TJ Maxx And Saks Off Fifth: Off-Price Jumps To Online

Apparel discounters TJ Maxx (NYSE:TJX) and Saks Off Fifth (NYSE:SKS) both plan to open online stores this year, with Nordstrom Rack (NYSE:JWN) and other off-price chains opening or beefing up their e-commerce offerings, according to Reuters.

TJ Maxx, which has been saying since 2011 that it was assembling an e-commerce team, has been selling online in Europe since 2009, and suffered a $15 million failure in a 2005 attempt to launch e-commerce in the U.S. But in 2011 the chain hired e-commerce executive Elaine Boltz away from Chicos, and last year, it spent $200 million to buy online retailer Sierra Trading for its e-commerce technology and expertise. One analyst says e-commerce for TJ Maxx and its sister brands could reach $1 billion.

Saks Off Fifth is in the middle of a three-year, $95 million overhaul of its IT systems to upgrade to e-commerce, and spent an extra $6 million to push up the Off Fifth site launch to this fall instead of 2014. Saks CEO Steve Sadove told Reuters that the Off Fifth online selection would be limited to better-selling items because of the expense of taking quality photos and editorial content.

Part of the problem for both chains is one shared by their discount competitors: Off-price inventories are tight, and it's critical to know when specific sizes or colors are out of stock—in most cases, back-ordering is impossible. That requires much better visibility into inventory and faster monitoring so merchandise is removed from the website as soon as a product runs out.

Among other discounters, Nordstrom plans to build out the e-commerce site for its Rack off-price chain as part of a $1 billion online overhaul. But Gap (NYSE:GPS) and Ross (NASDAQ:ROST) say they are sticking with just brick-and-mortar stores for their discount businesses.

For more:

- See this Reuters story

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