TJX is on a roll. Sales are up, profits are up, and traffic is up. This growth is occurring despite a relatively low investment in their digital business compared to Macy’s and other department stores. Meanwhile, department stores continue to face an erosion of business and, with the exception of Nordstrom (due in part to Nordstrom Rack, a TJ Maxx style format), compounding losses of sales. Analysts credit a large part of TJX’s success to the appeal of “treasure hunt” style shopping, which is the common ingredient across their TJ Maxx, Marshall’s, and HomeGoods portfolio.
What is so appealing about a treasure hunt? Why are shoppers increasingly choosing what might on the surface appear to be a laborious experience over a tidy one – the chaos of hash-merchandising on long racks versus visual merchandising? The answer may lie in two different, yet related explanations.
First is recognizing the difference between seeking and discovering. This difference has everything to do with pre-meditation: “seeking” shoppers know specifically what they are after. When pre-meditation exists, eCommerce can more easily intervene and intercept a traditional retail purchase. Why shop from store to store for, say a pair of light-blue argyle socks, when the internet is based on search efficiency? The king of eCommerce, Amazon, gets this as a foundational shopper benefit. According to Gartner, over 50% of product searches now begin on Amazon. But eCommerce’s strength is its biggest vulnerability. It is difficult to discover on Amazon or most ecommerce sites. TJX is harvesting sales from the discoverers. Shoppers browse TJ Maxx like Pinterest looking for something inspired to add to their wardrobe or home. It’s fun to discover. It is work to seek.
Second is the confidence of saving. Sure, traditional department stores have sales, and there is an almost 90% chance that on any given Saturday, a shopper can find a significant number of items marked down in Macy’s. But finding deals in a forest of displays means either doing up-front work scouring ads, or risk that time walking around the store will be inefficient and fruitless. TJ Maxx, Marshall’s, and HomeGoods, by contrast, are one continuous journey of deals.
The term “treasure hunt” is accurate but what keeps the momentum going for TJX is their retail strategy, to capture the “discovering” dollars while most retailers are chasing the “seeking” dollars, which will become harder and harder to wrest from the mighty eCommerce players. If you are a traditional retailer, it is time to rethink how shoppers can use your store. Maybe it’s time to focus more on discovery, and less on seeking.