TJ Maxx is changing the retail industry.
The discount department store recently reported some of the best sales gains and traffic in the industry. As TJ Maxx thrives, competitors like Macy’s and Kohl’s have reported lagging sales.
Morgan Stanley analysts write that TJ Maxx’s creative business strategy is working during a time that consumer behaviour is changing.
Macy’s same-store sales declined 2.6% in the second quarter, and the company blames consumers young who are spending on categories other than apparel.
TJ Maxx is a discount retailer, but that doesn’t mean it touts sales. Instead, management floods the stores with new merchandise to keep customers coming back.
The company also works to have a wide product assortment while offering very few of each item. This gives customers a sense of urgency and entices them to buy, according to Fortune.
Consumers will happily eschew the traditional merchandising, displays, and organisation for cheaper products. Discount retailers have a no-frills approach, allowing them to pass savings on to the consumer.
CFO Karen Hoguet is blaming Netflix for her brand’s slow sales.
Millennials have a tendency to spend money on electronics and online subscriptions rather than apparel, Hoguet said at a recent conference covered by MarketWatch.
“I think part of that is the customers are buying other things, whether the electronics, cable services, Netflix, whatever,” Hoguet said.
Macy’s and Kohl’s are both in the process of launching lower-priced outlet stores.
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