Can HomeGoods Succeed Without E-Commerce?

According to Insider, HomeGoods abruptly shut down its e-commerce site.

Owned by TJX Companies, the discount home decor chain sent out an email blast to its customers last month explaining how its online shop would be permanently closed after Oct. 21. HomeGoods' e-commerce store initially went live in 2021.

The email explained that the retailer is choosing to focus its resources on brick-and-mortar stores, and it will be “announcing many new store openings” in the future.

HomeGoods exists as an in-between discount retail chain and thrift store experience since each store’s inventory can be drastically different. Discovering a heavily discounted high-value item is a thrilling moment, similar to striking gold at a thrift store, and although a HomeGoods item won’t be a relic or a treasure, it will be brand new.

This move to shut down its online retail site comes after the company shared a quarterly report where less than 1% of its total sales were from its e-commerce division. According to the report, "Our HomeGoods e-commerce website, homegoods.com, represented less than 1% of HomeGoods net sales for both the second quarter and the first six months of fiscal 2024, and did not have a significant impact on year-over-year segment margin comparisons."

In an August earnings call, TJX Companies CFO John Joseph Klinger stated, "As to e-commerce, overall, it remains a very small percentage of our business." While the e-commerce site was active, the company added new merchandise often so customers could "see something new every time they visit," but ultimately, it wasn't valuable enough to the business. One potential reason for shutting the site down could have been shipping costs, which are high for large items like the ones HomeGoods sells.

Klinger also noted in the earnings call “that TJX planned to open about 125 new stores in fiscal 2024. TJX's second quarter net sales were $12.8 billion, an 8% increase compared to the same quarter last year.”

In an interview with Yahoo Finance, Bloomberg Intelligence Senior Retail Analyst Poonam Goyal said, “HomeGoods’ strength has been helped by the strong housing market combined with consumers’ appeal for value and a treasure hunt experience."

Additionally, Yahoo Finance explained that “two brick-and-mortar categories have been largely immune to online competition: off-price retail and home retail," and HomeGoods falls into both of these categories. As a result, HomeGoods has increased from 619 stores in 2017 to over 900 in 2023.

While the move to cut e-commerce seems like it might not have a big effect on HomeGoods' sales, some shoppers have taken to social media and expressed their disappointment. For example, one person posted on the HomeGoods Facebook page about how they will no longer support the retailer because they cannot drive over 40 miles to their closest HomeGoods.

Regardless of how customers are reacting to the initial news, it seems that HomeGoods has proven that it’s possible for physical retail stores to exist without an online shop in this day and age.