- [Narrator] A Pima cotton blend T-shirt on Vince's site costs $85, but the same shirt sells
for $29.99 at T.J. Maxx. So why does it cost less? Over 10 years, the off-price retailer has opened 263 more stores. In 2022, TJX, which owns T.J. Maxx, Marshalls and HomeGoods, brought in almost $50
billion in sales revenue, more than Nordstrom's and Macy's combined. And the secret to its success, the company isn't shifting
most of its business online, or using big data to figure
out what shoppers want. Instead, it's sticking to
a decades old playbook. ♪ You get the max for the
a minimum minimum price ♪ ♪ And it's never ever the same ♪ - [Narrator] This is the
economics of T.J. Maxx. There are really two components
to T.J. Maxx's strategy, the bargain, and the hunt. One way T.J. Maxx gets discounted goods is by buying excess merchandise and canceled orders from
other brands and retailers. Essentially, it takes advantage of surplus and waste in the retail system. This allows the company
to sell its merchandise generally around 20 to 60%
below regular retail prices. But there's a catch. - Just the fact that the
price is low is not enough. What you need is also reference price because people don't know
how much things cost. - [Narrator] That's where Alex says something known as the
anchoring effect comes in. At T.J. Maxx, most items have two prices, the T.J. Maxx Price
and a comparison price. - People anchor in the regular price and then they see exactly how much of a
deal they're getting. And this way they really
understand what the value is that T.J. Maxx provides to them. - [Narrator] Take these rag & bone shorts. A T.J. Maxx in Manhattan
sold them for about $40 with a comparison price of
$50, that's a 20% discount. But the original price tag
happened to be on these shorts and it lists the price as $195. That would be around an 80% discount. And that comparison price
is really just an estimate. On T.J. Maxx's website, there's a message next to the
comparison price that says "These prices are references
to regular retail prices. Where identical items are not available, we compare to products of a similar type, quality and style." These price tags aren't the only way T.J. Maxx helps customers feel like they're getting a bargain. - You got the whole
positioning of T.J. Maxx is that we give you brand names for less. And the reason why it's important is because very often when you see low price you think it's low price because the quality of the product is low. - [Narrator] But if the customer
knows and trusts the brand then they won't assume the price is low because it's a bad product. Instead, Alex says they'll attribute it to T.J. Maxx's ability
to get discounted goods. And because people often
expect name brand items to be more expensive, the
brand itself acts as an anchor. - Emphasizing the fact that as a customer you're getting a
deal, makes people feel good. It's not only I'm getting a low price but I'm actually getting a deal, which makes people feel
good about themselves, that they're smart shoppers. - [Narrator] T.J. Maxx
says it gets its goods from about 21,000 vendors and the inventory in its
stores is constantly turning. - So as a result, people
tend to go more often to this type of stores and also spend a little
bit more time in the store in search of something. - [Narrator] Across its companies TJX employs more than 1200 buyers that each control millions of dollars and has authority to
cut deals on the spot. - As a buyer for T.J. Maxx,
I'm always on the hunt. - Let's say you have a bathing suit brand and it's right before Memorial Day weekend and they're stuck with
extra bathing suits, so that's when T.J. Maxx
buyers show up at the showroom. You know, they can cut
a deal right on the spot and they can get it to
their stores within a week. - [Narrator] Department
stores, on the other hand, can take weeks to review and approve orders from their buyers. So T.J. Maxx buys the merchandise quickly and gets it into the store just as fast. - They have a saying internally
"Door to floor in 24," meaning that any merchandise that shows up at a store in the morning has to be on the sales floor
by the end of that day. - [Narrator] To ensure speed, merchandise often arrives at stores already on racks that
employees wheel off trucks and move straight onto the sales floor. And once it's there, all the merchandise is
laid out differently than other retailers too. Helping to create that
treasure hunt experience. While most department
stores group items by brand T.J. Maxx organizes its inventory by type. This means that different brands can end up next to each
other on the same racks. And since T.J. Maxx doesn't
have walls dividing sections of the stores or brands, it can easily reconfigure the layout based on changing inventory. Seeing all the products
and changing layout can encourage impulse buying. Shoppers know that if they
see something they like they need to buy it now. If they wait, it may be sold out or hard to find when they come back. - Once you take it home, things
are changing dramatically because now you are not buying something you are giving up something. Lots of research has shown that giving up something is
more difficult than acquiring. You are willing to pay more not to give up something
than to buy something. - [Narrator] Retailers
struggled through the rise of E-commerce in the pandemic, and while TJX's off-price
retailers still took a hit, they have bounced back. In 2021, TJX had the highest
sales in the company's history. A record it then beat the following year. And it's not because T.J. Maxx and the other off-price retailers adapted, but rather because they never drifted away from their core strategy. - T.J. Maxx tends to perform pretty well in an economic downturn because that's when customers
tend to be bargain conscious and, you know, they offer
really good value for the money. (quirky music)
