Photo: Canva
August 23, 2023
Is TJX Companies’ Among the Biggest Benefactors of Bed Bath & Beyond’s Demise?
TJX Companies has reported a very profitable Q2 2024, including an average 6% bump to comparable store sales across its banners, thanks to an inflation-friendly business model and the opportunities created by the shutdown of Bed Bath & Beyond’s physical footprint. This could also help HomeGoods and T.J.Maxx gain market share as former Bed Bath & Beyond customers look for an in-person place to shop now that their preferred banner has moved online.
“HomeGoods, and to a slightly lesser extent T.J.Maxx, have been beneficiaries of the demise of Bed Bath & Beyond,” said managing director at GlobalData Retail Neil Saunders, who is a member of the RetailWire BrainTrust, in an interview with RetailWire. “In certain categories like home storage, décor, soft furnishings, and kitchenware, HomeGoods has picked up customers who would once have shopped at Bed Bath & Beyond. TJX has been very targeted in its approach; it looked at stores close by to former Bed Bath & Beyond shops and ensured that categories that were once sold at Bed Bath & Beyond were well stocked and given emphasis.”
The improvement Saunders noted at HomeGoods is particularly noticeable. The retailer posted a 4% year-over-year comparable sales gain for Q2 2024, up from a 13% decline in Q2 2023 and a 7% decline in Q1 2024. Marmaxx, the division encompassing both Marshalls and T.J.Maxx, reported even higher comparable sales growth at 8% for the quarter, but the banners were coming back from a smaller 2% comparable sales deficit in Q2 2023 and had achieved 5% growth as of Q1 2024.
The banners were able to clear out some excess inventory as well. Inventory levels at the end of Q2 2024 were $6.6 billion, compared to $7.1 billion a year ago. Retailers in general struggled with inventory levels throughout 2022, and returning to normalcy will help TJX Companies better position itself for future success.
Saunders noted that TJX Companies also benefited from its off-price positioning, which made it an ideal destination for shoppers looking to save money or stretch their budgets. Middle-class and upper-middle-class consumers have been looking for deals, particularly in categories like apparel, and TJX has been there to meet their needs.
This is the first quarter that all of TJX Companies’ banners saw a positive sales trajectory in some time, and CEO Ernie Herrman said on a call with investors that he is “bullish” about HomeGoods’ prospects during the second half of fiscal 2024. With the opening left by the departure of Bed Bath & Beyond, HomeGoods in particular has the potential to capture e-commerce-shy home goods shoppers across the U.S.
“I think the demise of Bed Bath & Beyond is the gift that will keep on giving to TJX,” said Saunders. “While some former customers will migrate online, a lot liked to shop in person, so a digital-only Bed Bath & Beyond may not be appealing. These people are looking for alternative physical stores, and TJX’s banners are one of the places they are migrating to.”
Discussion Questions
DISCUSSION QUESTIONS: How well will TJX Companies be able to fill the gap left bey Bed Bath & Beyond? Are there any other retailers that you believe will benefit from the closing of Bed Bath & Beyond’s stores?
Poll
Loading …BrainTrust
Bob Amster
Principal, Retail Technology Group
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Shelley E. Kohan
Associate Professor, Fashion Institute of Technology
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At the time it went bankrupt, Bed Bath & Beyond had annualized revenue of around $2.2 billion. Most of these sales will not disappear entirely, they will be reallocated to other retailers. From our tracking, the gains have, so far, been spread quite widely with Walmart, Amazon, Target, Container Store, Best Buy, IKEA, At Home, and many others receiving some of the spoils. TJX is also a beneficiary, especially via HomeGoods. This is partly because there is an overlap of stores in some locations, and partly because their deal-focused offers appeal to old Bed Bath & Beyond consumers. However, TJX also deserves credit for preparation. When it knew Bed Bath & Beyond was likely to go under, a plan was put in place to ensure stores near failing locations were stocked with the right merchandise and placed in a position to pick up custom and sales where categories overlapped. TJX may not sell all of the things offered by Bed Bath & Beyond, but this simple move made them a beneficiary of their failure.
Bed Bath & Beyond left a big hole in the market that TJX — and HomeGoods in particular — is delighted to fill. But TJX’s success is about more than the demise of Bed Bath & Beyond. TJX has been a strong for many years, as the off-price category continued to perform well. But let’s also give credit to the team at TJX – they’re not just living off good market conditions and the demise of Bed Bath & Beyond – this is a well-oiled, off-price juggernaut and its HomeGoods banner has evolved into a strong player in its own right.
Juggernaut is right. TJX’s stores are exceptionally well-run, clean, and merchandised. What a delightful experience.
While I agree with my colleagues in the Braintrust, Home Goods is more of a treasure hunt store whereas BB&B stores were predictable. If you were going to purchase an OXO potato peeler, you would go to BB&B and buy it because Home Goods might not have any. To that extent, I think that Home Goods may not take over so much of the BB&B base as would other stores in similar business but the TJX companies, as a whole, certainly will fill the gap left by the demise of BB&B brick and mortar.
I agree that TJX can pick up some of the BBB business, but the real stores that will be filling the gap are discount stores (as they continue to expand) and Amazon, which has mastered delivery and ease of ordering (Oxo Peeler, $12 and delivered in two, sometime one day).
That’s my reaction as well, Bob. BB&B was a destination for specific items. Knowing how savvy TJX/Home Goods merchants are, there is no doubt they will find a way to address the classification demand if in a somewhat less regimented approach. And there will probably be some excess merchandise out there in those areas available to stock in in Home Goods.
Don’t forget that we also lost a $1B player with the demise of Tuesday Morning, which also had more of that treasure hunt mentality that HomeGoods has.
Between TJX, Target and Walmart the former BB&B customer does not have to travel far to fill their needs, and still enjoy a great level of predictability and value. I’d love to add Kohl’s and Macy’s Cellar to that list, but they don’t seem to be as top of mind as the others.
I think the “lost” BBBY sales get spread around — after all, the company sales approached $12B at its peak instead of looking at when it hit bottom. Home Goods will benefit, but everybody from Target to Kohl’s is making a play for those sales by remerchandising their selling floors. Predictable inventory management and in-stock levels may turn out to be more important than the “treasure hunt” mentality in the long run.
I think the sales (re)distribution will be quite spread out (who knows? maybe even JCP will benefit!). And while no ONE company will be able to “fill the gap”, I don’t think collectively all retailers will have any trouble at all filling it…which of course is a big reason why BBB isn’t around any more.