HomeGoods finally has a home online

Discussion
Source: homegoods.com
Oct 04, 2021

HomeGoods, founded in 1992 and now with 846 locations, has launched an e-commerce offering for the first time.

“We believe this is something our existing customers have been waiting for, and there’s another way for us to attract new shoppers,” Ernie Herrman, president and CEO at HomeGoods-parent, TJX Cos. said recently on his company’s second-quarter call. “Similar to our other online businesses, HomeGoods.com will be complementary to our physical stores and allow customers to shop our great values 24 hours a day, seven days a week.”

HomeGoods employed “a little tweak” to its e-commerce strategy versus TJX’s other sites, he said. TJMaxx.com and Marshalls.com employ separate buying teams and inventory to ensure a “treasure hunt” in-store experience continues. With extensive SKUs that “turn so fast” in the home category, differentiation is less of a concern for HomeGoods so buyers and inventory are shared.

The coordination supports home customers’ buying needs, Mr. Herrman said. A shopper finding furniture in the store to outfit a room, for instance, may head online to find complementary items.

The home category remains on fire with the benefit of the stay-at-home economy during the pandemic. HomeGoods’ comps jumped 36 percent in the second quarter compared to the same period in 2019.

The home category faces freight challenges selling online given some of its inherently bulky and heavy items, but has seen an accelerated digital shift over the last year.

Whether online selling works for moderate off-price businesses, however, remains debatable. Ross Stores and Burlington Stores don’t offer e-commerce because those businesses believe the treasure hunt experience can’t be replicated online and their average prices aren’t high enough to offset shipping, returns and other online costs.

TJX launched e-commerce in 2013 and it only makes up about three percent of sales, but officials have said e-commerce meets the needs of customers seeking an online option. The order threshold at TJMaxx.com.com and Marshalls.com to qualify for free shipping is also comparatively-high among apparel-focused sites, at $89, and even higher, at $119, for HomeGoods.com.

DISCUSSION QUESTIONS: Does e-commerce make sense for off-price selling in the home category? Do you see a bigger opportunity for TJX with HomeGoods.com than with TJMaxx.com and Marshalls.com?

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"Some of us think that HomeGoods is the hub of the universe. Having access 24/7 is just about heaven."

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14 Comments on "HomeGoods finally has a home online"


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Rick Watson
BrainTrust

Digital is not just about e-commerce. It’s about convenience — even if 99 percent of all purchases still happen in stores, people will still demand a great digital experience for being able to check inventory, pick up, etc.

Delivery they can afford to make expensive (high minimums) to make up for the fact that they don’t want to encourage it.

Bethany Allee
Guest

The portion of the market HomeGoods serves has the need for a reliable e-commerce play that allows associates and customers to access inventory from other stores/warehouses to round out customer orders (Ex. I need five giant candy canes for the front of my house, and the store I’m in only has three). This real-world use case is dependent upon accurate inventory across stores and consumers should have the ability for store holds vs shipping. Direct-to-consumer shipping on larger home wares will still be a challenge in their pricing model.

Cathy Hotka
BrainTrust

Some of us think that HomeGoods is the hub of the universe. Having access 24/7 is just about heaven.

Liza Amlani
BrainTrust

An e-commerce play for HomeGoods is not only a long awaited gift to the treasure hunter but is also incredibly timely for TJX as the home category continues to grow.

With more and more customers starting their shopping journey online and with more deals to score than ever, it made sense for HomeGoods to finally launch online. Competing with Wayfair and Amazon on price and product mix, TJX needed to secure their digital presence and will also reach those customers that can’t get to their physical locations.

Additionally, off-price home product is the perfect category to launch online versus the lower price points and margins of the TJX apparel stores/portfolio.

Melissa Minkow
BrainTrust

E-commerce shouldn’t be expected to be the revenue-driver for the off-price furniture space, but it is definitely a necessary component to a modern retail strategy. Very few retailers should stay solely brick-and-mortar forever. This step is demonstrative of the fact that HomeGoods is evolving with consumers’ shopping behaviors, even if very little of the business comes from it.

Jeff Sward
BrainTrust

It might be a late and begrudging entry into e-commerce, but this move recognizes the long term futility in not trying at all. And the threshold for free shipping makes abundant sense. No need to make this a money losing proposition from the very first step.

David Spear
BrainTrust

I definitely see a bigger opportunity for HomeGoods.com vs TJMaxx.com and Marshalls.com, especially as more companies offer more flexible work arrangements for their employees. A prime example last week was PwC, as they’re offering employees the choice of WFH or in-office. As more and more companies offer flex plans, home improvement will continue to remain strong and companies like HomeGoods who offer affordable, quality items online will thrive. As for the $89 delivery fee, it’s an initial attempt to help offset e-commerce expenses, but it might be a tad high in the shopper’s eye, especially given HomeGoods type of merchandise, i.e. pillows, throws, comforters, etc. If the average shopper were buying bigger, bulkier items such as furniture, then the fee would be viewed in much more of a convenience-based calculus.

Neil Saunders
BrainTrust

With more people shopping online, HomeGoods was missing out by not having an e-commerce site. And while I doubt that this new online presence will eclipse its store sales, it is a sound addition to the business that allows customers to interact with the brand in the way they want. That said, it is very difficult to recreate the treasure hunt experience online, so it will be interesting to see how behaviors and purchase dynamics change compared to stores.

Richard Hernandez
BrainTrust

Neil, you are correct – you go there for the treasure hunt aspect of shopping, so it will not completely cannibalize their sales, but a lot of times they only have one of what you want (I know very little about decorating but a wise woman advised me long ago, this was the place top go). To be able to look for it online will be extremely helpful.

Steve Dennis
BrainTrust

I feel like 2004 called and wants its press release back. This is long overdue. While concerns about e-commerce transactional profitability are legitimate, the off-price industry’s slow roll into digital ignores several important facts. Remarkable retailers focus on lifetime value, not just transactional profitability. Digitally-enabled commerce tends to benefit physical stores more than sales rung up and fulfilled via traditional e-commerce fulfillment. If you don’t show up well in early parts of the customer journey, consumers don’t make it through the funnel. Bottom line: They’ve been leaving a lot of money on the table. Also, this “treasure-hunt” idea is largely nonsense. Most of the product is made for these stores. It’s not hard to do the allocation.

Peter Charness
BrainTrust

Shop online makes tremendous sense, even if the purchase will ultimately be completed in store … or started in-store and completed later on online. I suspect the hard part here will be insuring accurate inventory positions, and ship from store capabilities to support the online channel.

Kim DeCarlis
BrainTrust

E-commerce is a channel that makes sense for all retailers — from luxury to off-price — and it’s great to see HomeGoods going online as it is a base level expectation of shoppers today. It’s important though, that going online doesn’t merely mean taking existing analog processes and digitizing them. It means rethinking the interaction with the consumer along their discovery and purchase process — from home page to checkout — and optimizing it, as well as building a strong omni-channel approach that brings together the interaction between online and in-person. In that regard, TJX is in a great position to leverage their experience with their other brands to help HomeGoods advance more quickly.

Karen Wong
BrainTrust

Online research and pre-shopping discovery is an increasingly important part of true omnichannel retail. Unless you’re in a very exclusive or bespoke industry, customers expect an online product catalog regardless of where they actually buy. As long as they have implemented this in an efficient way with real-time inventory, it’s a win.

Ricardo Belmar
BrainTrust

It’s tough to respond with anything but “it’s about time!” to news of ecommerce coming to HomeGoods! Yes, this is a welcome addition. Fact is, as the home goods category has continued to grow throughout the pandemic, not having an ecommerce presence when most consumers start their shopping journey in a digital channel (again, especially throughout the pandemic) meant that HomeGoods was missing out on many customers. While their most loyal customers will surely continue to “hunt” for products in-store, the best growth for customer acquisition at HomeGoods will come from digital channels. Ecommerce is a necessity to make that work.

And yes, it’s true that replicating the treasure hunt feel of the store with an online presence is difficult, I don’t believe that will hold back any customers shopping at HomedGoods.com — what will create an even more pleasing experience online is bringing store-level inventory counts to the ecommerce site to help shoppers find even more items they want conveniently.

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"Some of us think that HomeGoods is the hub of the universe. Having access 24/7 is just about heaven."

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