If you think physical retail is dead, you’ve never shopped at a TJ Maxx or Marshalls. These two off-price retailers are thriving today, despite the struggles faced from bigger-name retailers such as JCPenney and Sears.
Late last year, TJX Companies, the parent of TJ Maxx and Marshalls, reported that comparable sales were up 9 percent at both stores in the third quarter of 2018. This marked the 17th consecutive quarter in which customer traffic had increased at these retailers.
Why are TJ Maxx and Marshalls doing so well when so many other brick-and-mortar retailers are struggling to bring in the customers? Jaime Ward, head of the Retail Finance Group for Citizens Bank, pointed to two main reasons: Consumers enjoy shopping at TJ Maxx and Marshalls, never quite sure what bargain they might find on a given day. Secondly, the stores are two of the few that don’t face direct competition from Amazon or online shopping.
These two reasons have combined to give both Marshalls and TJ Maxx an edge in today’s physical retail environment, Ward said.
Consider the enjoyment factor. Ward says that shoppers who comb through the racks at TJ Maxx and Marshalls might discover a brand-name blouse or pants at 60 percent to 80 percent off the list price. Finding such bargains provides a thrill to customers, Ward said.
“These stores represent a kind of treasure hunt for consumers,” Ward said. “They don’t know exactly what they want. They know they need something. They go in and find top brands at deeply discounted prices. It feels like a total bargain and a rare find. That is a shopping thrill that consumers like.”
Then there’s the online shopping factor. While most other physical retailers face direct competition from Amazon and other online retailers, TJ Maxx and Marshalls don’t, Ward said. Consumers want to shop at physical TJ Maxx and Marshalls stores because they’re not sure what bargains they’ll find. They don’t consider shopping online as an alternative, Ward said.
“What these stores sell and how they buy means that they don’t need to worry as much about selling online,” Ward said. “The merchandising model they have really works. Online is almost more of a distraction for them than a necessity.”
TJ Maxx and Marshalls are also nimble, updating their product lines quickly to meet the changing demands of consumers. An example? After Toys “R” Us declared bankruptcy, Marshalls and TJ Maxx stores increased their offering of toys. The bread-and-butter of these retailers is still that surprise blouse or inexpensive pair of pants, but by boosting their other offerings, both TJ Maxx and Marshalls keep their customers happy and shopping.
The off-price retailers aren’t the only ones doing well today, Ward said. Family Dollar and Dollar General continue to expand, as does Ollie’s Bargain Outlet.
“These places offer great deals, too,” Ward said. “They also offer the treasure-hunt aspect.”