Why Are Home Depot & TJ Maxx Bringing In Customers Other Retailers Can’t?

Image courtesy of Nicholas Eckhart

With retailers like Macy’s, Kmart, Sears, and others closing dozens of stores year after year in a bid to boost their bottom line in the face of sluggish sales, you might think the retail world as a whole is struggling. While a number of big names have indeed seen better day, a few companies are bucking that trend.

The Wall Street Journal reports that Home Depot and TJ Maxx are outperforming the current retail market by operating in areas where consumers are willing to spend — need a new refrigerator or kitchen cabinets? — or offering goods at the best possible price — deeply discounted designer clothing.

Home Depot and TJX Co., the owner of stores like TJ Maxx, Marshalls, and HomeGoods, both reported an increase in sales for the second quarter on Tuesday.

Home Depot says it increased sales at established stores by 4.7%, while TJX boosted sales 4% at existing stores.

The increases in sales doesn’t necessarily mean consumers are spending more, it just means they are spending differently: choosing lower cost clothing and home goods, while continuing to invest in their home improvement.

“The fundamentals for consumers are good; they’re just spending their money differently,” Carol Tomé, Home Depot’s finance chief, tells the WSJ.

The home improvement store — and its rival Lowe’s, which will likely see a boost of its own in earning reports this week — have benefited from the rising housing market and homeowners’ desire to upgrade their adobe.

As a result of these pricey projects, customers are not only spending more, but buying a large variety of products. CEO Craig Menear estimates that customers’ carts often contain 40 to 70 items.

TJX says the boosted sales it’s seen are largely a result of its business model, which involves buying closeout goods and selling them at discounted prices.

“We are convinced that we are attracting new customers, driving more-frequent visits to our stores, and gaining market share,” CEO Ernie Herrman told analysts on Tuesday, the WSJ reports.

The retailer say it expects sales to continue to rise 3% to 4% for the rest of the year.

Home Depot, TJX Cos. Buck Retail Trends [The Wall Street Journal]