The TJX Cos. Inc. is about to take the plunge online — and if the off-pricer proves it can swim, the e-commerce waters might never be the same again.
The mammoth retailer, which operates TJ Maxx and Marshalls and logged sales of $25.9 billion last year, is late to the e-commerce game, with just a limited online assortment from its TK Maxx unit in Britain. TJX will detail its plans for e-commerce Wednesday as it reports results for the fourth quarter, when earnings per share rose about 30 percent to between 80 cents and 81 cents, according to company projections.
TJX has been steadily gaining market share where many competitors have relied on Web sales to keep growth up. The retailer’s comparable-store sales rose 7 percent last year on top of 4 percent gains in both 2011 and 2010 and a 6 percent increase in 2009.
If the company ultimately creates an online presence commensurate with its 3,050 stores, it will take a big bite out of the fastest-growing and most promising segment of the retail market.
The company seems to be itching to make up for lost time. In December it bought the off-price e-commerce player Sierra Trading Post for about $200 million, bringing on board 700 employees with online expertise.
Chief executive officer Carol Meyrowitz said the deal added “immediate scale, capabilities and infrastructure in e-commerce, which we can leverage….We will be able to build upon this platform as we continue to develop our e-commerce strategy.”
TJX, which declined to comment for this article, has described e-commerce as “an important long-term growth opportunity and offense strategy.”
The company clearly has the financial muscle to push into e-commerce, but that doesn’t mean it will be an easy endeavor.
Observers noted the move online would push TJX outside of its traditional comfort zone of brick and mortar, that competitors will not lightly give ground in such an important growth area and that suppliers might get flack from other chains if their brands start showing up on TJX Web sites.
Those concerns might ultimately be overwhelmed by the opportunities, however.
Mark Montagna, stock analyst at Avondale Partners, projected TJX’s e-commerce business could grow to $1 billion in sales within three years of the launch, and $2.2 billion within five years.
That’s a big chunk of business that would give TJX a good position in the marketplace, but not a dominant one. Macy’s Inc.’s e-commerce unit, for instance, had sales of $2.2 billion in 2011, according to the analyst.
Although TJX’s customer profile is believed to be most similar to Macy’s, the competitive fallout of a TJX Web presence might be felt most acutely further down the price scale.
“Clearly, Macy’s is doing something pretty darn right to compete so well against TJ Maxx,” Montagna said. “The people who would be at greater risk would be lower-echelon department stores like J.C. Penney, Sears and Kohl’s because the price differential is not that great.”
Jennifer Davis, an analyst at Lazard Capital Markets, noted the company has been “very cagey” about its plans, but predicted it would ultimately become a “big player” in e-commerce.
TJX has also raising its fashion profile with consumers, trying to transcend the traditional image of an off-pricer peddling older inventory.
“They’ve done a great job at getting it out there that they’re not [selling] last season’s merchandise, that they have current-season, in-style merchandise,” Davis said.
It remains to be seen how the appeal of TJX’s stores will translate online.
“Their business model isn’t based on replenishment apparel, it’s more of a treasure hunt,” said Leon Nicholas, director of retail insights at Kantar Retail. “They’re going to have to be sure that they can replicate the treasure hunt experience. If they can have a sort of ‘Hey, we’ve got it today, it’s gone tomorrow’ atmosphere, than I think it’s going to be successful.”
E-commerce has been on the retailer’s radar for some time. The move to online selling is expected to be led by senior vice president of e-commerce Elaine Boltz, who was hired two years ago and previously worked at Chico’s FAS Inc. and what is now Ann Inc.
The key question might be: How fast does TJX plan to act?
Craig Johnson, president of Customer Growth Partners, said the company was “10 years behind the ball” in the e-commerce world, but it could rapidly catch up.
“You’ve got to have talent, you’ve got to have the skill set [and] you’ve got to have the right technology platform,” Johnson said. “TJ Maxx has been growing very rapidly without e-commerce. They will continue to gain market share, and this may well accelerate the increase. It can make a lot of sense for them to do, but it’s not going to happen overnight.”
And it’s not going to happen without TJX learning some new tricks.
“This is a company that does a superb job at blocking and tackling, straight-ahead football, and suddenly they draft a run out of the pocket quarterback,” Johnson said, referring to the entrée into a new business. “It’s sort of a different element for them.”
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion