TJX to open 260 stores this year
Off-price powerhouse TJX Companies still seems plenty of room for store expansion — particularly in the home good sector.
The retailer, which reported strong second quarter results on Tuesday, has more than 3,800 stores worldwide and will open 260 new locations this year. Long term, it sees the opportunity for 5,600 stores with it current banners, or about 1,700 more locations than it currently operates.
"We see enormous global store growth potential for TJX," CEO Ernie Herrman said on the company's quarterly call with investors and analysts. "We have plenty of white space or markets to fill in throughout our current countries. We continue to see store openings as an attractive investment and a very good use of capital internationally."
TJX's remains committed to its brick-and-mortar strategy. More importantly, so do its customers.
"The customer is clearly telling us that brick-and-mortar retail continues to be an essential part of the shopping experience and certainly when it is executed right with the right values," Herrman said. "All of this gives us confidence in our long-term global store growth potential. Our key pillars for growth remain driving comp sales and customer traffic and our global store expansion."
On the call, Hermann also discussed TJX's new U.S. home concept, HomeSense, which debuts Aug. 17 in Framingham, Mass. He emphasized that HomeSense will look and feel very different from the company's HomeGoods chain.
"HomeSense is rooted in inspiration and discovery and will complement HomeGoods by offering expanding categories such as large scale furniture lighting and art," Herrman said.
The new format will also include such new departments as a general store, which will offer organization and hardware items, with an element of fashion. Certain departments, including kids and pets, will be featured only at HomeGoods.
“We believe an enormous opportunity remains for us to gain additional share in the U.S. home market,” Herrman said. “We are confident that shoppers are going to love our new HomeSense stores.”
While HomeGoods is typically a standalone format, TJX is experimenting. It has "successfully" opened more than 20 HomeGoods stores co-joined with an existing larger Marshalls or T.J. Maxx store. Pleased with the above-plan sales of this group of stores, the retailer plans to convert an additional 10 Marmaxx (Marshalls or T.J. Maxx) locations to this format this year.
“This initiative will bring even more HomeGoods stores to new markets more quickly and efficiently and increase our overall HomeGoods openings to almost 100 this year,” Hermann said. “Again, we are seeing great opportunity for the future of our company within the U.S. home sector.”
BJ’s seeks greater consumer insight with predictive analytics
BJ's Wholesale Club will leverage predictive analytics and machine learning to assist with buying decisions.
The warehouse club operator will begin using First Insight’s consumer-driven predictive analytics. The tools are designed to help BJ’s make design and buying decisions on the broad spectrum of products offered in its warehouse clubs.
“Providing the products our members really want at the right prices is critical to our growth strategy,” said Lee Delaney, chief growth officer at BJ’s Wholesale Club. “First Insight is helping us make sure we have the right products, including seasonal assortments, with the features and prices our members’ value.”
First Insight uses online social engagement tools to gather real-time preference, pricing and sentiment data on potential product offerings. The information is filtered through First Insight’s predictive analytic models to determine which products present the greatest opportunity. The solution will enable BJ’s to evaluate a greater number of products and reflect direct consumer input in their buying decisions.
“First Insight will help BJ’s make efficient operational decisions about product assortments that will benefit both the company and its members," said Greg Petro, CEO and founder of First Insight. "By introducing the voice of the customer through predictive analytics, BJ’s will increase their speed to market with trend-right products, targeted to their members.”
Study: Millennials don’t act — or shop — alike
Retailers need to update their approach to targeting millennials.
That's according to a new report by management consulting firm L.E.K., which provides insight into Millennials and their predecessors Gen X and the Baby-Boom generation.
"Savvy retailers who want to court millennials should think more about sub-segments than the whole population, and remember that at the end of the day it's individual consumer behavior that counts," said Rob Haslehurst, managing director in L.E.K.'s consumer products and retail practice, and co-author of the report, "Retailers Play the Generation Game: Lessons from Adapting to Millennials." "Millennials are sometimes treated as a monolithic group, although they're not, and it's often assumed that they behave the way young consumers have always behaved, which is a half-truth at best."
Millennials number 75 million — approximately 30% of the U.S. population — and account for approximately 90% of first-time mothers today, according to L.E.K. They spend about $1.2 trillion a year — one-fifth of the nation's total consumer expenditure. But preferences and behaviors differ notably from one millennial subgroup to another.
"By far the most important distinction among millennials is whether they have children, and their level of education," said L.E.K. Retail Practice consultant Shang Saavedra. Millennials with children and at least a college education spent sharply more than the next-highest spending group in several categories, she added, most notably home (68%), footwear (56%), electronics (52%), and apparel and personal care (49%).
To win over millennial consumers, L.E.K. suggests retailers do the following:
• Target sub-segments. Find the ones relevant to the brand and figure out how to meet their specific needs. Some millennial subgroups prefer to buy beauty and personal care products online. Online-only sellers can take advantage – and beat out grocery and pharmacy stores.
• Target the behavior, not the age. Some behaviors transcend generations. Electronics consumers are tech-savvy and shop in the same channels no matter what generation they're in.
• Personalize. Personalization pairs well with technologies that millennials like. Retailers can use artificial intelligence to drive personalization down to the individual level.
"Retailers have always had to adapt to new generations of consumers," said Haslehurst. "In the case of millennials – because they're a large, high-spending group – the need to adapt is particularly important. But the lesson is timeless – only those that adapt will survive."
The L.E.K. survey, comprised of 3,800 U.S. consumers, maps millennial preferences and behaviors, compares different millennial subgroups, and explores how Gen X and Baby Boom consumers behaved when they were the same age. To download the full report, click here.