TJ Maxx’s stores have been popular in the pandemic with shoppers looking to score bargains on designer brands — but it’s been raising prices on some of those upscale products.
“Our strategy to surgically raise retail [prices] on select items is well underway, and we believe it is working very effectively,” Ernie Herrman, CEO of TJX companies, parent of TJ Maxx, Marshalls and HomeGoods discount chains, said during an earnings call with analysts Wednesday.
The price increases on luxe goods are due to a triple whammy of pandemic-related factors.
First, there’s less product on the shelves thanks to the global supply chain crisis, with new merchandise long delayed getting into US ports. Second, there’s plenty of pent-up demand from customers hunting for a deal. And finally, TJ Maxx and its sister companies — like many retailers — need to make up the difference now that they’re paying higher wages to combat the worker shortage.
“The foundation of this is what’s going on in this country, which is that wages and supply chain costs are hitting really like never before altogether,” Herrman said of raising prices on some goods. “And it is forcing retailers around us to either promote less or raise their retail. So it is just creating a window of opportunity.”
The company didn’t specify which brands or categories it hiked prices on across its brands, but Herrman said they saw “very good success” in the third quarter.
In fact, Herrman said TJX expected shopper pushback that never came.
We were starting to do this pretty aggressively,” he said of hiking prices in the third quarter. “We thought there’d be a handful of items here or there that we would run into challenges with but that has not been the case.”
As for supply, the inventory of luxury goods in particular is “a little less” right now, Herrman said.
But he’s was confident that the discount stores would have enough products for this year’s holiday season: “Most of the inventory we need for the holiday season has already been delivered to us or is scheduled to arrive in stores and online in time for the holidays.”
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