Introduction
An effective pricing strategy is one of the keys to attracting more customers and ensuring the continuous growth of the company. The TJX Companies, Inc. has managed to gain an immense competitive advantage with respect to pricing thanks to its unique pricing strategy relying on the benefits of the off-price retailing.
Pricing
The TJX Companies, Inc. uses a sales orientation objective, as its pricing strategy relies on the principles of providing constant quick sales of the products offered by the company. The company is aimed at delivering steady sales growth and broadening the network of its stores and the population of its customers. Such an objective lets the company stay devoted to satisfying the customers’ needs and able to maintain its financial stability at the same time. The strategy employed by TJX provides the retailer with an opportunity to achieve a bigger market share and more sales. The company can keep the shareholders satisfied and continuously broaden the customer population even when the buying capacity of the customers decrease, as its pricing strategy is rather flexible.
TJX is an off-price retailer, which means that the prices it offers for the products sold in its stores are considerably lower than the ones available in most department stores – the regular prices for comparable merchandise in other stores are up to sixty percent higher (What is “off-price” retailing? n.d.). TJX employs a one-price policy, as the company offers a continual flow of rapidly changing merchandise for stable low prices. Thanks to the strategy of buying off-price merchandise from a wide range of vendors, including manufacturers making up too many products or retailers eager to clear the items at the end of the season, TJX can offer branded products and exceptionally low prices. The company does not change prices over the product life cycle as it is aimed at selling the items in the shortest period by offering the lowest possible prices and does not organize clearance sales. Such a strategy is based on the belief that buying new products at low prices is much more attractive to the customer than buying old items for cut prices. In such a way, TJX manages to ensure continuous high-speed sales.
The company has expanded its network outside of the U.S. successfully by employing the discussed pricing strategy. Understanding target customers and their cultural traits are the keys to ensuring the high demand for the company’s production, and TJX utilizes this principle well with respect to pricing (Grewal, Roggeveen, Compeau, & Levy, 2011). The company thoughtfully enters the markets where its current pricing methods are most likely to attract lots of customers. Western countries with a brand-aware population appear to be most favorable to the discussed strategy, and this aspect motivates TJX to open in its stores in such countries as the United Kingdom, Ireland, Canada, Germany, etc.
Competitive Advantage in Pricing
The TJX Companies, Inc. has a strong competitive advantage with respect to price. Off-price retailing enables TJX to keep its stores highly attractive for the customers interested in buying high-quality clothes items manufactured by well-known brands for unprecedented prices and retain a significant competitive advantage with respect to pricing over most apparel retailers. Besides, the company’s determination to providing a continuous flow of fresh merchandise enables it to avoid facing the need to cut the prices at the end of the season, which is often experienced by its competitors.
The pricing strategy employed by the TJX Companies, Inc. can be considered effective, as it enables the company to maintain a considerable competitive advantage with respect to price and remain one of the most popular American clothes retailers.
References
Grewal, D., Roggeveen, A., Compeau, L., & Levy, M. (2011). Evolving pricing practices: the role of new business models. Journal of Product & Brand Management, 20(7), 510-513.
What is “off-price” retailing? (n.d.). Web.