How TJX and Costco drive foot traffic in the digital age

Costco and  TJX Group (including brands like TJMax, Marshalls, HomeGoods etc.)  seem to be always crowded. And when you look at long checkout lines you know they must be doing something right to drive foot traffic in the digital age. TJX describes itself as an “off price” apparel and home fashions retailer while  Costco  is a paid membership bulk retailer focussed on quality products for their members, a commitment to employees and suppliers as mentioned on the Costco About Us section.

No matter what your brick based organization (including  healthcare and banks) – if customers can receive services online. They will avoid the friction that comes with visiting the store. For example, in medicine,  tasks like appointments, test results, refill requests, billing are digitized and patients extensively Google before meeting the doctor. Think about banking – when was the last time you went to a bank branch?… you get the picture.

Here are some video tips on shopping at TJMax  :

We were thoroughly intrigued by the observation that there is substantial traffic in TJX and Costco while US malls tend to be desolate. Here is our take:

  • Surprise and Delight  This seems to be the mantra for both TJX and Costco. The TJX shopper feels the excitement of  a flea market except that the brands are top names and the merchandise is new. The aisles are pretty stable so you would see the pants in the same place except that seasonal changes might be upfront. Costco follows a horseshoe layout (see first video above) but moves things around to add to the “surprise ” element.They seem to put out the most recent and fashionable stuff on the front of the aisles. the assortment is as expected, every time, but the specifics are a process of discovery and everyone seems to take great delight in finding deals.   For Costco , you know that you’ll get milk, eggs and toilet paper but the aisles of random stuff like “Coconut Clusters” with tastings makes buying easy. 
  • Encourage returns: At TJX you can try out whatever you want to and the fitting room counter lady (in most stores!) seem to be a little intimidating. Wonder if this is a strategy for you to simply buy and take the stuff home. If it is already reached home – there is an exponentially better chance that you’ll keep it ! Costco is famous for its return policy – but if it has reached your basement store- then the likelihood of hanging on to stuff increases. We don’t have access to data but it is  likely that people buy more than they return on a visit. Only a small fraction of shoppers seem to bring in returns that must be tagged after you show your membership card.
  • No in-aisle customer service: There is really no in-aisle customer service. While Costco has loyal members TJX seems to have perfected the art of making shoppers feel like members. This transfer of “responsibility” (to shop!)  to the customer is quite amazing. Educators and healthcare needs to pick up some ideas here. Perhaps it is the full package that encourages such “ownership”.
  • Can’t beat the price: Try searching online for a better price and you’ll be disappointed at both TJX and Costco particularly for under $10 items. There must be a whole lot of research going into setting store prices.
  • No way to look at store inventory before visit: This is absolutely brilliant. You cannot look for inventory for a particular item in a particular store at TJX without physically visiting it. You can leave an online store in seconds but if you enter a physical store between parking and searching you are looking at an hour or more- that many actually like to spend.  At Costco the in-store prices tend to be better than online prices and there is a different assortment in both particularly for the “long tail” surprise-delight items.
  • Email and Text: Both companies are active in reminding you that the “discounts” are disappearing- so it’s not that they are lagging behind in digital marketing.
  • Hours and Directions available online: For both TJX and Costco hours are quickly available on your mobile phone. They do want  you to come in but enjoy the fun of a visit while actually visiting.
  • Employee Focus: You really can’t do the above without employees who are very engaged and thinking about improving the customer experience. And lot of the hard work is done behind the scenes working with suppliers and systems. It does appear that the employee page at TJX  and the employee section  at Costco are not just “company speak”.

Clearly, something to learn for all  organizations that have products or services delivered from physical buildings. 

About StratoServe for Growth Strategy.

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