Friday, November 26, 2010

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T.J.Maxx & Marshalls On the Concept of Off-Price Retail

As one of the few retailers who have experienced a steady increase in customer count during this tough economy, T.J.Maxx and Marshalls are two stores you may want to check out while shopping for holiday gifts this year. Both are "off-price retailers", not to be confused with outlet stores, which often carry past season merchandise and product that is not first quality. Conversely, both T.J.Maxx and Marshalls stores carry over 95% first quality merchandise in fashions and home furnishings, most of which belong to the current season's lines.

In order to help dispel the myth that these two stores are only able to offer department store merchandise at 20% to 60% off retail because the merchandise is not top quality, The Marmaxx Group invited 23 bloggers to come to Boston to learn about what the buying team does to obtain such great prices on current first quality merchandise. Here are some of the highlights of what I learned during the Boston T.J.Maxx & Marshalls Event . . .

We heard from a handful of corporate representatives and buyers from The Marmaxx Group, including Laura McDowell, Manager of Media Relations (above) and Michael MacMillan, President of T.J.Maxx/Marshalls (below).

The following video only scratches the surface of what I learned during this event . . .

Here is a summary of how The Marmaxx Group is able to offer T.J.Maxx and Marshalls customers such low prices on the same merchandise department stores carry during the same season . . .
  • The buyers are able to purchase large quantities of merchandise from one vendor because there are over 1700 stores combined between T.J.Maxx and Marshalls.
  • The buyers purchase goods 40 out of 52 weeks each year, rather than seasonally. So they are still purchasing merchandise for holiday in November, rather than buying the same merchandise several months in advance. Owning their own distribution centers allows newly bought merchandise to be processed and shipped to the stores quickly.
  • Since not all stores carry the same styles of merchandise and the identical merchandise is never placed in both T.J. Maxx and Marshalls stores, the buyers can buy large or small quantities, depending on which will get them the best deal. They are able to take advantage of one-time opportunistic buying without restrictions for the most part.
  • If merchandise does not sell, it is not returned to the vendors like with many retailers. Ultimately, if merchandise does not sell after it goes on clearance at the end of the season, it will be donated to charity.
  • Aside from merchandise getting marked down to clearance at the end of the season, there are no promotional sales, so customers can drop by a store at anytime without wondering if they are getting the best price for current merchandise.
  • The store fixtures and marketing are purposely simple to keep costs down.

During the event, we were given a very effective presentation demonstrating how the same merchandise is being sold in T.J.Maxx and Marshalls stores as in fine departments stores at a significant savings. Many times the product is identical and sometimes the difference in price was due to the merchandise being a different color.

There was certainly quite a bit of information packed into one day. The topic of off-price retail was only half of it. The other half of the day covered current trends and gift ideas. If time permits, I will share what I have learned on those topics in a future article.

For all you handbag addicts out there, I just had to include this photo of the sample room devoted to bags in the buying department at home office . . .

Although I did not receive compensation for sharing this information with my readers, The Marmaxx Group did cover all expenses associated with the event I attended and I did receive a gift card to shop as part of the event activities. All thoughts expressed in this article are my own.