‘Years ago, people would hide,’ said one wealthy woman, if they saw a familiar face in the aisles. Now, a TJX haul is a badge of honor.
About three times a week, marketing CEO Lyss Stern stops into a T.J. Maxx location to peruse the store’s inventory. Usually, it will be the discount chain on Manhattan’s Upper East Side, where she lives. In summer, she often finds herself at the Bridgehampton, N.Y., location, or the Marshalls next door.
Though her scouring for heavily discounted status-buy bargains can be “hit or miss,” Stern has scored many style coups at the cost-cutting hubs, which are both owned by the TJX Cos., a retail conglomerate based in Framingham, Mass. Both Marshalls and T.J. Maxx acquire designer goods through surplus sales at boutiques and flailing luxury retailers, which leads to steep discounts.
Like some other wealthy women, Stern doesn’t just shop at T.J. Maxx and Marshalls but talks openly about her spoils and the thrill of the hunt. As Upper East Side resident Karen Kreitzer said, “Years ago, people would hide” if they saw a familiar face in the chains’ chaotic aisles. “But now, everyone goes.”
Original article by Carson Griffith. Updated on May 16, 2024. $800 Designer Finds for 90% Off? No Wonder Millionaires Shop at T.J. Maxx and Marshalls. https://www.wsj.com/style/fashion/millionaires-shop-at-tj-maxx-marshalls-414ef86d
Why aren’t there any TJ Maxx’s (or TK Maxx depending on your country) in Asia?” is a question I’m often asked. To clarify: 1) discount retailing does exist in Asia; 2) it’s growing; and 3) its current form differs from the standard big box stores like TJ Maxx.
The Love for Bargains
Consumers love bargains, and suppliers need to offload unsold inventory. Discount retailers fill this gap perfectly. The concept of "formalized" off-price retailing can be traced back to Filene’s Basement. In 1909, Edward Filene implemented a structured markdown system for obsolete merchandise: 25% off after 12 days, 50% off after 18 days, 75% off after 24 days, and discarded after 30 days. This model has proven effective but hasn't yet rolled out universally across Asia.
Key Factors
Middle-Income Dynamics
Asia is diverse, with unique consumer behaviors influenced by varying economic conditions. In regions where economies are stable and a middle class exists, like North Asia, formalized off-price retailing is familiar. In contrast, developing parts of Asia often lack the critical mass of middle-class consumers necessary to support these stores. Here, shopping habits are more need-based, focusing on everyday essentials rather than discretionary desires.
Distribution Challenges
Western formal retailing operates through main street shops, online platforms, and malls—each taxed and regulated. However, developing Asia’s retail landscape is not as straightforward. For example, about 60% of Indonesia’s workforce and GDP stem from informal markets.
These markets, characterized by mixed transport options and a significant number of unbanked individuals, are well served by neighborhood stores (warungs) and open-air marketplaces. The limited formal retail trade that does exist in urban areas tends to be full-priced and aimed at providing elevated shopping experiences, rather than off-price treasure hunts.
Real Estate Complexities
Despite Asia’s vast land mass, living quarters tend to be small, limiting storage space for consumers. Commercial real estate in Asia is often fragmented, with small parcels owned by families for generations. Securing the necessary space in optimal locations to build large box retailers, along with the supporting infrastructure, can be a massive undertaking. However, as developers continue to push forward, this scenario is likely to change.
The Digital Edge
There’s clear demand for branded overstock at discounted prices. At Pollen, we believe the unique opportunity lies in dynamically pricing unsold inventory and equipping brands to capture opportunities across various geographies and channels seamlessly.
Today, digital platforms are the primary means of reaching consumers in Southeast Asia. Marketplaces like Carousell, Shopee, and Lazada, along with social selling on platforms like TikTok, inspired by Pinduoduo, are rapidly becoming the off-price channels of choice for Gen Z. This generation is poised to fill the middle-income gap in many markets.
The Future of Off-Price Retail in Asia
While off-price retailing exists in Asia, its current form differs from the TJ Maxx model. However, as real estate development progresses and middle classes stabilize, the big box treasure hunt experience will likely flourish across Asia. It’s just a matter of time.
In the meantime, the focus remains on leveraging digital channels and innovative pricing strategies to meet the evolving needs of Asia’s diverse and dynamic consumer base.
This article is featuring Michael Schindler’s observations related to dynamic pricing and sustainability. Michael Schindler (LinkedIn) is Pollen's Chief Operating Officer and has a long track record of leading teams, uncovering insights, and driving business results across the US, EMEA, and APAC. At Pollen, he’s leading our business teams as well as directing overall company strategy and operations.
