TK Maxx tees off on Aussie market
International ‘off-price’ retailer, TK Maxx has officially begun its assault on the Australian market, after opening its first stores in Melbourne and Queensland last week, followed by a raft of Sydney locations yesterday.
Melbourne punters were the first to have a go at frequenting the ‘off-price’ retailer’s large stores, with six opening in one fell swoop at Fountain Gate, Dandenong, Broadmeadows, Docklands, Moorabbin and Frankston.
Over last weekend, eight locations opened in Queensland including Fortitude Valley, Chermside and Oxley while seven yesterday opened in NSW tomorrow at Chatswood, Hillsdale, Castle Hill, Fairfield, Mount Druitt, Campbelltown and Penrith.
The final locations throughout regional NSW and more in Queensland will open tomorrow and during the first week of May. The major rollout of stores has seen TK Maxx convert all 35 Trade Secret stores that it acquired while it will open a handful of new stores this year.
TK Maxx is operated by The TJX Companies Inc, which is a leading off-price retailer of apparel and home and fashion in the US and worldwide. Its headquarters are based in the US and has more than 3,800 stores around the world.
At the time of its Aussie entry announcement, Tessa Buenen, TJX spokesperson said there are opportunities within the discount department space in Australia. “Our off-price model is unique to the market,” she said.
The retailer sells a huge assortment of big names, major brands, up-and-coming labels and ‘one-offs’ at a discounted price to that of a typical department store or on the high street.
On the supply side, TK Maxx differs to retailers that buy seasonally – it buys throughout the year and works in an opportunistic buying and no frills operation fashion, according to Buenen.
TK Maxx currently operates over 500 stores across six countries – the United Kingdom, Ireland, Germany, Poland, Austria, and the Netherlands – with a global buying network of more than 18,000 vendors.
In February, net sales for the fourth quarter of fiscal 2017 increased six per cent to $9.5 billion, over an eight per cent increase last year. Consolidated comparable store sales for the fourth quarter increased three per cent, over last year’s six per cent increase. Net income for the fourth quarter was $678 million and diluted earnings per share were $1.03, a four per cent increase over the prior year’s 99c.
Senior research analyst for analyst for apparel and footwear at Euromonitor, Emily Cox, said the current competitive environment and strong level of price discounting in Australia has conditioned consumers to search constantly for cheaper products, discounts and bargains.
“This trend is expected to benefit TK Maxx’s entrance to Australia, with the company to appeal to savvy consumers looking for lower-priced, affordable and on-trend fashion,” she told IRW.
The company poses a threat to retailers such as Kmart, Target and Big W, due to its offering of affordable and branded fashion.
“However, the operating environment in apparel has become increasingly cramped, as international fast fashion retailers continue to expand their presence and gain a stronger foothold on sales,” said Cox.
“Consumers now have greater access to a plethora of brands across multiple price points and these companies frequently launch new collections and styles.”
According to Cox, with the presence of international brands expected to increase over the next few years and arrival of Amazon and department store Debenhams, the success of TK Maxx will depend on the strength of its marketing strategy, the quality of its range of brands and the location of its stores.
A version of this article first appeared in our weekly magazine, Inside Retail Weekly.
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