American shoppers are increasingly trading down from department stores and opting to spend their money at off-price retailers. TJX Companies is the largest player in the off-price industry and has helped to change the way Americans think about the discount space.
"It was where you went if you didn't have much money, and you really needed to save. It isn't seen that way anymore. It's seen as being a very fashion-forward channel," said Neil Saunders, managing director of GlobalData.
TJX Companies, which owns Marshalls, HomeGoods and T.J. Maxx, has nearly doubled its annual sales over the past decade, reaching $54.2 billion in fiscal 2024. Part of that success has come from changing the way it merchandizes its stores.
"Their assortment has pivoted from being a compendium of mistakes to actually being product people are looking for" said Simeon Siegel, senior analyst at BMO Capital Markets.
For this to benefit the brands, selling to off-price stores must be done discreetly. One way that T.J. Maxx accomplishes this is by making designer brands unsearchable on its website. Siegel says that if a company sells its inventory to T.J. Maxx, there is less brand dilution than if it were advertising clearance sales in its own stores.
"If a logoed shirt is picked up and purchased, as soon as it is walked out of the TJX store, no one knows where it came from. It's not a T.J. product. It's that brand's product. And that's a powerful proposition to be able to sell a lot of units without the normal degradation that brands see as they scale," said Siegel.
Watch the video to learn more about why both consumers and brands love T.J. Maxx.
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