Specialist
Former VP at The TJX Companies Inc
Agenda
- Off-price retail industry trends, focusing on TJX Companies (NYSE: TJX)
- Competitive landscape
- Post-pandemic off-price model challenges and growth opportunities
Questions
1.
What are your expectations for the off-price retail sector over the next 12-18 months?
2.
In a recent Interview [see Burlington Stores – Off-price Sector Dynamics & Growth Outlook – 20 May 2021] our expert pointed to pent-up demand as a boon for the off-price industry, with Burlington as a clear beneficiary, and called for industry growth of about 6-8% in 2021 vs 2019. Do you think this figure is potentially too aggressive, too conservative or in-line?
3.
You stipulated Marmaxx’s Q2 apparel comps could be mid-single-digits if availability and inventory don’t pose a threat. Could you expand on this caveat and highlight the key risks behind that statement?
4.
Do you think the supply-demand equation might tip in favour of full-price retail, given the inventory shortages near term?
5.
How do you think work-from-home impacts off-price retail?
6.
Is there anything to be said on rising environmental concern and the sustainability movement? How is off price or full-price retail potentially threatened by the reused and sustainable clothing market?
7.
How should we assess the TAM for off-price vs full-price retail exiting the pandemic? How has this figure expanded or contracted throughout the pandemic?
8.
What are your expectations for department stores as a function of potential off-price retail growth? Might department store closures result in off-price retail growth?
9.
How could the shift to digital and higher e-commerce penetration impact off-price longer term? Based on the May 2021 Burlington Interview, e-commerce didn’t seem to be a potential growth channel for off-price, given the inventory availability and off-price’s structure.
10.
Do you think consumers might gradually shift towards D2C? Could this be a threat to TJX, as specific brands may no longer need to subject themselves to markdowns and could reach the public through vendors such as Shopify?
11.
To what extent does US government stimulus and unemployment help off-price? How sustainable is this for industry players, including TJX?
12.
What are your thoughts on the competitive landscape and TJX’s positioning? Could you give any relative market share estimates?
13.
How do you think market share could trend over the next three years? Do you expect any particular players to overtake one another? Which players could lose or gain market share?
14.
How would you grade TJX’s merchandising vs that of its competitors?
15.
You made a distinction across customer types. Where is the overlap between players’ target demographics? What are the structural differences in consumer demographics for these players?
16.
What might off-price retail players be doing to attract a younger clientele?
17.
Who do you think is most on-trend with younger clientele? We already touched on merchandising earlier.
18.
How would you assess the market positioning of TJX’s HomeGoods segment?
19.
How should we assess e-commerce as an incremental revenue opportunity within home furnishings? How meaningful do you think this could be?
20.
Where could e-commerce stand as a percentage of TJX’s revenues in the next five years? What could the upside potential be? Could it overtake over 10% of revenues?
21.
What are your thoughts on TJX’s potentially favourable opportunities in real estate? Some have called out the possibility of its access to better locations for stores, relocations and a potential to reduce rent expenses.
22.
What challenges might TJX face when evaluating real estate, across factors such as store footprint, format, store closures and demographics?
23.
What do you think is TJX’s ultimate penetration opportunity over the next three years? How many total or net new stores do you believe the company can reach?
24.
How would you say TJX is positioned vs its peers to address cost inflation, particularly in wages and freight?
25.
How would you respond to someone who believes that TJX brings no margin upside to the table? What potential levers does management have to expand margins?
