TJ Maxx/Marshalls’ parent TJX continues to benefit from value-chasing consumers.
The discount retail company released earnings Wednesday (Aug. 21) showing sales up 6% for the half year and 4% for the quarter, while raising its guidance in anticipation of the fall and holiday shopping seasons.
“We’re convinced that consumers will keep seeking value,” CEO Ernie Herman told analysts during an earnings call. “We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage. I am confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners.”
Elsewhere on the call, Herman noted that each of the company’s divisions — which also includes the HomeGoods chain — “continue to attract an outsized number of younger customers to our stores, which we believe bodes well for the future.”
The retailer’s popularity with younger consumers makes sense, given how many of them have no financial cushion to fall back on, according to PYMNTS Intelligence research. That data shows that 59% of American consumers live paycheck to paycheck, a number that jumps to 64% for Generation Z and 66% for millennials.
As noted here in June, this has led more and more consumers to trade down, which has been a boon to companies like TJX and Dollar General.
“[W]hat we’re seeing from the consumer overall is … it’s a cautious consumer,” Dollar General CEO Todd Vasos said on an earnings call. … [W]hat we’re seeing is that the next cohort and the one above that — so, let’s call it middle- to upper-middle income and then in some of the upper-income stratas — we’re seeing the trade-down still come in.”
Meanwhile, PYMNTS on Wednesday noted that value-seeking behavior also helped motivate consumers who took part in Walmart and Amazon’s recent flagship summer sales events.
“Amazon Prime Day and Walmart+ Week are seen by most consumers as opportunities to snag good deals on frequently purchased items rather than motivators to join these paid memberships,” that report said. “Data reveals that about 75% of shoppers participated in these events primarily to find deals on products they regularly buy.”
In addition, the report also pointed to pronounced buy now, pay later (BNPL) usage among consumers who live paycheck-to-paycheck. This year, 12% of Amazon Prime Day shoppers who struggle financially used BNPL for their purchases, almost double the previous year’s 6.4%. At Walmart+ Week, roughly 14% of paycheck-to-paycheck shoppers used BNPL, a jump from 6.2% last year.
“In contrast, BNPL usage among shoppers who do not live paycheck to paycheck remains low, with only 2% using the option at both events this year,” PYMNTS wrote. “This pattern suggests that financially constrained consumers are more inclined to rely on BNPL to manage their spending during sales events, while those with more financial flexibility use other payment methods.”
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