How Do Some Retailers Succeed While Ignoring The Internet?

Shopping online: it’s convenient for customers and brings in big bucks for retailers. But not everyone is jumping at the chance to sell their goods on the internet. HomeGoods and Marshall’s don’t have websites filled with products and TJMaxx has a sparsely filled online platform, and they appear to be doing just fine, thank you very much. 

Bloomberg reports that retailers like HomeGoods, Marshall’s, and TJMaxx — all owned by TJX Co. Inc. — have chosen to not focus on e-commerce sales, a strategy that has actually paid off, with revenue increasing 30% over the past five years.

While HomeGoods and Marshall’s only sell gift cards online, TJMaxx sells some clothing and accessories on its website, just far less than one might find in stores.

The e-commerce-less strategy seems to be working for the discount retailers for a few reasons: it’s complimentary to the company’s buying process and customers like to hunt around stores.

TJMaxx, Marshall’s, and competitors like Ross Stores each adhere to a process in which teams of buyers obtain excess items on the wholesale market or samples from select designers — all products that likely aren’t found at larger department stores or big box stores.

Because of this limited inventory, it’s difficult to place the items for sale online, analysts tell Bloomberg.

For TJMaxx, its online shop isn’t seen as a destination for customers, but as a carefully crafted supplement.

“While it’s a small part of our business, we see it as highly complementary to our physical stores,” TJX Chief Executive Officer Ernie Herrman said earlier this year, as reported by Bloomberg. “We are being methodical in how we grow this business.”

By placing most of their products in physical stores, the retailers are creating a destination for shoppers.

One TJMaxx customer tells Bloomberg that she could spend hours perusing her local store for deals and unique items. It’s a sentiment that’s apparently popular with customers. In fact, Bloomberg reports that TJX’s 10 brands have brought in nearly $31 billion in sales last year.

And those sales likely won’t decline anytime soon, analysts believe, pointing out that shoppers are more focused on value, an aspect that will likely make retailers like TJMaxx and HomeGoods even more popular.

TJMaxx, Marshall’s, and Ross aren’t the first retailers to shrug off e-commerce sales. Costco has famously taken a “we’ll get there someday” approach to online sales, offering an online platform with significantly fewer products than one might find in its actual warehouses — much like TJMaxx’s strategy.

Of course, Costco has a different business model than the discounters — requiring customers to have memberships to shop both online and in stores.

Back in May, Costco CFO Richard Galanti said that the wholesale club tries “to not avoid it or be arrogant about” its online retail operations, while at the same time “we try not to freak out about it.”

by Ashlee Kieler via Consumerist