Will A Customer Service Focus Give TJX The Advantage Over Ross Stores?

UBS analyst Michael Binetti took a look at the off-price channel in a recent note to investors. Binetti examined the impact of improved customer service on off-channel store performance by looking at two different names in the space - with opposing views on the importance of a focus on improving the customer experience.

TJX Companies, Inc. TJX shared during its first quarter conference call a focus on customer service, while Ross Stores, Inc. ROST indicated recently a belief that strong brands and low prices are all that’s necessary to keep store traffic high.

The analyst acknowledges that Ross Stores’ comp sales have remained strong, despite lagging in customer ratings of late. However, Binetti points out that TJX has been consistently “out-comp”-ing peers, while simultaneously improving its ratings with customers.

According to Binetti, in a space with increasing competition and similar bargain pricing, customer service may provide the ultimate competitive sales advantage.