(Bloomberg)—HomeGoods Inc. has finally gone online as the ubiquitous retailer looks beyond brick-and-mortar at a time of soaring ecommerce demand.
The discount home decor chain began offering items including bedding, kitchen goods and seasonal products on its website Tuesday. HomeGoods said it sees the ecommerce store as a complement to its network of more than 820 physical locations.
The late launch underscores the reluctance of parent company TJX Cos. Inc., which also owns off-price retailers T.J. Maxx and Marshalls, to embrace ecommerce, preferring instead to highlight the “treasure hunt” experience for customers inside stores. Marshalls only went online in 2019, while T.J. Maxx launched an ecommerce website in 2013. TJX is No. 63 in the 2021 Digital Commerce 360 Top 1000.
At the outset of the pandemic, TJX not only shut down its more than 4,500 stores worldwide but also halted online operations for months. CEO Ernie Herrman said at the time that the retail giant would “not look to ecommerce as our major leveraging point to get us through COVID and out the other side.”
Since then, online sales have soared while renewed coronavirus outbreaks keep some shoppers away from physical stores.
Discount merchants in the Top 1000 have had a good year online. Mass merchants selling discounted merchandise and off-price apparel retailers grew online sales 52.7%, above the 45.8% growth of the Top 1000 overall. Top 1000 retailers of home furnishings also outpaced the Top 1000 as a whole, growing 49.0% in 2020.
However, the home furnishings 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 ecommerce launch taking place in 2003. While HomeGoods isn’t selling bulky furniture online, the bedding, kitchen goods and other home furnishings all present shipping concerns due to fragility and weight, problems many of its new online competitors have had years to solve.
The discount space is a little more open, with just 17 retailers in the Top 1000 focused on discounted merchandise. However, the field may not be as lucrative online as it is in stores. For example, Burlington Coat Factory shuttered online operations right before the pandemic. Ecommerce operations—when accounting for the cost of merchandising, processing, shipping and returns—were too high of a cost to continue investing in, CEO Michael O’Sullivan said at the time.
But some discount retailers are thriving. Discount mass merchant Five Below (No. 660), which launched ecommerce operations in 2016, was the second-fastest grower among off-price sellers. Big Lots, the fastest grower, is also among the top discount retailers, ranked 223 in the Top 1000 and second only to Dollar Tree Inc. (No. 197) among the off-price sellers.
Both Big Lots and Five Below offer a small curated selection of items to online shoppers compared with their store inventory, with a focus on items more suitable for shipping. And the pandemic seems to have pulled discount retailers out of a growth slump, with a pre-pandemic growth high of 39.0% in 2016, compared with just 18.4% growth in 2019.