Stores are closing and shoppers are cutting back on spending. TJ Maxx says its thriving because of this.
In a call with investors last month – announcing its fourth-quarter and fiscal 2023 earnings – CEO Ernie Herrman said that the company is in an extremely strong position when it comes to sourcing inventory, describing the current inventory availability as "phenomenal."
Recent store closures, and a slowdown in consumer spending because of inflation, have meant that many retailers are being left with a surplus of stock that they want to offload in a quick and discreet way, and TJ Maxx is often the perfect solution for this.
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The chain buys up excess inventory at a discounted rate and sells it to the consumer at bargain prices – typically 20% to 60% less than full-price retailers. It is an attractive place for retailers to offload inventory because TJ Maxx is happy to buy incomplete assortments, buys without asking for returns privileges, and mostly sells in-store so there's limited risk of discounted brand names being splashed all over the internet which could harm the brand image.
TJ Maxx has a team of more than 1,200 buyers who source products from its 21,000 vendors globally. These buyers are the "secret sauce" to its success, Neil Saunders, managing director of GlobalData Retail, told Insider. They know where to look for the best deals and cast their web wide.
TJ Maxx's buyers know how to negotiate the best prices but they're also in a strong position to do so. Essentially, parent company TJX buys other companies' mistakes when they've ordered too much inventory or demand has tailed off, Simeon Siegel, managing director of BMO Capital told Insider. "Inventory doesn't get better with age," he said, and because retailers are aware of this, TJ Maxx pays much less upfront for this product.
2022 was a good example of how the market can turn in TJ Maxx's favor. While the company was subject to industry-wide rising supply chain costs, the snafus in this pipeline meant that many retailers were receiving the wrong inventory at the wrong time and an easy way to get rid of it was to sell to the off-price channel. TJ Maxx continues to have the "pick of a large pool" when it comes to inventory, Morningstar analyst Zain Akbar wrote in a note to clients in January.
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Buying in bulk
The scale and size of TJ Maxx — it has vendors in over 100 countries and stores in nine — mean that its buying team is often buying product in bulk, which gives it more room to negotiate deals with sellers.
According to Morningstar research, it also buys up inventory when it's cheaper to store up for future seasons. And as it's happy to buy a limited assortment rather than the full collection of sizes and styles from a retailer, it is an attractive option for these stores and therefore has more leverage to bargain on price.
It sells its own brands
TJ Maxx also sells products that are manufactured especially for the chain, which means it has direct control over the pricing in this area. This is an area of its business that is growing, Siegel said. Well-known brands like Ralph Lauren have been known to make items for TJ Maxx in the past, but pulled back in a bid to address worries about brand exclusivity.
Low maintenance stores
TJ Maxx's low-frills stores also help to keep costs down. These stores are typically stuffed with racks of product. The appeal here is the treasure hunt shopping experience, where customers care more about assortment and price than the store design.
TJ Maxx says its assortment of discounted brands is better than ever thanks to store closures elsewhere. Here's how it keeps prices so low. TJ Maxx sells products at 20% to 60% cheaper than department stores and retailers. It does so by buying surplus inventory from retailers.
Unlike brands and stores that lock in their inventory six months to a year in advance, TJX and other off-price chains buy surplus merchandise to sell it right away. They also capitalize on orders that have been canceled or when companies manufacture too many items.
The majority of products we sell are high quality, fashionable, brand name, and designer merchandise generally sold at prices 20%-60% less than full-price retailers' regular prices on comparable merchandise. Most of our merchandise is fashionable, current season styles.
(NewsNation Now) — Bad news for bargain shoppers: Designer brands are expected to be pulled from discount chains like T.J. Maxx, Ross and Burlington due to global supply chain issues.
Discount chains like T.J. Maxx and Marshalls are experiencing a boom, and not just from budget-conscious shoppers. This surge in popularity among wealthy consumers coincides with a decline in traditional luxury sales as consumers re-evaluate their spending habits.
Here's how it keeps prices so low. TJ Maxx sells products at 20% to 60% cheaper than department stores and retailers. It does so by buying surplus inventory from retailers.
In other words, the same stuff you'd find at full-price retail stores. But the truth is, many outlet stores sell their items cheaper than their retail counterparts because their quality is cheaper, too. Say hello to a dirty little industry secret: made-for-outlet products.
Price. Discount Pricing: Central to TJ Maxx's strategy is its commitment to offering products at discounted prices compared to traditional retail. The “off-price” model positions the brand as a destination for budget-conscious yet quality-seeking consumers.
T.J. Maxx is an off-price retailer that offers a treasure-hunt shopping experience. It's been known as the retailer that takes the inventory other stores couldn't sell. Now, the company is said to be a go-to destination for brands to sell to.
TJ Maxx and Marshalls operate as sister stores, and share a similar footprint throughout the country. While their prices are nearly identical and they have similar store layouts, TJ Maxx has a more upscale appearance than Marshalls and typically sells a larger range of fine jewelry and accessories.
One of the biggest myths about T.J. Maxx is that the retailer stocks defective or unattractive merchandise that Macy's and Nordstrom couldn't sell. The reality is vastly different: Suppliers purposefully create excess merchandise for the retailer, Fortune reports.
The main competitors of TJX Companies include Ross Stores (ROST), GAP (GPS), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Urban Outfitters (URBN), Foot Locker (FL), Buckle (BKE), Guess? (GES), Caleres (CAL), and Shoe Carnival (SCVL). These companies are all part of the "apparel retail" industry.
Shoppers may notice that designer names are hidden for certain items on the TJ Maxx and Marshalls websites. While off-price stores like TJ Maxx and Marshalls are a helpful avenue for brands to offload their inventory, some designers don't want it to be known how deeply they are discounting their goods.
Some argue that thrifting has essentially become gentrified because of its trendiness. Wealthier people have begun to frequent thrift stores, shopping for the same items as low-income people who were the original customers of the secondhand shops.
The department store sector has struggled in recent years, but Macy's and Nordstrom are benefiting from wealthier consumers making discretionary purchases. Luxury goods and clothing brands have also capitalized on spending from higher-income shoppers.
TJ Maxx is known for its ever-changing inventory. Stores typically receive new shipments several times a week, but the most substantial restocks often happen on weekdays. This means that if you're looking for the freshest selection, a weekday visit is your best bet.
Off-price retailers TJ Maxx and Marshalls buy surplus inventory from department stores at discounted rates. This is how they sell brand-name merchandise and keep their prices low. Comparison prices convince shoppers that they are getting a good deal.
“When a designer overproduces or other stores overbuy, we swoop in, negotiate the lowest possible price, and pass the savings on,” says Nicole Stuttman, senior account executive at Edelman, the PR agency representing TJ Maxx and Marshall's.
It's called opportunistic buying—which means when a designer overproduces a product, a manufacturer makes too much, or other stores overbuy, we step in and negotiate the lowest possible price and pass the savings on to you. You can shop online 24/7.
TJ Maxx and Marshalls operate as sister stores, and share a similar footprint throughout the country. While their prices are nearly identical and they have similar store layouts, TJ Maxx has a more upscale appearance than Marshalls and typically sells a larger range of fine jewelry and accessories.
Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.
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