Its annual sales, $27.4 billion—more than Estée Lauder, Hilton Worldwide and Hershey combined—rose 50 percent over the past six years. Its profit tripled to $2.1 billion. In its almost four-decade history, it had only one year of negative same-store sales, all while selling blouses, pots and pans, bedding, sunglasses, sriracha seasoning, yoga mats and maybe a Stella McCartney dress or two.
The retail business can be a tough place. Chains soar when they manage to sell into the spirit of the time, Target for example. But, chains can also collapse when public tastes change, much like Abercrombie’s situation. The Framingham, Massachusetts-based TJX, by contrast, is “the most consistent, most powerful apparel retailer in the United States,” said Howard Davidowitz, who runs his own retail consulting and investment banking firm.
The salient fact that adds to the TJX enigma is that it will do anything to prevent anybody else from knowing how it manages everything it has. TJX’s CEO Carol Meyrowitz, 60, rarely gives interviews. “My sense of Carol is that telling you less is better than telling you more,” said David Poppe, a major TJX shareholder. TJX sells mostly name-brand goods at discount prices, but here's why it continuously does so when others have failed.
Play No. 1: Sell “new,” not a “sale.”
The measure of speed here is how fast a company turns over its inventory, and TJX does every 55 days versus the 85 of its peer group, according to Morningstar. TJX shipped about 2 billion units to its stores in its 2014 fiscal year, up 1.6 billion in 2010. This also includes a door-to-floor approach that cuts down on space needed for backroom storage, and people love new things much more than they love things they saw before now discounted.
Play No. 2: Put real treasure in a treasure hunt.
No one goes to a Marshalls or T.J. Maxx to find something specific. At an off-price chain, the lure is the wonderful discovery. TJX hides gems for the well-heeled as well as the middle class, and the focus is on “value,” not “cheap.” A $499.99 Stella McCartney dress is a much better value than a $1,250 Stella McCartney dress.
Play No. 3: The money is in the buy.
“If you can buy it right away, you can sell it cheap,” Davidowitz said. TJX’s buying organization is considered one of the best in the business. TJX’s buyers focus more narrowly than their department store counterparts. Instead of specializing in accessories, a TJX buyer will specialize in handbags. TJX buyers are also in the marketplace most weeks out of the year, instead of purchasing inventory seasonally.
Play No. 4: Have the vendor make it for you.
TJX gets product from the opportunistic buys category, but the company also buys merchandise from its suppliers upfront. Vendors might even produce excess, just so TJX will buy it.
Play No. 5: Take it all.
TJX can help its vendors grow because the “company is big enough that it can spread the merchandise—both the diamonds and the roughs—throughout its thousands of retail outlets,” said a CEO of a rival retailer. TJX does not advertise the brands it sells in its stores, and that is a part of what brands today want to get in on.