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TJX Companies: Its Strategy in O-Price
Home Accessories and Apparel
Overview
In February 2018, TJX Companies, Inc., the world’s largest off-price home accessories and apparel
retailer, completed 42 years of operations with several enviable milestones: the company had edged
up to number 85 on the Fortune 500, surpassed $35 billion in sales, and opened its 4,000th store, guided
by a highly effective global strategy. Sales had grown over eight percent and comparable store sales
increased 2 percent in fiscal year 2018. In the company’s 42-year history, it had experienced an annual
decline in comparable store sales in only one year. The strong earnings trend enabled TJX to increase its
per share dividends for fiscal 2019 by 20 percent, which made 21 consecutive years of dividend increases.
Ernie Herrman, the President and CEO of TJX, looked back at his first year in charge of the huge, international
off-price retailer with great satisfaction. As the TJX Companies moved into fiscal 2019, President Herrman
pondered how to keep the company on the same upward trajectory. Although the TJX Companies had one small
chain that was primarily e-commerce, and its brick-and-mortar chains had e-commerce capabilities, in a world
ostensibly focused on e-commerce, TJX had been very successful concentrating on its brick-and-mortar chains.
TJX management believed that the company had one of the most flexible business models in the world, and that
the great flexibility had enabled the company to succeed through the many economic and retail situations over
the years.
There were no walls between departments in TJX stores—stores could expand and contract merchandise areas
for fast response to market trends and changes in customer preferences. TJX had rapid inventory turnover, which
enabled the company to buy close to need, having visibility into current fashion and pricing trends. The company
sourced its merchandise from around the world from a group of over 20,000 vendors in over 100 countries. TJX
was an industry leader in innovation: the company relentlessly tested new ideas, trying to identify the current
fashions and top brands, and leveraging information from their global worldwide purchasing network. Also,
the company was financially strong, which gave it the ability to invest in the growth of its business. These key
success factors gave TJX management confidence in the company’s ability to achieve corporate goals for global
growth.
TJX’s management was focused on increasing market share, while simultaneously delivering profitable stock
growth to its shareholders. Management had several initiatives underway in 2018 to attract consumers to the
TJX stores and grow its customer base in the United States and internationally. TJX expected total sales and
comparable store sales growth in fiscal year 2019 similar to prior years.
*
case 21 teaching note
* This teaching note reflects the thinking and analysis of Professor David L. Turnipseed, University of South Alabama. We are most
grateful for his insight, analysis and contributions to how the case can be taught successfully.
Case 21 Teaching Note TJX Companies: Its Strategy in O-Price Home Accessories and Apparel
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Given TJX’s steadily increasing sales and profits in its present structure, President Herrman needed to decide
whether the company should divert part of its attention and resources, and attempt to boost its internet sales?
Also, given the outstanding sales growth driven by opening new stores worldwide, should the company stay the
course, or would concentration on certain geographical locations produce more sales and profits?
There is ample detail in the case for students to evaluate:
■ TJX’s global strategy
■ The attractiveness of the company in light of recent events, its current situation and future prospects
■ The company’s financial performance
■ The intricacies of operating in a niche market
Suggestions for Using the Case
The TJX Companies case is brand new, and a very popular case that generates significant interest and classroom
discussion. Almost every student—domestic and international- will be familiar with one or more of TJX’s
business segments, and many will have shopped in the stores. This new case will provoke a lively, interesting
class discussion of whether it was possible for a multinational brick-and-mortar firm to grow and be profitable
in the time of Amazon and internet retailing. Differences of opinion will emerge about how long the brick-and-
mortar chain can survive using its present strategy, the pros and cons of the company’s strategy, and the best
options for the future.
Spirited debate will focus on the viability and sustainability of TJX’s strategic mission and business model,
and whether they are optimally aligned with the off-price retail industry. Students will have differing opinions
about the relative contribution of the TJX business segments and the geographic regions in which the company
operates. Consequently, there will disagreement about TJX’s ability to maintain strong growth and attractive
profitability, and varying scenarios suggested for TJX’s best future course of action.
Some students will suggest that TJX focus on expanding its relatively new internet sales segment “Sierra Trading
Post” and begin a move from brick-and-mortar to a predominately internet retailer, or at least work to significantly
increase the internet percentage of its business. Can the new CEO Ernie Herrman succeed in keeping the company
on its very strong uptrend? What chance does TJX have to succeed in its present competitive configuration?
What, if any, changes in strategy are needed at The TJX Companies?
The TJX Companies case is probably best assigned after you have covered Chapters 1-7, but it can be successfully
used after students have read just Chapters 3, 4, and 5. The topics covered in Chapters 5 and 6 are pertinent to
student identification and assessment of The TJX Companies’ strategy and competitive approaches. With TJX’s
operations in foreign markets, the material in Chapter 7 regarding competing in foreign markets comes into play
as well.
The TJX Companies is a good case for drilling students in (1) applying the tools of analysis covered in Chapters
3 and 4, (2) identifying and evaluating the efficacy of a company’s mission and strategy, and (3) identifying
a company’s key resources and capabilities, and using a VRIN analysis to evaluate competitive advantage
potential, and (4) determining how well a company’s competitive resources and capabilities mesh with the
demands of the industry.
There is a 2018 YouTube video entitled “Kohl’s, TJX Highlight Ups and Downs of Retail Earnings” that you
can show in class or have students view on their own. The 3:14-minute video can be accessed at https://www.
youtube.com/watch?v=pGbR6Cy5eTE.
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In our experience, it is quite difficult to have an insightful and constructive class discussion of an assigned
case unless students have conscientiously made use of pertinent core concepts and analytical tools in preparing
substantive answers to a set of well-conceived study questions before they come to class. In our classes, we
expect students to bring their notes to the study questions to use/refer to in responding to the questions that
we pose. Moreover, students often find that a set of study questions is useful in helping them prepare oral
team presentations and written case assignments—in addition to whatever directive question(s) you supply for
these assignments. Hence, we urge that you provide students with assignment questions—either those we have
provided or a set of your own questions—for all those aspects of a case that you believe are worthy of student
analysis or that you plan to cover during your class discussion.
To facilitate your use of assignment questions and making them available to students, we have posted a file
of the Assignment Questions contained in the instructor resources section of the Connect Library for the
22nd Edition.
Utilizing the Guide to Case Analysis. If this is your first assigned case, you may find it beneficial to have
class members read the Guide to Case Analysis located in the instructor resources section of the Connect Library.
The content of this Guide is particularly helpful to students if your course is their first experience with cases and
they are unsure about the mechanics of how to prepare a case for class discussion, oral presentation, or written
analysis.
Suggested Assignment Questions for an Oral Team Presentation or Written Case Analysis. We
believe the “TJX Companies: Its Strategy in Off-Price Home Accessories and Apparel Retailing” case is quite
well-suited for written assignments and/or oral team presentations. Our suggested assignment questions are as
follows:
■ Ernie Herrman, President and CEO of TJX Companies has employed you as a consultant to assess the
company’s overall situation and recommend a set of actions to improve the company’s future prospects.
Prepare a report to Mr. Herman that includes: (1) an evaluation of TJX’s mission and business model and
their appropriateness for the off-price retail sector, (2) an evaluation of TJX’s consolidated financial and
operating performance, (3) a performance assessment of the company’s several operating segments, (4)
a set of action recommendations that TJX’s management team should initiate to continue the company’s
upward trajectory and preserve the company’s growth and performance. Your report should be 5-6 pages
and should include an assortment of original (not copied from the case!) charts, tables, and exhibits to
support your analysis and recommendations.
■ Prepare a brief report to The TJX Companies’ CEO Ernie Herrman outlining the 2–3 top priority issues
that TJX needs to address to seize additional global market share. Where should he focus his efforts
and resources? What business segments should lead the way and what geographic regions should get
immediate attention? Address the actions you believe he must initiate to increase market share while
maintaining profitability. Your report should contain detailed and convincing reasons in support of each
one of your recommendations. It is imperative that the support offered for each of your recommendations
be based on: (a) conclusions drawn from application of the concepts and analytical tools discussed in
Chapters 3 and 4 and (b) the content of Chapters 5–7 regarding strategic moves that may be suitable for
TJX.
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Assignment Questions
1. Describe TJX’s strategic vision and corporate strategy. Is its vision and strategy consistent with the
characteristics of the retail sector? Support your answer.
2. What are TJX’s key resources and capabilities? Does a VRIN analysis suggest that any offer competitive
advantage potential? How well are the company’s capabilities aligned with external opportunities? Is the
company well-positioned to defend against competitive threats?
3. Using the data in case Exhibits 6 and 7, what does an analysis of TJX, Inc.’s consolidated financial
performance reveal about the company’s profitability and liquidity?
4. Compare TJX’s business segments. Which segment appears to have the greatest potential? Are any business
units a detriment to overall corporate performance? Support your answer.
5. Does TJX have a good internet versus brick-and-mortar mix? Are there opportunities to revise the retailing
approach of its business units?
6. What recommendations would you make to TJX management to improve business unit and corporate
performance? Support your recommendations.
Teaching Outline and Analysis
1. Describe TJX’s strategic vision and corporate strategy. Is its vision and strategy consistent
with the characteristics of the retail sector? Support your answer.
TJX’s mission was to deliver great value to our customers every day. The company did this by offering a
rapidly changing assortment of quality, fashionable, brand name, and designer merchandise generally 20
percent to 60 percent below full-price retailers’ (including department, specialty, and major online retailers)
