TJX Companies (TJX) Further Competitive Advantage

My older post on TJX (click), showed how TJX should have the power to outperform in the case of a recession. In addition to that, TJX’s competitive advantage gives it significant power over its competitors to outperform.

Inventory Turnover Rates

TJX utilizes incredibly high inventory turnover rates in order to beat out their competition. Put simply, inventory turnover rates are the rates at which companies have to restock their products and buy new ones to replace their old ones. TJX buys a rather smaller amount of merchandise at one time, always only buying what is in fashion for their customers. After the customers buy their products, TJX restocks them almost twice as often as other retailers. This gives them the ability to always have what’s in fashion on their store shelves, and get in early on fads and other consumer desires before other retailers join in the game. In basicallity, there seems to be an extreme flaw in this strategy, as other retailers could simply choose to buy less products at one time and restock their inventories more often, therefore replicating TJX’s competitive advantage. This, however, is not possible, as TJX specifically designs all of their stores without walls or any form of enclosures, allowing their to expand or contract sections of their store depending on what the consumers want at that give time. For example, in the back to school season, TJX could easily expand their kid’s clothing section and cut back on something like adult’s clothing simply by expanding their kids section by using the adult clothing shelves. Other retailers, however, could not do this, as they build their stores with walls and enclosures, forcing them to keep their sections separate and unchangeable.