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Discount chains are winning in this economy, but keeping prices low isn’t the only trick they have up their sleeves.
TJX Companies, which owns off-price chains including TJ Maxx, Marshalls, and HomeGoods, said a 5% sales bump in Q4 was “entirely driven by an increase in customer transactions,” and that its diverse and flexible product mix helped bring in customers across income levels.
“Our ability to offer a differentiated mix of good, better and best merchandise at each of our stores allows us to appeal to value-conscious shoppers across a broad range of income demographics,” CEO Ernie Herrman told investors in a call on Wednesday.
TJX’s business model, he noted, allows it to “shift our buying, distribution and store mix to quickly react to the hottest trends in the marketplace and changing consumer preferences.”
He added that more than 1,300 buyers sourced products from 21,000 vendors in 2023.
More foot traffic: A new report from Placer.ai, which tracks foot traffic to retailers, found that visits to a number of major discounters were up in Q4, including to TJ Maxx and Marshalls, which were up 7.7% and 6.9%, respectively.
“Off-price apparel retailers typically employ a straightforward method: sell excess or off-season merchandise that would otherwise remain unsold at a discount, benefiting both shoppers and manufacturers,” the report said.
In addition, it found that median household income is higher in TJ Maxx and Marshalls’ potential market than it is for rival chains Ross Dress for Less and Burlington, noting that this variance may have something to do with differences in product selection.
“Marshalls and TJ Maxx tend to have the higher price points, with TJ Maxx in particular expanding its designer offerings over the past few years through its Runway stores.”
The focus on volume and product mix rather than price aligns with other major retailers, such as Walmart, which recently claimed that price increases aren’t a major part of its long-term growth plans.
Herrman similarly said, “we don’t see the [average selling price] changing that much.”