Bucking the Trend of a Shrinking Retail Presence

Even as so many retailers contract their physical presence, TJX is expanding with new stores in many of its retail brands. It owns TJ Maxx, Home Goods, Sierra Trading Post, Marshalls, and HomeSense (all in the US). Its Canadian brands include Winners, HomeSense, and Marshalls. These are off-price retailing brands, with a "treasure hunt" sensibility and lower-than-traditional-stores pricing.

Home Goods is opening stores from the Atlantic to the Pacific. Above, the grand opening day of one store, where the line to check out reached from front to back of the store for the first three hours. Before the opening, inventory was stocked neatly on shelves and attractive display platforms. Even as shoppers poured in, stock was neatened and replenished.

Wisely, Home Goods had lots of extra employees on hand to answer questions, direct shoppers to the right aisle, and direct cart traffic to keep lines moving quickly and efficiently all day. With a TJMaxx just down the road from this new store, local shoppers were already familiar with the kinds of discounts and merchandise they would find.

Another wise move: Leveraging brand synergy by putting two retail names together under one roof. Home Goods is going in with Marshalls in several sites, capturing more shoppers and, hopefully, more wallet share. This makes sense because all of the TJX brands are known for discount pricing.

The bottom line is, apparently, consumers' bottom line: Lower prices, and the opportunity to grab a bargain, will attract shoppers and keep them coming back periodically.

Stores That Thrive on Surprise

Not everyone is clicking or swiping to buy this year. Some shoppers are actually walking into bricks-and-mortar stores to see what's new and buy before someone else snaps up that unexpected treasure.

T.J. Maxx has a winning off-price formula: Put new merchandise out every day or two, offer name brands at low prices, and staff the cash registers to speed shoppers on their way. The stores have focused inventories that change all the time. So when shoppers walk in, they never know what they'll find. Yes, the retailer has an e-commerce operation, but the real appeal is the thrill of the hunt. Consumer behavior in action!

Same at Marshall's, where the slogan is "Your surprise is waiting." Also owned by TJX, Marshall's has a slightly wider variety of merchandise in each store, but the same merchandising philosophy--ship new merchandise regularly to bring shoppers back again and again. While T.J. Maxx does a bit of e-commerce, Marshall's only sells gift cards online. If you want to buy, you have to go to a store. The retailer's hashtag #MarshallsSurprise reinforces the treasure hunt aspect of the shopping experience.

Marshall's has 300,000 Twitter followers; T.J. Maxx has 385,000 Twitter followers. So the retail brands are social, adding word of mouth to the mix.

Sure, e-commerce is growing every day...giving a boost to the USPS, FedEx, UPS, and other carriers. But for some shoppers, the element of surprise is a real lure to real stores.

Macy's Eyes Off-Price Opportunity

Off-price retailing is nothing new--Loehmann's, Hit or Miss, Marshall's all were in the business decades ago. Of course Marshall's is still going strong, now part of the booming TJX off-price empire that includes Home Goods and T.J. Maxx.

In recent years, Nordstrom and Saks Fifth Avenue have enjoyed considerable success with their Nordstrom Rack and Saks Off Fifth off-price stores, located in outlet malls and in lifestyle shopping centers. (Saks Off Fifth began as a chain of clearance stores for Saks merchandise and evolved into off-price over time.)

Now Macy's sees significant revenue opportunity in entering the off-price retail space. Its Bloomingdale's department store division has 13 off-price outlet stores, so Macy's has experience in the sector and can evaluate investment vs. profit potential.

Macy's has announced it will shutter 14 of its full-price department stores and open 2 new ones in 2015, as consumer behavior shifts toward online shopping and pursuit of value (meaning lower prices for quality merchandise). The company's possible off-price venture is in the very early planning stages.

Macy's has been an enthusiastic proponent of multichannel marketing. It's also highly social and mobile, with well over 14 million FB likes and 720,000 Twitter followers, plus participation in Apple Pay, among other mobile activities.

What's Next for Off-Price Retailing?

Loehmann's, one of the original off-price retailers, went bankrupt last year and its logo has disappeared from shopping centers everywhere. In its heyday, New York-based Loehmann's was the go-to store for high fashion at low prices, and an early proponent of bullpen dressing rooms, which keep costs low so prices can be low. Syms, another New York area off-price retailer, is also gone. Hit or Miss, an early Massachusetts-based off-pricer, is long gone.

But T.J. Maxx is not only alive, it's thriving. It's survived tough economic times and tough competition. Beth Kowitt, writing in Fortune's latest issue, asks the question: Is T.J. Maxx the best retail store in the land?

Kowitt makes a very convincing case, and I agree with the 7 key points she lists:

1. Shoppers are looking for "new" merchandise, not "sale" merchandise. Yes. This is a major reason for the success of Costco, Zara, and other strong retailers, not just T.J. Maxx. Store traffic is vital, and shoppers enjoy the hunt, so new inventory has to be added every few days to keep the hunt going.
2. Give shoppers treasure to hunt for. Costco is famous for this. T.J. Maxx also stocks some special products, but not in the same product category as Costco.
3. Know what to buy and buy advantageously. This is what made Loehmann's reputation in decades past: Its buyers knew what to offer and when to make an offer to acquire special merchandise for the treasure hunt. Fast-forward to the 21st century: T.J. Maxx has its buyers constantly searching the marketplace for the next opportune buy.
4. Get close to suppliers and order merchandise for yourself. No, there's not enough off-price merchandise to go around. That's what the other off-price retailers discovered as they tried to expand to keep up with shopper demand. T.J. Maxx wisely makes buys for inventory purposes, not just during mid-season or off-season opportunities.
5. Make big buys. Today's apparel manufacturers appreciate the financial possibilities of purchases made by off-price retailers. Money talks, and T.J. Maxx has the money to make important buys (see #3 and #4).
6. Build supplier relationships. Knowing that shoppers covet brands (see #2), T.J. Maxx will work with suppliers. Of course price is carefully negotiated, but without good supplier relationships, no retailer can accomplish key points #2 and #4.
7. Give the leadership reins to a real retailer. T.J. Maxx's CEO, Carol Meyrowitz, is a seasoned retailer with the know-how and the experience to keep the company moving forward day after day, no matter what happens to the economy and the competition.

My big question: What will T.J. Maxx do as more shoppers move to mobile and digital shopping? Part of the buzz of an off-price chain depends on bringing shoppers back to the stores week after week in the hunt for "new" things at low prices (see key point #1) and treasures (point #2). Off-price does not operate using the same retail model as Gilt Groupe, for instance. Sometimes shoppers just have to go to the store and walk the aisles in search of that special bargain.

T.J. Maxx is definitely social: It has more than 2.2 million FB likes and 28,000 Pinterest followers. And the parent company has begun addressing online retailing in some divisions. What's next?