(Source: www.forbes.com)

When I walk into a T.J. Maxx store, I get excited about the products, the throngs of customers and the values the store offers. It is different from my visits to Macy’s or Nordstrom stores, where everything is rigid and almost has a museum quality. That is undermining retail.

A rare bright spot is T.J. Maxx parent TJX.  Its stores have won the trust of customers and reap strong sales as a reward. Its approach can teach us lessons that must be learned for survival of other chains.

Lesson #1:  Organizational Structure Matters

TJX has a tight administrative staff. Sure, there is a president but the C-suite is very sparse. TJX has only a CEO and four Senior Vice Presidents, one of which is their CFO. In sharp contrast, the Macy’s latest annual report lists 10 “C” positions, including the necessary CEO and CFO. There is also a chief merchandising officer, chief legal officer and secretary, chief omnichannel and operations officer, chief stores and human resources officer, chief private brands officer, chief marketing officer, chief strategic analytics and innovation officer and a chief merchandising planning officer. Every one of these positions comes with a corner suite, big windows and especially a substantial staff. I wonder if these good people could accomplish their objectives just as well without all the fancy trappings. It may be that some needed the title or they would have left.

Both TJX and Macy’s have a myriad of buyers. While Macy’s and Bloomingdale’s together have not disclosed their numbers, I estimate that they have 180 to 200 buyers while TJX has over 1,000. TJX buyers are diligently trained to recognize style, quality and value, supervised carefully for about 3 years by a trainer who ensures compliance to corporate objectives. Buyers have a mission – to give customers the best value of quality branded merchandise from around the world. In addition, buyers strive to create excitement with unusual values of famous brands. That is quite different from the role of buyers in traditional department stores. Instead, they are held accountable to deliver profitable departmental performance, and that means they must look intently at the initial margins of a product. As a result, it’s typical for them to demand guaranteed profit for an item, or even for a whole line, from a manufacturer. In turn, store management then agrees to many vendor requirements to reach such an arrangement.

Because of these arrangements, vendors strongly suggest what styles should be included in a store’s assortment. Often, that translates into what will sell well for them. This leads to duplication in one store chain to another and undermines any effort to choose the ‘right merchandise’ for a store. The merchants of the store have very little to say about the merchandise they are charged to sell. As public companies, they want to have a profitable performance for their shareholders, even if it disregards customer preferences.

Lesson #2:  Merchant Talent must be Valued

I think that merchants are the heart of a retail organization. They are men and women who are passionate about the merchandise they sell to customers. A merchant must possess a blend of skills; she or he must be creative to develop enticing promotions, and be innovative and resourceful enough to find the new styles and contemporary trends that generate fresh excitement. His store, or her department, must be unique. A good merchant must intuitively grasp relevant fashion trends and the right fashion colors before customers are even ready for them and then be ready to lead customers to his assortment. In hardlines, a merchant must develop a special approach to merchandise so that customers understand the point of view being presented. A strong merchant must be the backbone of a store organization.

Merchant talent can reside and be nurtured almost anywhere across the organization.   It is often the chief executive or president of a store that will set direction and understand where to focus his team. Or, it may be the general merchandise manager, a divisional merchandise manager or sometimes just a buyer with great ideas. Much of this instinctual merchant spirit is cultivated in every TJX buyer. That’s what I would like to see more in a department store buyer, but it is too frequently downplayed or lacking entirely because of the requirements to look for a profitable product rather than an item that will fly out the door.

More Info: www.forbes.com

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