EXPERIENCE

TJX May Not Mark the Spot

Every June photo of a winding store line traced back to one reopened retailer: T.J. Maxx. Shoppers missed its “treasure hunt” cocktail of 20%–60% discounts and unique inventory at every location during lockdown—especially since its (small) e-comm operation had shut down. 

Analysts and execs also lined up for T.J. Maxx, expecting it would thrive on the strength of its magnetic in-store experience. CEO Ernie Herrman told analysts in May that parent company TJX wouldn’t turn to e-commerce as a “major leveraging point,” despite the dangers of relying on stores.

They spoke too soon

TJX’s Q2 earnings Wednesday met analysts’ expectations—but also suggested its brick and mortar momentum is fizzling. Revenue climbed to $6.7 billion in Q2 from $4.4 billion in Q1, while comparable sales declined 3% across its top three brands (T.J. Maxx, Marshalls, and HomeGoods).

Herrman warned analysts that sales could fall as much as 20% in Q3—denting the argument that T.J. Maxx is more pandemic-proof than its rivals. 

• Visits to T.J. Maxx rebounded in June, but shoppers didn’t return throughout the summer at the rate analysts expected. 
• The downward trend’s continuing as COVID-19 continues to spread. This week, traffic to T.J. Maxx stores had declined 16% YoY per Placer.ai data.

^Placer.ai

More problems: Average cart sizes did grow, but they weren’t enough to offset losses from extra discounts. T.J. Maxx is also sitting on a landfill’s worth of excess inventory from store closures—and had to take “significantly more markdowns” than usual.

Time to log on? 

This is the part in the story where you’d expect a 180-degree switch to e-comm. 

But TJX would have significant (and expensive) operational ground to make up: The WSJ reports that T.J. Maxx generates only 2% of its annual revenue from its current online stores; the other 98% comes from its 4,500+ locations. And there are additional barriers to moving this off-price retailer more online...

• The experience doesn’t translate. Anyone, anywhere gets the same products in an online store—whereas T.J. Maxx stores are beloved for their distinct inventory.
• Designer brands may push back. TJX brands can fill their racks with brands’ leftovers because their discounts aren’t traceable online. 

My takeaway: When an in-store experience is so central to a retailer, every week of soft traffic is detrimental. So TJX may need a creative digital solution to counter shoppers’ store wariness.

GROCERY

Virtual Carts, Full Fridges, Can't Lose

According to this week’s online grocery news, I may have deployed “big delivery energy” a few editions too soon. Let’s recap. 

At the front door: DoorDash now delivers groceries from Smart & Final, Meijer, and Fresh Thyme. Like DoorDash’s convenience store tie-in, grocery orders are all placed within DoorDash’s app. Unlike rival services, all deliveries are guaranteed in an hour. 

At the curbside: Target’s curbside grocery pickup program is available nationwide after the service skyrocketed 734% in Q2. Expanding pickup options meant remodeling some stores ahead of schedule—Target originally projected online grocery pickup would go coast to coast by the holidays. 

Put them together...and you’ve got companies rushing to accommodate exploding online grocery sales at every possible touchpoint. By Business Insider Intelligence’s latest estimate, U.S. online grocery penetration will surpass 50% by Q1 of 2021, up from 24% in 2019. 

While all grocers that go digital will gain convenience points with consumers, it’s still a Walmart v. Amazon game. Walmart narrowly surpassed Amazon as the No.1 online grocery retailer, grabbing 30% of pantry hauls to Amazon’s 27%, according to a TABS Analytics survey this month.

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E-COMM

Don't Sleep on This Content

Yesterday Mattress Firm pulled the covers off Sleep.com, a website dedicated to articles and resources about bedtime wellness.

Dream analysis

With Sleep.com, Mattress Firm’s following younger DTC brands down the commerce-to-content route. From Outdoor Voices’s The Recreationalist mag to the many DTC mattress blogs, brands leverage lifestyle content to build 1) authority in their product segment and 2) loyalty.

• Since mattresses are typically a once-in-a-new-home purchase, product recommendation articles could funnel Sleep.com visitors to smaller Mattress Firm items, like pillows and PJs.  

Then there’s SEO. U.S. mattress sales are picking up during the pandemic, the NYT reports. Securing a top domain and pumping out wellness content could help Mattress Firm rank higher in searches for a new sleep number. 

Bottom line: Mattress Firm already claims the largest share of the global mattress market, per Statista. Sleep.com’s loyalty potential could solidify Mattress Firm’s top spot as more brands compete to be good in beds.

WHAT ELSE IS BREWING

• ThredUP is planning to IPO next year, Bloomberg reports.
• Jeff Wilke, CEO of Amazon's worldwide consumer business unit, is stepping down.
• Estée Lauder is eliminating up to 2,000 jobs and closing as many as 15% of its stores.
• L Brands will sell holiday merchandise over a “broader time period” this year.
• Lego released a braille version of its building blocks. 
• Taco Bell's future stores will feature extended drive-thrus.

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SWAPPING SKUS

Frequently covered industries + fresh perspectives = my top reads today. 

• The pandemic dealt a blow to the burgeoning plus-size fashion industry. But underserved customers need brands to stay the course. (Refinery29)
• Prolific DJs of the 21st century: Avicii, Kygo...Ikea? Why we should think of Ikea’s brand collaborations like remixes—and why other brands should follow suit. (The Sociology of Business)

FRIEND OR FAUX?

You know the drill: Three stories are true; one is a knock-off. Which one is fake? 

1. Burger King Belgium is giving customers face masks printed with their orders.
2. Estée Lauder’s CEO proposed retiring the lipstick index for the moisturizer index.
3. Budweiser’s campaigning to become the official state beer of Utah.
4. Peloton banned the resale of its $2,000 spin bikes.

ICYMI

Catch up on the top Retail Brew stories from the past week.

• Exclusive: Our Interview With Warby Parker Co-CEO Dave Gilboa 
• How Four DTC Brands Design From a Distance
• Is Remote Learning the End of Dorm Decor Retail?

FRIEND OR FAUX? ANSWER

4. Nope, Peloton bikes aren’t banned from resale. So if yours is collecting dust in a corner and you’d like to send it to a new home...hit reply.