PESTEL Analysis
Political
Micro political risks could be a very detrimental factor for the TJX company if they enter a country with heightened political risk. Since they run their business through making connections with vendors around the world, their supply chain could be held up by export restrictions, major tax increases, or restrictive local laws. As of now, TJX tends to choose countries to expand into that have a history of stable government. However, you cannot always predict political turmoil.
Economic
Since TJX is a global company that has a supply chain spread throughout multiple continents and 100 countries, they always face the risk of confronting economic recessions or drastic changes in exchange rates. For example, currently the Canadian dollar is being devalued, which means TJX is paying a lot more to have exports shipped in for their Canadian brands. Since they cannot do business without outside vendors, they have to adjust their spending to make room for those added costs. So far, they have shown to have a great strategy for these mishaps. During the American recession, TJX companies still showed a growth in sales and profit. These economic issues have not caused them much grief yet.
Sociocultural
By operating in so many diverse environments, TJX monitors sociocultural factors closely to see what areas fit their business model the most. They have honed in on their target customer, and tend to open new retail locations in places where demographics match their customer demographics in other successful locations. They also seem to follow a similar trend regarding what markets they expand their business into. The United States, Canada, Australia, and the United Kingdom tend to have relatively similar scores in cultural dimensions. Considering Hofstede’s dimensions, these four countries all have high individualism and indulgence scores. TJX has found their niche markets and have dedicated a lot of time into finding markets with similar value that will support their business model.
Technological
The TJX Companies, Inc. have created a synchronized supply chain system that keeps them dedicated to technological advances. However, the further development of e-commerce shopping could lead to negative effects on their business. TJX drives profits by giving customers the sense of urgency when they are shopping because the product they are looking at may be the only one sold in the store, and possibly even in the state. Customers also know that TJX keeps merchandise fresh in their store, so they visit more frequently. However, as we further embrace the e-commerce culture, customers are able to find more unique, one-of-a-kind items on global websites, or even on sites like Etsy. With this prospect, TJX could lose profits as the internet continues to connect us to boutiques in other countries, hand-made goods, or flash-sale sites. So far, TJX has overcome these obstacles, but it is definitely much harder to compete when the internet is bringing foreign merchandise to our front doors.
Ecological
Just like any growing business, the heightened fear of limited natural resources is on TJX’s radar. They have developed in-house campaigns to further reduce their carbon footprint in hopes to help the environment, and to help their own operations in the future. TJX does business across the globe, so local resources are not their only concern. By depending on thousands of vendors, TJX is depending on them to continue making products for a lower cost. Since value is such an important part of TJX’s mission, increased costs due to limited resources could completely destroy their profit margin. To combat this issue, the TJX Companies, Inc. has invested in their energy efficiency and waste management in hopes to better the environments they’re conducting business in.
Legal
Since TJX operates in several political economies, they also confront various legal structures. Since TJX is an outside force, they face scrutiny from foreign government throughout their operations. They face exporting and importing regulations within countries that their business is dependent on; they face legal fees and excessive taxes when working in foreign economies that they are not “locals” to. But again, TJX has wisely chosen stable countries to expand into thus far. Although disaster can strike at any time, they balance out their business by dabbling in many markets instead of investing everything they have into one. That way, if they run into legal issues, their entire operation is not forced to a halt.
Micro political risks could be a very detrimental factor for the TJX company if they enter a country with heightened political risk. Since they run their business through making connections with vendors around the world, their supply chain could be held up by export restrictions, major tax increases, or restrictive local laws. As of now, TJX tends to choose countries to expand into that have a history of stable government. However, you cannot always predict political turmoil.
Economic
Since TJX is a global company that has a supply chain spread throughout multiple continents and 100 countries, they always face the risk of confronting economic recessions or drastic changes in exchange rates. For example, currently the Canadian dollar is being devalued, which means TJX is paying a lot more to have exports shipped in for their Canadian brands. Since they cannot do business without outside vendors, they have to adjust their spending to make room for those added costs. So far, they have shown to have a great strategy for these mishaps. During the American recession, TJX companies still showed a growth in sales and profit. These economic issues have not caused them much grief yet.
Sociocultural
By operating in so many diverse environments, TJX monitors sociocultural factors closely to see what areas fit their business model the most. They have honed in on their target customer, and tend to open new retail locations in places where demographics match their customer demographics in other successful locations. They also seem to follow a similar trend regarding what markets they expand their business into. The United States, Canada, Australia, and the United Kingdom tend to have relatively similar scores in cultural dimensions. Considering Hofstede’s dimensions, these four countries all have high individualism and indulgence scores. TJX has found their niche markets and have dedicated a lot of time into finding markets with similar value that will support their business model.
Technological
The TJX Companies, Inc. have created a synchronized supply chain system that keeps them dedicated to technological advances. However, the further development of e-commerce shopping could lead to negative effects on their business. TJX drives profits by giving customers the sense of urgency when they are shopping because the product they are looking at may be the only one sold in the store, and possibly even in the state. Customers also know that TJX keeps merchandise fresh in their store, so they visit more frequently. However, as we further embrace the e-commerce culture, customers are able to find more unique, one-of-a-kind items on global websites, or even on sites like Etsy. With this prospect, TJX could lose profits as the internet continues to connect us to boutiques in other countries, hand-made goods, or flash-sale sites. So far, TJX has overcome these obstacles, but it is definitely much harder to compete when the internet is bringing foreign merchandise to our front doors.
Ecological
Just like any growing business, the heightened fear of limited natural resources is on TJX’s radar. They have developed in-house campaigns to further reduce their carbon footprint in hopes to help the environment, and to help their own operations in the future. TJX does business across the globe, so local resources are not their only concern. By depending on thousands of vendors, TJX is depending on them to continue making products for a lower cost. Since value is such an important part of TJX’s mission, increased costs due to limited resources could completely destroy their profit margin. To combat this issue, the TJX Companies, Inc. has invested in their energy efficiency and waste management in hopes to better the environments they’re conducting business in.
Legal
Since TJX operates in several political economies, they also confront various legal structures. Since TJX is an outside force, they face scrutiny from foreign government throughout their operations. They face exporting and importing regulations within countries that their business is dependent on; they face legal fees and excessive taxes when working in foreign economies that they are not “locals” to. But again, TJX has wisely chosen stable countries to expand into thus far. Although disaster can strike at any time, they balance out their business by dabbling in many markets instead of investing everything they have into one. That way, if they run into legal issues, their entire operation is not forced to a halt.
VRINE Analysis
Valuable
One of the most valuable assets to TJX is their ability to offer name-brand products for a valuable price. This has given them the capability to compete not only against value-based department stores like Kohl’s, but also quality-based department stores like Macy’s. They have found a niche market, and have established strong relationships and supply chains in order to keep their well-oiled machine working. The TJX Companies, Inc. has found a miraculous way to combine value, quality, and uniqueness, when most other retailers can only focus on one of those three traits.
Rare
One of the rarest resources that TJX has that competitors don’t is their abundance of vendors. They have created flexible, lasting relationships with thousands of brands that are willing to sell their assortments to TJX. TJX has also enhanced this relationship by being open to purchasing random assortments, sizes, and product categories from said vendors that they are able to incorporate into at least one of their many brands. These relationships are what keeps their inventory so fresh and exciting. Also, the diversity of products from such different vendors has built that treasure hunt appeal in their stores. You could find a Coach purse, or you could find a Calvin Klein sweater-shopping with them is always an exciting adventure.
Costly to Imitate
The TJX Companies, Inc. has created a business model that is costly to imitate. The biggest cost, however, is time. TJX has a first-mover advantage, and because of that, they have secured relationships and locations in the most promising product and consumer markets. Several businesses have tried the off-price retail business, however, they have not been able to offer the assortment and experience that TJX has been building since 1956. TJX has stayed true to innovation, and has not held back when competition was nowhere in sight. However, now that the competition is heating up, TJX is so far ahead of the game, that no one can imitate what they do. They have been untouchable through recessions, e-commerce, and new competitors.
Organized to Capture the Value of the Resources
The TJX Companies, Inc. supply chain and network has seamlessly built this company to be what it is today. Not only does TJX have amazing product assortment, but they can alter their inventory based on customer response. This allows them to offer customers what they’re looking for, but at just the right amount in order to keep that urgency experience alive throughout their stores. Without their supply chain system, TJX would not be able to offer merchandise from all around the globe for the price that they do. They are not tied down to any one vendor or market, and this gives them such a strong competitive advantage. If TJX was not organized, it’s business model would crumble, but that goes to show just how organized they are.
Sustainable Competitive Advantage
Without a doubt, the TJX Companies, Inc. has created a sustainable competitive advantage. New competitors come and go, but TJX is still the number on global off-price retailer in the United States and the world. Businesses may have great ideas and missions, but TJX has experience and connections in this industry that would take competitors decades to build. On top of that, customers never get sick of TJX because things are always changing. They are dedicated to their business model, and never stop improving.
One of the most valuable assets to TJX is their ability to offer name-brand products for a valuable price. This has given them the capability to compete not only against value-based department stores like Kohl’s, but also quality-based department stores like Macy’s. They have found a niche market, and have established strong relationships and supply chains in order to keep their well-oiled machine working. The TJX Companies, Inc. has found a miraculous way to combine value, quality, and uniqueness, when most other retailers can only focus on one of those three traits.
Rare
One of the rarest resources that TJX has that competitors don’t is their abundance of vendors. They have created flexible, lasting relationships with thousands of brands that are willing to sell their assortments to TJX. TJX has also enhanced this relationship by being open to purchasing random assortments, sizes, and product categories from said vendors that they are able to incorporate into at least one of their many brands. These relationships are what keeps their inventory so fresh and exciting. Also, the diversity of products from such different vendors has built that treasure hunt appeal in their stores. You could find a Coach purse, or you could find a Calvin Klein sweater-shopping with them is always an exciting adventure.
Costly to Imitate
The TJX Companies, Inc. has created a business model that is costly to imitate. The biggest cost, however, is time. TJX has a first-mover advantage, and because of that, they have secured relationships and locations in the most promising product and consumer markets. Several businesses have tried the off-price retail business, however, they have not been able to offer the assortment and experience that TJX has been building since 1956. TJX has stayed true to innovation, and has not held back when competition was nowhere in sight. However, now that the competition is heating up, TJX is so far ahead of the game, that no one can imitate what they do. They have been untouchable through recessions, e-commerce, and new competitors.
Organized to Capture the Value of the Resources
The TJX Companies, Inc. supply chain and network has seamlessly built this company to be what it is today. Not only does TJX have amazing product assortment, but they can alter their inventory based on customer response. This allows them to offer customers what they’re looking for, but at just the right amount in order to keep that urgency experience alive throughout their stores. Without their supply chain system, TJX would not be able to offer merchandise from all around the globe for the price that they do. They are not tied down to any one vendor or market, and this gives them such a strong competitive advantage. If TJX was not organized, it’s business model would crumble, but that goes to show just how organized they are.
Sustainable Competitive Advantage
Without a doubt, the TJX Companies, Inc. has created a sustainable competitive advantage. New competitors come and go, but TJX is still the number on global off-price retailer in the United States and the world. Businesses may have great ideas and missions, but TJX has experience and connections in this industry that would take competitors decades to build. On top of that, customers never get sick of TJX because things are always changing. They are dedicated to their business model, and never stop improving.
Recommendations
The one weakness seen within the TJX Companies, Inc. is their online presence. Since their in-store experience is so unique and hard to imitate, they need to invest more into creating that experience online. E-commerce is such a competitive market and TJX has nothing that makes them stand out online. Of course customers know that they can still find brand-name items for a quality price, but it is much easier to meet that need on any website. TJX should consider how they can give their website the same unique and urgent feel as their stores. They could incorporate more of a flash-sale site feel by making things available online for only a limited time. I feel like there is a lot of opportunity to make the online experience more similar to the in-store experience.