T.J. Maxx, Marshalls' Parent Co. Made More Money Last Year than Gucci, Balenciaga's Parent Co.

In late 2016, Bloomberg highlighted “one huge American retailer that ignored the internet and won.” That retailer – or better yet, retailers – were T.J. Maxx and Marshalls, Framingham, MA-based TJX Companies’ marquee stores. Fast forward to today and the group’s analyst expectation-beating first quarter revenue report solidifies its continued reign, which has seen the group “focus on keeping prices low and making shopping more engaging,” which, per Reuters, “has helped it draw more people to its stores, a stark contrast to [the reality of] many U.S. retailers that have been hit hard by consumers shopping online.”

An emphasis on the power of brick-and-mortar sales is an interesting one right now, while most brands and retailers – even some of the most up-market luxury ones, like Hermes – are investing heavily in e-commerce and treading slowly in terms of real estate, with no shortage of brands opting to hedge their bets with temporary pop-up shops if they are looking to expand into real property at all. 

In the era of Amazon, TJX has shunned the internet almost entirely and instead, has remained steadfast in its approach to retail by way of brick-and-mortar networks to much success. That success comes to the tune of $8.69 billion in net sales for the first quarter, and growing.

Yes, T.J. Maxx and Marshalls, which are, according to reports, the top-earners under the TJX umbrella, have managed to post extraordinary growth at a time that seems unlikely, when it is widely understood that almost all of retail is in a tailspin and many retailers are looking to chapter 11 bankruptcy for assistance. To put their revenues into perspective, along with TJX's other large retailer, HomeGoods, they bring in nearly $36 billion per year, compared to Gucci's parent company Kering's $7.6 billion in annual revenue

The secret to the success of these two off-price retailers? Well, it’s not much of a secret: They rely on low prices and the thrill of the hunt. “If lucky, a shopper can sometimes find a Versace coat at a T.J. Maxx at half the price offered by most other retailers." This is one thing that Reuters highlighted in connection with the first-quarter surge in sales for TJX, an ode, undoubtedly, to the bargain hunting nature of many American consumers. 

“Americans are value shoppers more than anything," The RealReal's founder and CEO Julie Wainwright said recently in explaining the appeal of her luxury consignment site. 

Add to this the fact that TJX does not advertise the brands it sells. Instead, it enables – or maybe more accurately, forces – consumers “to go on a treasure hunt through its aisles to find ever-changing deals on a wide array of products,” a tactic that not only keeps existing consumers coming back but routinely draws in new shoppers in search of a shopping experience and of course, deals on both its in-house brands, as well as big-name brands, ranging from Ralph Lauren shirts, of course, to in-season Givenchy trousers for $600 and brand-new Balenciaga bags, which will set the T.J. Maxx customer back more than $1,300 (still a fraction of the price of a Bazaar bag), in its "Runway" section. (True stories). 

“The treasure hunt nature continues to drive new interest, new people and more visits by current customers,” Brian Yarbrough, an analyst at Edward Jones, told Reuters, and saves TJX the expenses of having to partake in the large-scale advertising campaigns being put forth by the likes of Macy's, Nordstrom, and co. 

One of the essential elements in play in the "treasure hunt" that is shopping at T.J. Maxx and Marshalls is also a sense of urgency. If consumers see something they like, they have to buy it then. In much the same way as Spanish fast fashion giant Zara was able to build a huge brand from the combination of low(er) priced garments and accessories with the well-known rapid change of stock and limited quantities of products, the hit-or-miss nature of the deal-ridden inventories of T.J. Maxx and Marshalls forces consumers to open their wallets if they see something they like.

Chances are, it won’t be there next time, due to the fact that the inventory is at least somewhat random, sourced from department store cancellations, a manufacturer making too much product, or a closeout deal when a vendor wants to clear merchandise at the end of a season.

As Racked reported several years ago, "T.J. Maxx cycles its product through stores much faster than its competitors. Former employees say that the stuff moves so rapidly that merchandise is often sold before TJX has paid its vendors for it. The busiest stores can take daily delivery of product, which employees put out on the floor right away—a "door to floor" approach that cuts down on the amount of space needed for backroom storage." 

For items that linger, "The store will discount items if they've been around for seven or more weeks." 

Such a model brings some element of emotion – whether it be motivation, excitement, in some instances, frustration – to shopping. Add to that, “the ability to touch and feel the merchandise and the inspiration that our shopping experience elicits, [which] leads to instant gratification — all important factors for shoppers,” said TJX Chief Executive Officer Ernie Herrman on a conference call with analysts.

These are all things that most retailers are sorely lacking in connection with their retail set-ups.