Ad Age
Amid the retail earnings bloodbath of the last two weeks, one of the few bright spots was TJX Cos., parent of off-price brands Marshall’s, TJ Maxx and Home Goods. The Framingham, Mass.-based retailer reported a strong first quarter as consumers stocked up on discounted designer pillows and cut-rate Michael Kors bracelets. The company called out its marketing as a reason for such positive growth.
“We are very happy with our creative marketing campaigns at every division this spring,” said Ernie Herman, who was promoted to chief executive earlier this year, replacing long-time leader Carol Meyrowitz, on a recent conference call. He noted that recent traffic gains are a result of TJX’s marketing across all divisions.
Knowing that most shoppers appreciate a good deal, TJX has built a $29.1 billion retail empire around it. The company, which has nearly 3,700 stores in seven countries, has continually succeeded at a time when other retailers—both department stores such as Macy’s and Kohl’s and specialty stores like Gap Inc.—are falling short. Such gains are partly due to the company’s discovery and destination store model—shoppers are eager to spend when it’s an ever-changing assortment of bargains—and also to its clever taglines and effective marketing campaigns.
Executives noted last week that the chain will spend more on advertising in the second half of the year than originally planned since the current marketing has been so successful. Last year, TJX spent $86.5 million on measured media in the U.S., according to Kantar Media. It’s been incrementally adding dollars each year and spending is up nearly 40% since 2011.
A spokeswoman for the company declined to speak with Ad Age, citing a longstanding practice of not disclosing business activities considered competitive in nature.
The excitement of finding a bargain and the urgency of getting it before it sells out help propel shoppers to visit brick-and-mortar TJX locations, wrote Neil Saunders, CEO of retail research agency Conlumino in a recent research note. “TJX’s execution both in store and in terms of marketing is on-point and helps to create a strong connection to the various brands,” he wrote, noting that “TJX is one of the reasons that U.S. department stores cannot succeed at the discount game.”
Indeed, despite off-price ventures from nearly every other department store, including a recent push from Macy’s with its outlet Backstage stores, TJX is the only retailer truly winning the discount game. Its in-store destination strategy also protects it from the encroachment of ecommerce giant Amazon.
For the first quarter, TJX beat analyst expectations by listing a 10% uptick in revenue to $7.5 billion, compared with the year-earlier period. Same-store sales were up 7%, and profit soared to $508 million, a 10% gain.
Though TJX’s marketing isn’t particularly groundbreaking or innovative, it does a good job of resonating with the company’s target consumers. In the last six months, all but one of the marketer’s 10 spots have scored above the norm in the discount store category, according to analysis by Ace Metrix, an ad-tracking firm. In fact, the company’s “Bring Back the Holidays” commercial was praised by the firm as one of the most relevant of the crucial November and December season.
This isn’t the first time TJX has powered through while other brands have faltered. During the recession, the company ran an integrated marketing effort for its TJ Maxx and Marshall’s brands that played on shoppers’ need for value. The company’s ads have coined words like “Maxxinista,” Shopportunity” and terms like a “Spending Intervention.” Other marketing has promoted the idea of discovery, and has featured women speaking about their own confidence and self-acceptance.
Ron Hess, an associate professor of marketing at the Mason School of Business at the College of William & Mary, praised TJX for its ability to connect with core consumers and use word-of-mouth when appropriate.
“Do I think of them as a marketing powerhouse? Not necessarily,” he said. “But what they try to get people to do is through word-of-mouth, to find a good deal in store. The mom network is a powerful thing.”
View the article on Ad Age
