(Bloomberg) —HomeGoods Inc. is finally live as the ubiquitous retailer looks beyond the brick and mortar in an era of high e-commerce demand.
The discount home decor chain began offering items such as bedding, kitchenware and seasonal produce on its website on Tuesday. HomeGoods said it sees the e-commerce store as an addition to its network of more than 820 physical locations.
The late launch underscores the reluctance of parent company TJX Cos. Inc., which also owns low-cost retailers TJ Maxx and Marshalls, to embrace e-commerce, preferring instead to highlight the “scavenger hunt” experience for shoppers inside stores. Marshalls only went live in 2019, while TJ Maxx launched an e-commerce website in 2013. TJX is # 63 in the 2021 Digital Commerce 360 Top 1000.
At the start of the pandemic, TJX not only closed its more than 4,500 stores worldwide, but also suspended its online operations for months. CEO Ernie Herrman said at the time that the retail giant “would not view e-commerce as our main lever to get us through COVID and out to the other side.”
Since then, online sales have skyrocketed as new coronavirus outbreaks keep some shoppers away from physical stores.
Top 1000 discount merchants had a good year online. Mass merchandisers selling discount merchandise and low-cost clothing retailers increased their online sales 52.7%, above the 45.8% growth of the Top 1000 as a whole. The top 1000 home furnishings retailers also surpassed the Top 1000 as a whole, growing 49.0% in 2020.
However, the furniture market is already crowded, with 104 retailers in the category. And most of them have a long history of selling home goods online, with the median e-commerce launch taking place in 2003. Although HomeGoods does not sell bulky furniture online, bedding, kitchenware, and more. other home furnishings all have shipping problems due to their fragility. and weight, issues that many of its newer online competitors have had years to resolve.
The discount space is a bit more open, with just 17 Top 1000 retailers focusing on discount merchandise. However, the domain may not be as lucrative online as it is in stores. For example, Burlington Coat Factory closed its online operations just before the pandemic. Ecommerce operations – when they factor in the costs of merchandising, processing, shipping and returns – were too high a cost to keep investing, said CEO Michael O’Sullivan at the time.
But some discount retailers are thriving. Mass discount merchant Five Below (# 660), which launched e-commerce operations in 2016, was the second-largest producer among low-cost sellers. Big Lots, the fastest producer, is also among the top discount retailers, ranked 223 in the Top 1000 and second only to Dollar Tree Inc. (No. 197) among discount sellers.
Big Lots and Five Below both offer a small selection of items to online shoppers compared to their store’s inventory, with an emphasis on items more suitable for shipping. And the pandemic appears to have pulled discount retailers out of a growth slump, with pre-pandemic growth of 39.0% in 2016, down from just 18.4% in 2019.