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Here's how TJ Maxx keeps its prices so low
TJ Maxx is thriving in today's retail climate. One reason for that is its low prices.
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.
Here's how TJ Maxx keeps its prices so cheap.
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.
Source: TJ Maxx
TJ Maxx's buyers search year-round for products.
TJ Maxx gets its inventory from a few different sources, including boutique labels, designer brands, and up-and-coming labels.
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.
When manufacturers overproduce items, TJ Maxx takes advantage and negotiates to get lower prices for the excess inventory.
It does the same when department stores overbuy.
The diversity in TJ Maxx's buying methods helps the retailer pass savings on to customers. It buys orders that department stores canceled ...
... surplus products from manufacturers ...
... and closeout deals at the end of a season.
Many of the designer products it sells are from past seasons, so they can be bought and sold for less.
TJ Maxx also passes along savings by keeping its store design no-frills.
By spending less on its store design, it can sell its products for less.
