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Yesterday we ventured up to glamorous Framingham, Massachusetts, to visit the TJ Maxx and Marshalls headquarters—the home of the country's largest off-price retailer. We got a behind-the-scenes tour, where we checked out the sample bag and shoe closet and got a sneak peek at what the buyers have in store for off-price shopping fanatics for fall.
Have you ever seen Prada bags and Yves Saint Laurent at TJ Maxx? What about Michael Kors and Dolce & Gabbana? Well, to be sure, it exists, we saw it with our own eyeballs. Part of the allure of TJ Maxx and Marshalls—and one of the reasons that their customers keep coming back is because these are stores for people who relish in the thrill of the hunt. When every store is different—carries different merchandise and is set up differently to serve the unique needs of its local community—sometimes it's worth driving out of the way to check out more than one branch, just to see what's on offer.
So, we've always been curious about how exactly the buying at off-price retailers like TJ Maxx and Marshalls works. With 85% of the merchandise in stores being the same as the seasonal merchandise in mainstream department stores (the 15% of the merch that's from past seasons is marked "past season."), how do they do it?
Turns out the buyers travel 40 out of 52 weeks each year all over the world—to vendors in the US, France, Italy, the UK, Spain, and more—and buy, in their words, "close to need." What does close to need mean? Well, unlike mainstream buyers who plan and buy their merchandise six months in advance, buyers at off-price retailers buy last-minute—selecting items and pieces that they know their customers want, in order to avoid having to put everything on sale halfway through the season.
What about the prices, how do they get them so much lower than department stores if it's the same merch? Well, most mainstream stores have 300% to 400% mark-ups above wholesale, and a lot of big mainstream buyers have leeway from designers to return stuff that doesn't sell at the end of the season—resulting in designers being stuck with a bunch of past-season stuff that they have to figure out how to dispose of after everything is said and done (thus the phenomenon of factory outlets, etc.) Buyers at TJ Maxx and Marshalls have forsaken this privilege of return in order to cut better deals with designers. "This motivates vendors to provide a better price up-front," they say.
Another way that TJ Maxx and Marshalls keep their prices low is by going minimalist on their store fixtures and displays—something that shoppers there are probably familiar with. In fact, the head of marketing talked openly about what she calls the "Customer Pain Points" endemic to the off-price retailing experience. It isn't easy to search through racks of kind-of-organized stuff, try it on in a no-frills dressing room, and then have to wait on supermarket-ish lines to pay. Plus, there's no fancy packaging or shopping bags—shoppers get plastic bags and no-nonsense wrapping. Although it's not the most luxurious experience, with nearly 2,000 store locations nationwide, the straightforward aesthetics of the stores saves the company tons of money—savings that get passed on to the consumer.
NB: TJ Maxx is currently undergoing renovations to improve their "Customer Pain Points." About 406 of the 900+ stores in the United States have so far undergone upgrades—better lighting, upgraded tiles, more polished features, and better bathrooms. All to make the shopping experience far more pleasant without bulking up the overhead costs too too much.
We had a really fantastic experience learning about off-price retail yesterday—checkout some of our photos of the headquarters above. Again, it's a no-frills office, but these guys live their company ethic. We'll see you at our local TJ Maxx, where we'll be hunting for some YSL...