Ross Stores, Inc. (ROST): Did The TJX Companies, Inc. (TJX) Finally Figure Out E-Commerce?

Contrast the absence of TJX and Ross online with the success enjoyed by Macy’s, Inc. (NYSE:M). Macy’s, Inc. (NYSE:M)’s saw online sales increase 40% in 2011 and 41% in 2012.  The company’s online strategy leverages over 300 of its 850 stores for online fulfillment, boosting inventory turn and reducing margin busting clearance sales.

Head start

If TJX can meet its goal of bringing its new e-commerce store online before the holiday season, it could grab a significant head start over competitors like Ross. To meet its fall launch target, TJX acquired off-price online retailer Sierra Trading Post in December, 2012. That deal gives TJX a successful online infrastructure to build upon.

“We see their deep e-commerce experience, scale and infrastructure as great advantages as we continue to develop TJX — tjmaxx.com,” said Ms. Meyrowitz.

One of the most compelling reasons supporting the online channel is the sheer size of the addressable market. TJX believes that 75% of consumers in the U.S. haven’t shopped the company’s brands in the past year. A convenient channel helps TJX reconnect with consumers who haven’t visited its stores recently and consumers who are unfamiliar with the brand. The company is taking a measured approach to its upcoming online store. That’s smart given the previous failed attempt.

“While we are excited to be nearing the launch, we are continuing with our deliberate approach. We plan to do e-commerce profitably and most importantly, not disappoint our customers. Grow smart is our motto. I want to reiterate that while we see e-commerce as a significant long-term opportunity for TJX, we view it as a strategy in offense,” said Ms. Meyrowitz.

Conclusion

By leveraging Sierra’s online experience and controlling investor enthusiasm, TJX may be better able to stick with its e-commerce strategy during the early growth pains. If so, TJX may end up delivering significantly more growth over the next few years as its Internet channel matures.

The article Did TJX Finally Figure Out E-Commerce? originally appeared on Fool.com and is written by Todd Campbell.

Todd Campbell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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