TJX Nixes Online Business, Makes Other Changes
By George Anderson
In an era when many brick and mortar retailers are moving to multi-channel models, TJX Cos. has made the decision to get out the e-commerce business.
Last week in a prepared statement, the company’s chairman and CEO Bernard Cammarata said, “We have decided to exit our e-commerce business, as it has not delivered the sales
we had planned, and pre-tax operating losses are projected to be approximately $15 million for the current fiscal year. Exiting this business will eliminate these losses going
forward and allow us to better focus our energies into other areas.”
The company also plans to increase its advertising spending and reposition its Bob’s Stores chain away from its current casual sportswear for men focus to offer more products
in the same category for women.
TJX also plans to scale back new store openings as it gets its financials in order.
Ted English, the company’s former CEO, unexpectedly resigned from the company last month.
Moderator’s Comment: What is your reaction to the moves being made by TJX? –
George Anderson – Moderator
Given the “found treasure” quality of so many of their stores, the online marketplace may not have been as useful a medium for them as for many other retailers. However, to me, it feels like a short-term remedy.
I can’t help but wonder if they know how many shoppers checked things out on the website then shopped in-store – which happens with amazing frequency for most retailers.
Long-term I think anyone without a good internet presence will lose out. And retail is just too competitive to let that happen.
Goodbye, TJX. With thinking (and execution) like this, please engage your bankruptcy attorneys early for a discount rate. And just for kicks, please share the “other areas” in which your energies could be better focused – outside of attracting women to Bob’s.
Authorized Business Warning! Beancounters are now in charge of TJX and (typically) believe they understand marketing. All merchants are advised to evacuate the premises at once.
I shop T.J. Maxx and Marshall’s all the time and I didn’t even know they had an e-commerce site. There’s part of your problem, right there.
I can see e-commerce being problematic for the “treasure hunt” concept, but there’s no reason to abandon the Web altogether. A clever site designer could create something that would reinforce the image of good-stuff-cheap by highlighting the brands that can be found in the store on any given day. I can visualize a sort of dress-the-paper-doll application that would let the customer design an outfit from different pieces, show how they work together, and let the customer know the brand names, what MSRP is and what the TJX price is.
While I believe I understand the reasons behind TJX decision to step away from e-commerce, the company should not abandon strategic thinking about its online presence. Maintaining a Web presence is crucial for all businesses, in my opinion, because for an increasing portion of consumers, if you have no Web face you do not exist. The strategic fallacy may lie in evaluating the Web unit solely on its direct sales. If selling close-out apparel online does not contribute direct profits, the company should explore how its online offering might enhance excitement, loyalty and sales within its stores. It’s harder to calculate a Web site’s contribution on this basis, but the effort could be repaid in the battle over wallet-share.
This is a prime example of a company whose business does not translate well to the web. They probably should not have ever tried to move their treasure hunt to the web – it just doesn’t work.
However, they should definitely utilize their web site as a means of communicating with their customers. They have a glorious opportunity to keep all up to date with “new” treasure deliveries. Additionally, the email database can be updated over the web and announcements and coupons can be delivered directly to the consumer via email. I would like to see TJX move their internet sales to eBay. This would seem to be a perfect match!
Based on a combination of reading everyone else’s comments and what I have come to know about e-commerce over the past several years, it seems that the decision isn’t entirely sensible. It would be better to find a way to make an online presence work rather than eliminating it. It would also seem sensible to find out, as Karen suggests, whether customers are actually using the online shop, how and why. Or why not. And how they might use it. In addition, some customer profiling may be in order. Do their customers use the internet for shopping and, if so, where, why bla bla bla. If not, ditto. Lots of online shops don’t have specifically measurable cash returns. This doesn’t necessarily mean they don’t – or won’t – work.
TJX is a wonderful company in many ways. They stand out for their ethics, their open communicative nurturing culture, their consistency, the support they give their people, their good citizenship, etc. That said, there is some question about the efficacy of the “treasure hunt” approach they have clung to for what many of think is far too many years when consumers have become more and more oriented to speed, edited inventories, pre-shopping online, and efficiency in purchasing. TJX suffers from lack of strong direct competition pushing them in the off-price market and the current weakness of the department store industry, in that they do not get the challenges and stimulation and the urgency to move forward and innovate that good competition provides. TJX is a no cell phone, no laptop environment in the year 2005!!! The answer to the internet issue should be “make it work” not abandon it because if you don’t the Blueflies and the Smartbargains will ultimately own businesses that should be yours. The retail adage that applies here is “In retailing if you are not moving forward…you are moving backward.” It is time for TJX to embrace necessary change particularly in the areas of technology and more creative merchandising and presentation in their stores.
The time for determining whether an internet presence is a “good channel” for retailers is long past. Retailers offering anything other than “immediate consumption” products and/or relying 100% on “impulse sales” must have a credible online presence today. Too many shoppers are prequalifying purchases online before selecting retailers to visit for physical inspection and final purchase. And a growing number are simply choosing to “order and see if I like it” based on the liberal return policies that successful catalog retailers employ.
The issue here is not the viability of TJX online presence. The issue is the viability of TJX.
I agree with Karen that TJX’s store mix is all about the thrill of the hunt and — while I also think she’s right in the LONG term about most retailers needing an Internet presence, for now it would seem that calculation doesn’t figure into the hunting plans of TJX shoppers. I also wonder what percentage of their core shoppers actually shop online. All this said, cutting a pre-tax $15 million loss is probably a good idea for now.
Although Internet commerce is still in a fast-growth mode, it’s no longer an infant. Any on-line business that’s several years old and still losing money needs to be considered for merger, outsourcing, euthanasia, or some other radical change. TJX has a great closeout business, based on very moderate price points. The unit cost of tracking, merchandising, and shipping their items via Internet commerce, combined with the high cost of acquiring new on-line customers, makes this sales channel a marginal contributor at best. I assume that TJX explored outsourcing and mergers, and found no credible takers. Given their high store traffic, which can be leveraged to acquire on-line customers, perhaps the future will bring another opportunity. In the meantime, why lose money?
I wonder with all the deep price promotion activities of regular department stores, and specialty clothing outlets, that TJX’s reason for being has deteriorated!!!! Hmmmmmmmmm