Over the past few years there has been a revolution been going on in retail. An industry that used to be based on people coming to their bricks and mortar stores has been shifting more and more to doing business online as the e-commerce market has exploded and retailers have come to understand the importance of information technology. The arrival of the Covid-19 virus and the resulting of shutting of most retail stores caused the move to e-commerce to start to move even faster. However, not all CIOs are currently involved in this process. In fact, over at T.J. Maxx they are taking a different path.
The T.J. Maxx Strategy
The CIO at T.J.Maxx is facing a problem. The senior management at the retail chain isn’t looking to quickly ramp up e-commerce beyond its minuscule level or add new features allowing American customers to buy products online and pick them up in stores. In fact, T.J. Maxx stopped taking online orders during the lockdowns and even now is limiting the number of items for sale on its website.
What person with the CIO job at T.J. Maxx has to realize is that their parent TJX Cos., which also owns Marshalls, HomeGoods and other discount chains, is as focused as ever on drawing shoppers to its more than 4,500 stores world-wide. They are betting that consumers are desperate to roam the aisles after months of being stuck at home. What the CIO has to deal with is a company that believes that strategically, nothing will change. T.J. Maxx will not look to e-commerce as a major leveraging point to get them through Covid and out the other side.
There is a reason that the person in the CIO position at T.J. Maxx is not being asked to boost their e-commerce offerings. Retailers such as T.J. Maxx have found the economics of e-commerce unattractive, but they risk losing more sales should another lockdown occur. For now, though, shoppers are flooding reopened stores, pushing sales higher than they were a year ago. Meanwhile, other chains, including Macy’s and Kohl’s, say sales are running below pre-pandemic levels.
Going It Alone
Does T.J. Maxx stand a chance with this approach that seems to go against what everyone else is doing? What T.J. Maxx is counting on is that their customers love the deals that they offer. The stores offer a selection of discounted high-end designer brands and this seems to draw their customers back over and over again. As the impact of the Covid-19 virus starts to ebb, there will be a great deal of revenge spending. This is because people have been cooped up for so long they want to shop in stores.
What the T.J. Maxx CIO has to realize is that TJX’s approach contrasts with other retailers that are charting a post-coronavirus future less centered around drawing shoppers inside stores. As an example of this, the parent company of fast-fashion retailer Zara said it would permanently close as many as 1,200 stores and move more aggressively to selling online.
Others retailers have boosted investments in e-commerce. Walmart added online grocery pickup and delivery slots and quickly started shipping online orders from thousands more stores. Michaels, a craft supply chain that closed many stores throughout the pandemic, added online pickup and same-day delivery service to most of its U.S. stores. TJX gets just 2% of its sales from e-commerce and shut its websites during the lockdowns. Even now, it is fulfilling online orders at a slower-than-normal rate as it adheres to safety standards that require social distancing in its warehouses.
What All Of This Means For You
So what is the T.J. Maxx CIO to do? The company has long catered to shoppers who enjoy the “treasure hunt” experience of browsing aisles of constantly changing merchandise. The company believes that in today’s environment this kind of shopping experience can serve as a break in the day, and as some ‘me time’ for their customers, and in the future will continue to be a major draw for consumers to their stores.
There are also economic reasons for the aversion to e-commerce. It is hard for discount retailers to turn a profit when factoring in the cost of shipping and returns. Moreover, some brands that sell to discounters don’t want their items online where shoppers can easily search for deals. For a lot of companies, e-commerce is a blessing and a curse. It turns out that e-commerce comes with additional expenses and a reduction in shoppers visiting physical stores. The T.J Maxx CIO needs to deal with the fact that TJX is one of the few companies that doesn’t need e-commerce.
E-commerce is complementary to stores. With more attractive financial metrics in brick-and-mortar versus online, T.J Maxx plans to continue growing e-commerce strategically. T.J. Maxx has to understand that there are risks with taking this approach. The risk is a second wave of infections that would force nonessential retailers to temporarily close stores again. We’ll just have to see how this “going against the grain” approach to e-commerce works out for the T.J. Maxx CIO.
Question For You: Should T.J. Maxx start doing things like curb side pick up or online ordering?
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What We’ll Be Talking About Next Time
Being a CIO is not an easy job and if you have the CIO job at a major automotive manufacturer, it is even harder. That’s why it’s not all that surprising to see that the CIO at Volkswagen has just suffered a significant setback. The future of the company is riding on their forthcoming all electric car that they will be using to compete with the likes of Tesla. However, the planned launch of this car has had to be rolled back because of software problems. Looks like the CIO has a real problem on his hands.