TJ Maxx‘s Top 12 Competitors: An Expert Analysis

As a retail industry analyst and discerning shopper, I‘ve long been fascinated by the off-price sector and its resilience in the face of e-commerce disruption. For nearly half a century, TJ Maxx has been a dominant force in this space, delighting bargain-hunters with an ever-changing assortment of name brand and designer goods at 20-60% below department store prices.

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In fiscal 2021, TJ Maxx‘s parent company TJX posted $48.5 billion in net sales across its global business, cementing its position as the largest off-price retailer in the world. But while TJ Maxx may be the top dog, it faces plenty of fierce competitors eager to steal market share in the high-growth value sector. In this in-depth analysis, we‘ll take a closer look at a dozen of TJ Maxx‘s biggest rivals and see how they stack up.

The Off-Price Retail Landscape

First, some context on the off-price business model that has propelled TJ Maxx‘s success. Unlike traditional retailers that order most of their inventory months in advance, off-price players like TJ Maxx employ large teams of buyers to opportunistically source products much closer to need. This allows them to capitalize on manufacturer overruns, department store cancellations, and other supply chain inefficiencies to secure goods at steep discounts they can pass along to shoppers.

This approach has several advantages in the current retail environment:

  1. Value Proposition: With inflation top of mind, consumers are increasingly focused on stretching their discretionary dollars. Off-price delivers brand names at budget-friendly prices.

  2. Treasure Hunt Experience: Off-price stores foster a "scarcity mindset" and sense of urgency with their ever-changing, limited-quantity assortments. This turns shopping into a treasure hunt and drives repeat visits.

  3. Flexible Inventory: The off-price model is less vulnerable to sudden shifts in consumer demand or changing fashion trends. Buyers can quickly pivot to categories and styles that are selling.

  4. Lower Expenses: No-frills stores, lean inventories, and limited marketing budgets give off-pricers structural cost advantages over other retail formats.

The top three off-price chains in the U.S. – TJ Maxx, Ross Stores, and Burlington – have seen their collective revenues balloon from $26 billion to over $70 billion over the past decade, per company filings. Over that same period, department stores like Macy‘s and Kohl‘s have stagnated as more shoppers flock to value-oriented alternatives.

But the off-price space is getting more crowded as traditional retailers and upstart digital disruptors look to cash in on the growing appetite for affordable quality and brands. Let‘s dive into the competitive fray surrounding TJ Maxx:

1. Ross Stores

Ross Stores is TJ Maxx‘s closest direct competitor, with a strikingly similar off-price model across its 1,900 Ross Dress for Less and DD‘s Discounts locations. In fiscal 2022, Ross generated $18.9 billion in sales and is aiming to grow its U.S. footprint to 4,000 locations over time.

Like TJ Maxx, Ross offers a wide, frequently refreshed assortment of name brand apparel, accessories, footwear, home, and beauty products at bargain prices in a no-frills shopping environment. However, Ross has been slower to embrace e-commerce, preferring to drive customers to its stores for the full treasure hunt experience.

Here‘s how Ross and TJ Maxx stack up on key metrics:

Metric Ross Stores TJ Maxx
Revenue (FY2022) $18.9B $41.7B
Stores (FY2022) 1,983 1,284
Avg. Store Size 24K sq. ft. 28K sq. ft.
E-commerce % of Sales <1% ~5%

Sources: Ross Stores and TJX FY2022 Annual Reports

2. Burlington Stores

The third member of the off-price "Big Three", Burlington operates 840 stores offering up to 60% off other retailers‘ prices on apparel, accessories, footwear, baby, home, and beauty. Formerly known as Burlington Coat Factory, the company has broadened its assortment in recent years while keeping its original focus on outerwear and other cold-weather gear.

I estimate Burlington‘s U.S. off-price apparel and home sales at around $9 billion for fiscal 2022, based on company reporting. With ambitious plans to open 100+ stores per year, Burlington is betting that its growth runway is long. One advantage: Average pro forma sales per store of $10.8 million is well below Ross ($14.4M) and TJ Maxx ($32.5M), suggesting ample opportunity to boost productivity.

Still, Burlington remains a strong competitor to TJ Maxx, especially in outerwear, seasonal decor, baby gear, and beauty, where it has unique brand relationships and capabilities. It will be interesting to watch Burlington‘s partnership with recently-acquired budget beauty chain Glow, which could accelerate growth in the highly coveted cosmetics category.

3. Macy‘s

While squarely positioned as a mid-tier department store, Macy‘s faces significant competitive pressure from off-pricers like TJ Maxx in overlapping categories such as apparel, accessories, beauty, and home. Amid declining mall traffic and shifting consumer tastes, Macy‘s has been trying to reinvent itself as a true omnichannel retailer with a value bent.

The centerpiece of these efforts has been the aggressive expansion of Macy‘s Backstage, the retailer‘s off-price concept. First piloted in 2015, Backstage now encompasses over 300 locations inside existing Macy‘s stores and another 9 freestanding units. These shops carry many of the same brands as full-line Macy‘s stores but at steeper everyday discounts.

Macy‘s doesn‘t break out Backstage‘s revenue separately, but J.P. Morgan analysts estimate it could top $1 billion in sales for fiscal 2022, while still accounting for a small percentage of Macy‘s $24 billion total. Management sees potential for Backstage shops in all Macy‘s doors over time, underscoring the segment‘s importance as a key growth driver.

4. Kohl‘s

Like Macy‘s, Kohl‘s is a mall-based department store feeling the squeeze from ascendant off-price and online competitors. The company reported net sales of $18.5 billion in FY2022 across its 1,100 locations.

Kohl‘s competitive overlap with TJ Maxx spans apparel, accessories, footwear, soft home, and beauty. To better compete with off-pricers on national brands, Kohl‘s frequently promote steep site-wide discounts and category-specific sales events. It‘s popular Kohl‘s Cash loyalty program and growing emphasis on high-margin private label brands also help drive price perception.

Interestingly, Kohl‘s doesn‘t operate a distinct off-price concept but instead relies more heavily on an "EDLP" (everyday low price) approach with fewer promotions than other department stores. How this strategy fares as inflationary pressures weigh on consumers remains an open question.

5. Nordstrom Rack

Nordstrom Rack is the off-price division of upscale department store chain Nordstrom. It counts 237 stores and an e-commerce site selling discounted premium apparel, accessories, beauty, and home goods.

Given its more upmarket brand position, Nordstrom Rack‘s overlap with TJ Maxx is narrower than other off-price competitors. Still, both retailers appeal to aspirational, brand-loving consumers looking for deals on designer labels. Nordstrom Rack sales reached $3.8 billion in FY2021, accounting for about a quarter of Nordstrom‘s total revenue.

One advantage Rack has over other off-pricers is its ability to clear end-of-season merchandise from full-line Nordstrom stores, giving it first dibs on many high-end brands. However, Rack also faces unique inventory challenges in satisfying its more demanding customer base accustomed to a certain product and service level. Balancing these brand standards with the inherently hit-or-miss nature of the off-price model has proven difficult at times.

6. Marshalls

Shoppers could be forgiven for thinking Marshalls and TJ Maxx are one and the same. After all, the sister off-price chains, both owned by TJX Companies, employ remarkably similar models: brand name apparel, accessories, home goods, and beauty products sold at 20-60% discounts in no-frills stores.

But there are some subtle distinctions between the two banners beyond surface-level branding. Marshalls tends to skew more heavily female, with an expanded focus on shoes, beauty, and gifting categories. Some industry watchers also give Marshalls the slight edge in overall quality of goods, though this likely varies by individual store.

In any case, the "co-opetition" between Marshalls and TJ Maxx has been a fruitful one for parent TJX. The two chains operate more than 2,400 combined stores and accounted for over half of TJX‘s $48.5 billion in total FY2021 revenue. Long-term plans call for up to 3,000 U.S. locations under the Marmaxx segment, which also includes the newer Sierra off-price concept.

7. Target

Though not a pure-play off-pricer, Target is a formidable competitor to TJ Maxx across multiple categories, including the all-important apparel and home goods businesses. The "Tarjhay" experience may be more curated and branded than the TJ Maxx treasure hunt, but both retailers have a similar knack for democratizing style at affordable prices.

Target generated total revenue of $106 billion in FY2022, with apparel and accessories ($20.2B), home furnishings and decor ($20.7B), and beauty and household essentials ($16.3B) together accounting for over half of sales. Target‘s mix of trendy private labels and selective national brands allow it to offer competitive opening price points while protecting margins.

The biggest difference between Target and TJ Maxx is the former‘s positioning as a one-stop shop across grocery, essentials, electronics, apparel and more. Target‘s significant investments in omnichannel capabilities and a growing ecosystem of store-based fulfillment services also make for a far more sophisticated digital offering than TJ Maxx‘s online basics.

8. Amazon

E-commerce juggernaut Amazon, with a whopping $514 billion in global net sales for 2022, competes with virtually every retailer in every category to some degree. For TJ Maxx, the overlap is most acute in apparel and accessories, an area Amazon has aggressively expanded in recent years to become the nation‘s #1 clothing retailer.

Amazon has several key advantages here: a vast selection spanning hundreds of millions of items, algorithmically driven personalized recommendations, a growing stable of private fashion brands, and expedited shipping through the Prime membership program. It also offers its own take on the off-price treasure hunt through daily Lightning Deals and the Amazon Outlet store.

Still, TJX executives have long maintained that TJ Maxx is relatively well insulated from the Amazon threat. Their argument: The sensory, social experience of sifting through racks to uncover designer gems loses something when translated to a screen. TJ Maxx‘s close-in, opportunistic buying model and intricate web of vendor relationships would also be difficult for even mighty Amazon to replicate.

9. Resale Platforms

One of the most disruptive forces in retail over the past decade has been the rise of digitally-native resale platforms such as ThredUp, Poshmark, TheRealReal, and Depop. These venture capital-backed startups have tapped into powerful trends around sustainability, individuality, and the circular economy to bring thrifting into the e-commerce age.

The competitive threat to off-price retailers like TJ Maxx is clear. Sites like ThredUp use their advanced technology and data capabilities to efficiently process millions of unique secondhand items and match them to consumers at the right price. Sound familiar? It‘s not unlike the role TJ Maxx‘s army of merchants serve in scouring the world for those elusive designer deals.

Resale‘s also got that thrill-of-the-hunt angle that‘s so crucial to TJ Maxx‘s success with the browsing behavior of an "in-store funnel" online. Even though secondhand goods are more lightly curated than TJ Maxx‘s closeouts, resale sites foster a similar "scarcity mindset" with one-off items.

The U.S. resale apparel market reached $14 billion in 2021, with 60% year-over-year growth for online-only players, per ThredUp data. Over the next 5 years, the sector is projected to more than double to $47 billion. While that‘s still far short of off-price retail‘s $340 billion annual haul, the rapid pace of gains shows resale is poised to steal more share from value-based incumbents.

10. The Future of Off-Price

As we‘ve seen, the off-price marketplace is getting more fragmented and competitive from all angles. Traditional retailers are standing up their own discount concepts, like Macy‘s Backstage and Saks Off Fifth. Online-only entrants such as Amazon Outlet are vying for value-oriented apparel and home shoppers. And the meteoric growth of resale presents yet another affordable alternative for brand-loving bargain-hunters.

So what‘s an off-price leader like TJ Maxx to do? Fortunately, it has several structural advantages that should provide a wide defensive moat for years to come:

  1. Store Footprint: With nearly 1,300 U.S. locations and counting, TJ Maxx has unrivaled physical scale as shoppers return to stores post-pandemic. Strategic expansion into smaller markets and malls should unlock even more growth.

  2. Vendor Relationships: TJ Maxx‘s 40+ year history and massive sales base give it significant clout with thousands of brand partners. Its reputation as a brand-safe, price-disciplined outlet remains highly appealing to vendors.

  3. Buying Infrastructure: The global network of 1,200+ TJ Maxx buyers, plus decades of established processes and practices, is exceptionally difficult for competitors to match. This perpetual motion machine is the true secret sauce of off-price.

  4. Customer Loyalty: With an industry-leading ~75% of sales driven by TJX Rewards members, TJ Maxx boasts superior customer retention and lifetime value. Ongoing investments in mobile app, personalization should further enhance loyalty.

At the same time, TJ Maxx will need to keep evolving its model to stay ahead of nimble rivals and changing consumer habits. Near-term, that likely means doubling down on the treasure hunt store experience that brings shoppers back week after week. Removing friction through mobile checkout and improved merchandising should be low-hanging fruit.

Longer-term, TJ Maxx has the opportunity to more fully flex its e-commerce muscles while preserving that sense of serendipity across channels. Initiatives like 24-hour flash deals and rich user-generated content tags could go a long way in gamifying the online off-price experience. The company‘s trove of first-party shopper data is also begging to be put to use to drive incremental visits and purchases.

Wrapping Up

Make no mistake, TJ Maxx faces stiff competition on many fronts. Legacy rivals like Ross and Burlington aren‘t going anywhere. Wounded department stores and mass merchants are getting craftier with their own value-oriented offerings. Once-nascent threats like off-price e-commerce and resale are entering adolescence and flexing their muscles.

But for all the noise and hand-wringing, it‘s hard to bet against this off-price pioneer. Through relentless focus on delivering brand names at amazing prices, TJ Maxx has built a retail empire and cultivated an army of die-hard customers. While the methods may evolve with the times, it‘s that underlying magic – the promise of a treasure hunt and the thrill of the find – that should keep TJ Maxx buzzing along for decades to come.