Here's how TJ Maxx keeps its prices so low

Business Insider/Mary HanburyTJ Maxx sells designer goods at discounted prices.


TJ Maxx is thriving as other retailers struggle.

TJ Maxx’s parent company, TJX Companies, reported on November 20 that comparable sales were up 9% at TJ Maxx and Marshalls in the most recent fiscal quarter. It was the 17th consecutive quarter that customer traffic was up at the stores.

The off-price retailer has been benefiting from a disappearing middle class and higher demand for budget options – two factors that have been hurting department stores like JCPenney and Sears.

Shoppers have largely become accustomed to heavy discounting in the past decade.

“The value-seeking mindset is an interesting one as it is often assumed that it is most prevalent during times of economic difficulty. However, our data shows that it is now an underlying constant in terms of what consumers look for when shopping,” Neil Saunders, managing director of GlobalData Retail,wrote in a note to investors in August.

TJ Maxx is able to keep its prices low using a number of different strategies.

According to the company, much of it comes down to the way TJ Maxx buys its merchandise. It purchases stock from manufacturers that make too much and department stores that overbuy, and it jumps on deals at the end of the season.

Here’s how TJ Maxx sells its designer goods at such low prices:


TJ Maxx is an off-price retailer, meaning it sells brand names and designer products for 20-60% less than department stores and other retailers.

Business Insider/Mary Hanbury

Source: TJ Maxx


TJ Maxx’s buyers search year-round for products.

Business Insider/Jessica Tyler

TJ Maxx gets its inventory from a few different sources, including boutique labels, designer brands, and up-and-coming labels.

Business Insider/Jessica Tyler

TJ Maxx also has merchandise manufactured exclusively for its stores, which saves the company money and allows it to pass those savings along to shoppers.

Business Insider/Jessica Tyler

When manufacturers overproduce items, TJ Maxx takes advantage and negotiates to get lower prices for the excess inventory.

Business Insider/Jessica Tyler

It does the same when department stores overbuy.

Business Insider/Mary Hanbury

The diversity in TJ Maxx’s buying methods helps the retailer pass savings on to customers. It buys orders that department stores canceled …

Business Insider/Jessica Tyler

… surplus products from manufacturers …

Business Insider/Jessica Tyler

… and closeout deals at the end of a season.

Business Insider/Jessica Tyler

Many of the designer products it sells are from past seasons, so they can be bought and sold for less.

Business Insider/Mary Hanbury

TJ Maxx also passes along savings by keeping its store design no-frills.

Business Insider/Jessica Tyler

By spending less on its store design, it can sell its products for less.

Business Insider/Mary Hanbury

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