The retail industry is in a tailspin. There have been nine bankruptcies announced in 2017 already, as many as in 2016, and some stalwarts in the American market like J.C. Penney, RadioShack, Macy’s, and Sears have announced hundreds of store closures respectively. Wall Street is taking notice, too. Big brands like Lululemon, Urban Outfitters and American Eagle have seen their share prices slip to multi-year lows and there seems to be no end in sight.
Despite these gloomy facts, a few retailers are bucking the trend. TJ Maxx and Marshalls, both subsidiaries of Melville Corporation, are opening more stores, hiring more employees, and investing heavily in the future of their enterprises. While the rest of the industry struggles to figure out what to do with all of their retail square footage, how is TJ Maxx generating almost all of its sales from its roughly 3,800 brick and mortar store locations, planning to open nearly 250 more stores in 2017, and setting their sights set on expanding to 5,600 stores worldwide in the next several years. And in the face of all those bankruptcies and stock market woes, how is the bargain shopping chain able to catapult the sales at these stores to rise for 33 straight quarters, a feat accomplished by no one else in their industry.
So what gives? How is TJ Maxx able to buck industry trends and post continuous growth with an archaic, and purportedly doomed, business model in the face of big data, predictive analytics, mobile shopping, and all the other disruptive innovations that are shaping the retail industry today.
The answer: a steadfast dedication to their culture and not getting boxed in by bigger brands.
A Culture that Supports Their Strategy
TJ Maxx developed a culture obsessed with speed.
“Fresh merchandise hitting the floor is key,” said Paul Sweetenham, a former senior executive at TJ Maxx’s European division. “It’s a very simple business model, but it’s hard to execute.”
The onus is put on TJ Maxx’s buyers, the ranks from which its four CEOs have risen through, to search out and cut deals, and then get that merchandise to store shelves as fast as possible. With a clear understanding that their business model hinges on the need for new merchandise to reach stores quickly, TJ Maxx built their culture around it, and have stuck to their guns. Some might say it’s a culture of obsolescence. While the rest of the industry zigged towards mobile shopping and big data, TJ Maxx didn’t even zag, instead, they stayed the course and are now reaping the rewards.
And despite their competitors striking big deals to carry brand name garments, shoes, and accessories from the likes of Nike, Michael Kors, and Ralph Lauren, TJ Maxx avoided having these big brand names dictate their shelves. Instead, TJ Maxx bet on the American consumer’s continuously changing taste and orients themselves to satisfy that desire.
As for that dying brick and mortar business model? It’s turned out to be just a facade, after all.