The home furnishings off-pricer will start to sell online next year. Better late than never? (Photo … [+]
Finally: After resisting doing so for years, TJX Companies this week said it will put its HomeGoods division into e-commerce sometime next year. Begrudgingly late, it seems.
The giant off-price conglomerate has achieved remarkable success with its almost pure-play physical store strategy, outperforming most of the rest of the retailing business handsomely over the years. A few years back it launched a modest online operation for its Marmaxx brands (TJ Maxx and Marshals) but outside estimates are that digital represents perhaps 2 percent of the company’s overall approximately $40 billion in annual sales.
When the pandemic hit the country and specifically retail in late winter and early spring, TJX was forced to close all its stores and also shut down its e-commerce unit, resulting in months of no revenue across all its North American operations. (Most of its sizeable European operation has since closed again.)
When stores did reopen in the spring, many of the company’s locations were reported to be quite busy and the retailer said it expected a return to pre-Covid business. In reporting its results this week it said top line revenue was off with a net loss for the first nine months of the year.
This was also when it announced the online initiative for HomeGoods. “To both leverage our strength in the home category and capitalize on our market share growth opportunities, we are pleased to share that we plan to rollout e-commerce on HomeGoods.com later next year,” Ernie Herrman, CEO announced. Right now the site is not transactional.
The move into e-commerce seemingly contradicts what Herrman said earlier in the year when he was quoted in the Wall Street Journal as saying, “Strategically, nothing will change. We will not look to e-commerce as our major leverage point to get us through Covid and out the other side.”
In fairness he also said, “We plan to continue growing e-commerce strategically” and this HomeGoods launch could qualify under that heading. But the timing of the announcement, just a few months after seemingly dismissing the idea of e-commerce seems suspect. As does his use of the word “leverage” — earlier in the negative and just this week in the positive.
Off-pricers like TJX have generally justified their lack of e-commerce as a channel incompatible with their treasure hunt style of merchandising and localized assortments that would be hard to standardize online. And while they both have merits in the decision making process, one can argue that shopping online is the ultimate treasure hunt while off-price stores increasingly carry programmed goods with fewer and fewer opportunity-type buys in their mix. And again, to be fair, launching an e-commerce operation can also be a costly endeavor from both a technological and physical distribution standpoint. It’s a big undertaking no matter what the scale.
TJX is not alone in this thinking. Its closest competitor Ross Dress for Less has never sold online and Burlington, another big player in the space, ended its meager e-commerce program in February right before the pandemic hit.
Now HomeGoods will reverse course and start playing in the virtual space. There were no specifics on exactly when the business would launch next year or what the company’s expectations were for its place in its overall business. Other home furnishings retailers like the Williams Sonoma brands, Crate & Barrel and RH get as much as half of their total revenue online — and that is before the pandemic shifted even more sales away from physical stores. Even Bed Bath & Beyond, which had been a laggard in e-commerce for years, now does 20% (and climbing) of its overall sales online.
Will HomeGoods approach those numbers? Hard to say. But if it starts going in that direction, it appears it will do so in one way: begrudgingly late.
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