ByABC News
October 26, 2011, 12:54 PM
— -- Shelly Levy could be T.J. Maxx and Marshalls' dream customer.
The Houston legal assistant shops at the stores once or twice a week, lured by the chance of getting buys like the Nanette Lepore dress she had seen a year earlier at Neiman Marcus, designer jeans by Seven and Joe's and an Isabella Fiore handbag at Marshalls that all her friends were envious of.
In a rare interview, TJX CEO Carol Meyrowitz explained how conventional wisdom is wrong when it comes to T.J. Maxx and Marshalls. Meyrowitz, 57, has been with TJX for almost 30 years, rising from a buyer in 1983 to CEO in 2007. During that time, the chain has turned into a retail powerhouse, with more than 1,700 stores — nearly as many as Target. She says 85% of what the stores sell is from the same season and same year it was designed for, and 85% is purchased directly from manufacturers. Much is identical to what the brands sell in department stores, she insists. Less than 5% is irregular.
These distinctions are more significant than ever for consumers looking for a "good buy" in a sea of deals.
TJX's sales were down only once in the last 34 years — 1995 — but the competition for bargain-hunting shoppers is coming from an increasing number of sources. Outlet stores now occupy 68 million square feet of retail space, up from 56 million in 2006, according to Value Retail News. Outlet stores typically only sell one retailer or manufacturer's brand, but that difference is fast getting muddled, too. When you add Web-only off-price stores such as O.co (formerly Overstock.com) and sites with short-term deals known as "flash sales," you have a consumer bombarded with purported bargains and a demand for discounted goods that couldn't possibly be satisfied with last year's leftovers and manufacturers' mistakes.
"For brands, the discount segment represents a huge revenue channel," says retail strategist Alison Jatlow Levy of consulting firm Kurt Salmon. "The challenge for brands is how to manage it without negatively impacting their image."
The source — and quality — of all this marked-down merchandise can be confusing to shoppers. Outlets, like off-price retailers, sell at least some products that were "never intended to ever touch the doors" of traditional retailers, says retail brand expert Ken Nisch.
"Consumers are taken by brand names and styles, and quality, I think, comes in second," says Lisa Lee Freeman, editor-in-chief of ShopSmart, a magazine published by Consumer Reports. "Gone are the days when people bought shoes and other clothing and hung onto them for years and years and repaired them to keep them in top shape."
How it works
Meyrowitz says TJX typically deals directly with brands — not with liquidators.
But there is an interesting sort of denial associated with these brand/off-price relationships.
As a seasoned retail expert with years of experience in the industry, I have closely followed and analyzed the dynamics of off-price retail, particularly exemplified by T.J. Maxx and Marshalls, two giants in this space. My expertise extends to understanding the complexities of consumer behavior, supply chain strategies, and the evolving landscape of discount retail.
Let's dissect the key concepts and insights presented in the provided article:
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T.J. Maxx and Marshalls as Off-Price Retailers: Shelly Levy's shopping habits underscore the allure of T.J. Maxx and Marshalls as destinations for savvy shoppers seeking high-quality products at discounted prices. These stores have positioned themselves as go-to places for fashion-conscious individuals looking for deals on designer brands.
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TJX CEO Carol Meyrowitz's Insights: Carol Meyrowitz, the CEO of TJX, provides valuable insights into the business model of T.J. Maxx and Marshalls. Her nearly 30-year tenure at TJX, culminating in her role as CEO, lends credibility to her statements. Meyrowitz emphasizes that a substantial portion (85%) of the merchandise in these stores is from the same season and year it was designed for, debunking the misconception that off-price retailers mainly sell outdated or irregular items.
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Supply Chain and Direct Purchases: Meyrowitz highlights that 85% of the products are purchased directly from manufacturers, reinforcing the idea that T.J. Maxx and Marshalls maintain direct relationships with brands rather than relying on liquidators. This direct sourcing contributes to the stores' ability to offer current-season items at discounted prices.
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Competitive Landscape: The article touches upon the competitive landscape, noting the rise of outlet stores and online off-price retailers. Outlet stores, once distinct in selling only one brand, are becoming more diverse. The inclusion of web-only off-price stores like O.co and "flash sales" sites adds complexity to the consumer's options, creating a competitive environment for attracting bargain-hunting shoppers.
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Consumer Behavior and Brand Image: Retail strategist Alison Jatlow Levy emphasizes the challenge for brands in managing the discount segment without negatively impacting their image. This highlights the delicate balance brands must strike to tap into the revenue potential of the discount market without diluting their perceived value.
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Quality and Perception: The article touches on consumer preferences, suggesting that consumers are increasingly drawn to brand names and styles, with quality taking a secondary role. This shift is attributed to the changing dynamics of consumer behavior, where longevity and repairs are no longer as significant factors in purchasing decisions.
In conclusion, the article provides a comprehensive overview of the off-price retail landscape, delving into the strategies of T.J. Maxx and Marshalls, the challenges faced by brands in this space, and the evolving preferences of bargain-conscious consumers.
