The past two decades have been a turbulent time for retail, and yet a select group of innovative companies have found ways to adapt and thrive. While many of America’s most iconic retailers have been in sharp decline since the turn of the millennium — Sears, JCPenney and Lord & Taylor among them — a new generation of competitors has taken their place, offering unparalleled convenience, product selection and innovation.
With e-commerce commanding an ever-growing share of consumers’ wallets, brick-and-mortar natives such as Walmart and Target have been forced to invest in omnichannel capabilities to keep Amazon’s dominance at bay. Through economic highs and lows, price has remained an essential differentiator for U.S. retailers, yet off-price giant TJ Maxx has succeeded where rampant discounting has not.
Here’s how four very different retailers have come out on top again and again throughout the past 20 years:
Target
Target recently celebrated the 20th anniversary of its first designer collaboration. Along with making names like Isaac Mizrahi, Rodarte and Phillip Lim accessible to the everyday shopper, the program inspired similar high-low partnerships throughout the industry. This is just one example of the ways Target has consistently stood out from its peers, making its stores a destination for affordable products that don’t sacrifice style and can’t be found anywhere else. In achieving the latter, the Minneapolis-based retailer has built one of the most robust private-label businesses in the industry. These in-house brands generate higher margins than third-party competitors and allow Target to avoid the “race to the bottom” that comes with customers comparison shopping between retailers with identical inventory.
Finally, the company hasn’t shied away from investing billions into upgrading its stores, experimenting with (and ultimately implementing) services such as curbside pickup and turning its more than 1,800 stores into quasi-distribution centers. Customers can shop online and pick up their order at their local Target later that day, or have it sent straight from the shelf to their doorstep — something even Amazon can’t offer.
Amazon
Amazon may seem like an unstoppable force today, but 20 years ago, the company’s success was anything but a foregone conclusion. For one, the dot-com bubble had just burst, wiping out much of the company’s stock-market value, and many of its early e-commerce peers filed for bankruptcy soon after. Amazon managed to avoid this fate in part because of its diversified product array (it had expanded beyond books in the years leading up to the crash) and nascent marketplace business (the site opened to outside sellers in late 2000).
Today, more than half of all items sold on Amazon come from third-party merchants, and the company is expected to surge well past the $280.5 billion it made in sales last year. Among its most notable triumphs is Amazon Prime, the membership program it launched in 2005. The pioneering subscription service — which as of January 2020 had more than 150 million members worldwide — offered two-day delivery (since shortened to one) on a nearly endless array of products, encouraging loyalty and driving business to Amazon’s other services.
TJ Maxx
It may seem odd that any retailer so steadfastly offline as TJ Maxx could succeed in today’s digital world, but the off-price giant has long set itself apart through its in-person experience. While it has sold some products online since 2013, e-commerce only accounts for 2% of parent company TJX’s nearly $42 billion in total sales. In-store, the “treasure hunt” experience encourages shoppers to search for bargains they can’t find anywhere else and snatch them up before they’re gone.
This emphasis on value is why some analysts have called TJ Maxx’s business model “recession-proof”: in times of economic hardship, consumers go to off-price stores to find prices they can afford. As Americans recovered from the Great Recession, TJX proved that shoppers also want deals when they’re feeling flush: The company’s core customer is middle to upper-middle income and shops at a wide variety of retailers, including full-priced stores. With brisk inventory turnover, a wide variety of vendors — more than 21,000 spread out over 100 countries — and 4,500 locations, the stores offer shoppers a reason to keep coming back.
Walmart
Among Walmart’s greatest challenges of the past two decades has been going head-to-head with a single worthy competitor: Amazon. The Bentonville, Ark.-based retail giant was a household name long before Jeff Bezos got into the bookselling business, but the rise of online shopping has put the company — and its more than 4,700 U.S. stores — to the test. Walmart’s philosophy of “everyday low prices” has provided a bulwark during economic downturns and allowed it to side-step the discounting trap that many department and specialty stores have been caught in for the past decade. Its focus on international expansion has also given it a foothold in 27 countries, representing more than $120 billion in annual sales, and its Sam’s Club business competes with Costco in the increasingly popular membership warehouse segment.
While it launched its e-commerce site in 2000, it has ramped up its digital investments significantly in the past five years, acquiring the now-defunct online marketplace Jet.com in 2016 and hiring founder Marc Lore to lead its e-commerce division. Under Lore’s leadership, Walmart has rolled out free two-day shipping on orders over $35 (no membership fee required); free next-day shipping on many items; curbside pickup; and significantly expanded its third-party marketplace, fulfillment services, app capabilities and grocery delivery. The latter offering, in particular, plays to the company’s strong suits: Walmart is the nation’s largest grocer, and this infrastructure allowed it to nearly double its online sales last quarter as the pandemic pushed more Americans to shop for groceries online. Next up? A membership program to rival Amazon Prime, a drone-delivery pilot project and a 2.2 million-square-foot fulfillment center in Indiana, its largest e-commerce facility yet.