US clothes chain targets Britain: TJX plans up to 100 discount stores for top brands
Sunday 17 April 1994
TJX, with annual sales of dollars 4bn (pounds 2.7bn), opened its first TK Maxx store on Friday in Bristol. A second shop opens this week in Liverpool. TJX is negotiating leases on four more scheduled to open this autumn.
Ben Cammarata, founder, president and chief executive of TJX, said: 'Over the long term we think we have an excellent chance of opening 100 stores in Britain.
'British clothing prices are extremely high, and I think the consumer deserves more. We sense there is a great thirst for value here.'
The expansion rate would depend on the success of the first shops and the ability to cut through planning red tape and secure leases on suitable properties.
The group is talking to several landlords, and there is speculation that it is negotiating with Tesco to take excess space at some of its town centre properties.
Paul Morris, stores analyst at Goldman Sachs, said: 'This is as significant for the clothing industry as CostCo's arrival last year was for food and hard goods.' CostCo provoked intense industry interest with its no-frills, members-only format.
Department stores such as House of Fraser and Allders were most obviously vulnerable to the TK Maxx format, Mr Morris said. Some of the weaker own-brand garment retailers, such as Burton, might also be exposed.
TJX is able to discount 20 to 60 per cent by sourcing less fashionable lines and by taking incomplete ranges, in which some sizes or styles or colours are missing. The choice is often limited.
It also sites the shops in non-prime locations. The Bristol shop is on the top floor - the least visited part - of the Galleries shopping centre. The no-frills format is known in America as 'off-price retailing'.
The stores, of 18,000 to 25,000 square feet, the size of a medium-size supermarket, will stock around 50,000 items of men's and women's fashion, shoes, lingerie, accessories and some gifts and kitchenware. There are changing rooms and centralised tills.
British products will be sourced by a separate UK buying team, numbering nine, which will confer with its counterparts in the US, where combined buying muscle can be brought to bear upon suppliers.
TJX's main chain in the United States, TJ Maxx (the name was altered slightly for the UK), has 520 stores, and the format has been transplanted successfully to Canada.
TJX is quoted in New York with a stock market value of around dollars 2bn. Mr Cammarata's personal holding is worth about dollars 8m.
TJX contrasts itself with discount chains such as Mark One and What Everyone Wants, which sell cheap but largely unbranded clothing.
The closest Britain comes to the format is Matalan, a privately owned, club-style chain, which charges customers a membership fee.
Matalan, based in Preston, has grown to 36 shops, with turnover of about pounds 90m and pre-tax profits of pounds 5.3m. It is thought to be considering a stock market flotation.
Diving in at the deep end is no excuse for shirking the style stakes
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