T.J. Maxx-imizes hybrid concept - HomeGoods/T.J. Maxx

Discount Store News, August 5, 1996

Mega Maxx, the HomeGoods/T.J. Maxx hybrid, is a tiny experiment that may have a giant future.

As 1,100-store, $6 billion TJX ponders ways to grow, president and ceo Bernard Cammarata enthusiastically calls Mega Maxx "a vital concept." The Mega Maxx merchandising idea is a natural extension of this company's expansion of off-price retailing from apparel into the home categories. Like other off-price apparel chains, TJX's T.J. Maxx and Marshalls have steadily increased the proportion of domestics and other home furnishings products in their product mix.

But HomeGoods, the all-home chain TJX developed to capitalize on this direction, has floundered since its inception in 1991. Only a year ago, TJX said that it would add 10 to 12 new HomeGoods locations per year. No new locations are now planned--but by the end of 1997, up to four more Mega Maxx stores will join the three in operation in suburban Chicago.

As an experiment, HomeGoods has yet to turn a profit. The chain grew from 15 to 22 units during 1995. First quarter sales for 1996 reached $19.4 million, with an operating loss of $2.6 million.

This compared to first quarter 1995 sales of $13.1 million and a loss of $1.5 million, according to TJX and analysts' reports, which put the chain's '95 loss at $13.4 million on sales of $78.4 million.

TJX has already made Mega Maxx a key in turning around the profitability of this division. Cammarata recently told investors that the main goal for HomeGoods is to raise the frequency of customer visits. The apparel division has already found traffic-building success by building out home departments. Combining the best of each concept is a logical test.

About 60% of the volume at Mega Maxx, said Cammarata, is generated by the T.J. Maxx departments and 40% from the HomeGoods merchandise. The current Mega Maxx format is about 50,000 sq. ft., but may be scaled down to fit the 35,000-sq.-ft. size that works best for HomeGoods.

Mega Maxx combines the chrome apparel racks of a full T.J. Maxx in the front of the store with a scaled-down HomeGoods section in the rear. The only place the HomeGoods name appears, however, is on item price tags.

There is no real transition between apparel and home. Across the back of the store, floor treatment, window decor and bed and bath departments are arranged much like they are at any mass merchant. Power presentations, such as the backlit window treatment gondola toppers, the 40-ft. wall of Wamsutta and SpringMaid sheets, and the towel wall, are clearly visible from the front of the store.

Hanging box signs similar to those in the T.J. Maxx section simply call out departments by merchandise category. Unlike the ambiance at HomeGoods, there are no fancy sky blue signs with the fancy monogram logo, or large-scale illuminated wall slogans like "There's No Place Like HomeGoods."

The layout appears effective. Cammarata noted that results at the first Mega Maxx were nearly 20% over plan.

Most fixtures in a T.J. Maxx store are low-cut. The dearth of feature walls affords shoppers clear sight lines to all of the key home departments, where the merchandise is stacked much higher along the perimeter wall than in the apparel areas. Gondolas of the same height as the apparel fixtures hold picture frames, soft and hard tabletop, decorative lighting and cookware. Near the center of the floor, a staffed area offers clear cabinets full of glass and crystal decorative pieces.

To fit what are presumably the most productive HomeGoods lines into the Mega Maxx format, the merchants led by HomeGoods divisional president Edmond Lynch have edited the mix radically in some departments and not at all in others.

Mega Maxx does retain the full run of attractive displays for window, rugs, shower curtains and bedding, including four full-size bed vignettes and up to three dozen mini vignettes. There is virtually no RTA department, compared to a 1,000-sq.-ft. section in HomeGoods. Among other shrunken categories are lamps, frames and framed art, kitchen storage, dinnerware, cooking appliances and gourmet foods. Like HomeGoods, Mega Maxx stocks a sizeable assortment of kitchen appliances by Oster, Braun, KitchenAid, Krups and other upstairs brands.

There is less ostentatious presentation; the overall effect is more in line with the traditional T.J. Maxx "nothing fancy" ambiance.

The brand names, with few exceptions, differ from those found at major discounters. The towel section, for instance, boasts Dundee Forever, Fieldcrest Summit, Martex Embraceable and SpringMaid. In bedding, Bill Blass, Jessica McLintoch, Burlington House and Adrienne Vittadini are available.

While Cammarata has said that HomeGoods/Mega Maxx will greatly downplay in-line merchandise in favor of a purer off-price mix, the chain must show full assortments of coordinated looks in such categories as towels, hard bath accessories, comforters and other bedding, and the window department.

That indeed is the case. Four kiosks in the bath area showcase coordinated shower curtain and soft bath collections by SpringMaid. In window treatments, Mega Maxx offers a dozen Laura Ashley styles of blouson valences by Revman; balloon shades and valances by Croscill, Waverly, Richmark, Creative Window Fashions and others; curtain lines by United, CWF, S. Lichtenberg and Commodore; a Burlington House drapery program; and a run of lace curtains by S. Lichtenberg and National Curtain.