest department store’s sales (Macy’s) a few years ago and it is still showing a steady gain. TJX should not open new stores, but instead they should think about getting more brands to their off price chain system. The brands may be Ross Stores Inc., Burlington Stores Inc., or Tuesday Morning Corp. Also some bargain hunting websites like Etsy Inc. or Overstock.com Inc. could be the key in fueling TJX’s growth online. 

Still there is a lot of room for expansion in the markets that are spread internationally. Currently, the annual revenue share of US and Canada for TJX is 87 percent.

It’s clear that America isn’t in need of another thousand bigger box type stores.

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