TJX Companies SWOT and PESTLE Analysis

Strength

1. Flexible business model capable of delivering value worldwide: The retail business model of TJX is very flexible, which makes the company the top off-price retailer in the world. This flexibility coupled with a wide demographic reach enabled the company to achieve profitable growth in different economic cycles including major recessions across geographies. TJX has been effective at offering a unique and differentiated customer experience that can't be replicated through e-commerce and this has been one of its major competitive advantages. TJX’s wide-ranging product assortment attracts a wide customer demographic and it has demonstrated the ability to respond to changing customer preferences and industry trends. Store sales have always been positive, with a decline in sales occurring only once in the company’s history. TJX is among the very few US apparel and home fashion retailers who have managed to achieve successful international expansion. The company has stores in 9 countries across 3 continents, and continues looking for growth opportunities in US and abroad. The large annual cash flows generated have helped in this expansion and growth, while generating shareholder value.

2. High availability of quality products from across the world: Ever since the company’s inception, there was never a problem of merchandise availability to support the company’s growth. The company has built a flexible, value-driven and global sourcing model with 1100 Associates in the buying organization, buying offices located in 12 countries, 21000 global vendors and product sourcing from 100 countries. The company is able to bring on board many vendors due to its vendor friendly, mutually beneficial policies that aim to strengthen existing vendor relationships and develop new ones. The company’s stores have no walls, which enables the quick transfer of merchandise to respond to market opportunities and changing customer preferences. The combination of vendor relationship building capability and quick merchandise transfer ensures customers never face product availability issues in TJX stores.

3. Effectively leveraging its global presence: TJX has succeeded in effectively leveraging its global presence. It is the only major international company in the world operating in the domain of off-price apparel and home fashion retail. All the major divisions of the company are at least 25 years old. Over the years, the company has developed a highly integrated system of global teams and international infrastructure. All the divisions of the company make use of talent, ideas, expertise and infrastructure. The company has succeeded in capitalizing on first mover advantage to stay ahead of the competition.

4. Maintaining low cost operations: Prices of products at TJX are lower than that of many traditional retailers. There is aggressive focus on expenses across all businesses of the company. The company’s advertising budget is lower than that of traditional retailers because of the company’s focus on promoting its retail banners rather than products. Though TJX designs the stores to provide a convenient and pleasant shopping experience for customers, it spends less on store fixtures than traditional retailers. The company also has a cost-effective distribution network.

5. Strong financial performance and shareholder distributions: The Company’s consistently strong financial returns and cash generation have enabled growth along with shareholder value generation. Disciplined capital allocation has seen the company achieve one of the highest returns on invested capital in the industry in 2018. The company has the highest S&P Global rating in the retail industry of A+, which attracts vendors and other business associates. In 2018, the company generated $4.1 billion in cash from operations along with an increase in shareholder distributions. The same year, the company spent $2.5 billion in stock repurchase and retired 51.8 million shares. The per share dividend increased by 25%, making 2018 the 22nd consecutive year of dividend increase. In April 2019, the company once again saw an increase in per share dividend, this time by 18%, making 2019 the 23rd consecutive year of dividend increase. During the whole 23-year period, the compound annual rate of dividend increase was 22%. The company expects to continue the share buyback program in 2019, with $1.75 to $2.25 billion of repurchases planned. The company also saw cash flow increase from $2 billion in FY18 to $3 billion in FY19.

Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Reduction of greenhouse gas emissions: The rising concern about the impact of greenhouse gases on the earth’s temperature has prompted many companies to put a check on their greenhouse gas emissions. TJX is also implementing various initiatives to reduce emissions from its stores and other facilities. Majority of the emissions (82%) are from the electricity and fuels used to operate stores, and the rest are from distribution centers, offices and vehicles. 87% of the emissions from TJX are from electricity. The company’s efforts have resulted in $24 million in savings on energy expenses between 2011 and 2017. Some of the initiatives implemented are: retrofitting lighting, energy management systems, preventative maintenance of HVAC systems and distribution of training materials on energy awareness in the stores. In 2017, TJX had succeeded in reducing its total carbon footprint by 19500 metric tons. In the preceding 5 years, the reduction was 62500 metric tons. The target is a 30% reduction of emissions per million dollars revenue by 2020.

2. Green building concept to reduce harm to the environment: Nowadays there is a trend of constructing green buildings having environmentally friendly features to reduce harm to the environment. TJX implements the green building concept for new construction and renovation of old facilities. The company strives for energy efficiency and water conservation in its facilities. The Green Building Council awarded the Leadership in Energy and Environmental Design (LEED) Gold certification to TJX’s office buildings in Marlborough for successful implementation of energy conserving measures like LED lights and occupancy sensors in offices, and 100% compostable utensils in the cafeteria. TJX Canada’s regional headquarters was awarded LEED Silver certification for features like electric vehicle charging points, interior landscapes and vegetable garden. In 2017, TJX Europe has also started construction of its new headquarters based on green building concepts.

3. Waste management techniques – reduce, reuse and recycle: TJX focuses a lot on waste management, despite just 4% of GHG emissions coming from waste. The company has waste management experts who monitor and improve waste management processes. TJX has flexible waste management programs that are adaptable as per different store configurations and local regulatory requirements. Materials used for packaging contribute the most to waste generated by TJX. In 2017, a pilot project for maximization of packaging reuse was launched by a team consisting of US Logistics, TJ Maxx and Marshalls Store Operations, and Distribution Service Associates. The company started using a recyclable packaging material for packing liquid items transported from distribution centers to stores. This resulted in 11 million fewer plastic bags used annually. In 2017, 28000 kg of waste was diverted from the landfill by recycling of Styrofoam in TJX’s Canadian stores. Customers are also given the option of buying reusable bags in TJX stores.