TJX Cos. is reversing itself after months of resisting an e-commerce expansion, now saying it plans to launch an online platform for its furniture and household division HomeGoods next year as the pandemic shifts the willingness of customers to visit discount chain stores.
At a time when other retailers have rapidly expanded e-commerce and ramped up digital offerings because of the coronavirus and changing consumer habits, discount chains had been relying on the treasure-hunt experience they offered to bring bargain-seeking customers into their retail properties.
Discount clothing retailer Ross Inc. doesn't have an e-commerce platform and off-price department store retailer Burlington canceled its e-commerce sales in March. TJX Cos. has an existing small e-commerce operation and in May the CEO told investors the company would not leverage e-commerce to get through the pandemic. But that was then.
Now, many customers are still hesitating to shop in retail stores, TJX Cos. CEO Ernie Herrman said Wednesday in discussing the company's its third-quarter earnings results. The chain saw its same-store sales drop 5% in the third quarter. While that was better than expected, the company is concerned that rising coronavirus cases will hamper sales again.
Though more than 4,000 T.J. Maxx, Marshalls, HomeGoods and other TJX brand stores are open, there are 471 TJX stores temporarily closed, mostly in Europe. Changes in strategy by the company are particularly significant because TJX is the largest U.S. discount apparel retailer based on revenue. It ranks No. 80 on the Fortune 500 list of the largest publicly traded U.S. companies, with revenue of $41.7 billion, more than the revenue of department store retailers J.C. Penney and Macy's combined.
TJX is adding new brands to its online business in the United States and in the United Kingdom, Herrman said, including new gift options for the holiday season. The company also is launching HomeGoods.com next year to serve customers of the booming home goods division.
“We believe HomeGoods e-commerce will allow us to leverage both our strength in the home category and the power of our global buying organization and sourcing universe. We believe this will allow us to satisfy our current customer base, which is expanding, and continue to attract new shoppers,” Herrman told investors during a call with analysts.
Herrman said the HomeGoods website was “a longer-term play to capture market share over the next five years.” The website is expected to coordinate with brick-and-mortar stores.
“I would say we're hoping it's going to be complementary to our stores because the way we might orchestrate HomeGoods.com will be different than some other home retailers because we have so many brick and mortar HomeGoods stores where we feel we can encourage a visit based on an online purchase and encourage not just the return but a potential visit to the store, as well as obviously do straightforward HomeGoods purchases,” Herrman said.
HomeGoods was the only division within TJX Cos. that saw significant sales gains last quarter with same-store sales jumping 15% in the United States.
Even though TJX is expanding into e-commerce, it’s still bullish on brick and mortar. TJX continues relocating stores, repositioning stores and opening new locations.
“We are in an excellent position to take advantage of real estate availability to open new stores and relocate existing stores. Further, we plan to continue remodeling stores to further upgrade the shopping experience,” Herrman said.
The retailer expects to open 50 new locations this fiscal year and more than 100 new locations next year, added Scott Goldenberg, TJX's chief financial officer, during the earnings call.
Meanwhile, TJX competitor Ross is growing its brick-and-mortar presence and continuing to build its biggest distribution center in Houston.
TJX saw profits rise 4% to $866.7 million for the quarter, according to its latest earnings. Its net sales slipped 3% to $10.1 billion.