Digital Transformation

Proposal: TJX Companies

Team 1: Date:
Valerie Kuhn 7 March 2024
Brayden Gove
Lauren Murray Instructor:
Mollie Puffett Professor Gagne
Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Current Business Operations and Opportunity................................................................................5
Proposal and Future Business Operations........................................................................................6
Overview......................................................................................................................................6
Technology...................................................................................................................................6
Mobile App..................................................................................................................................7
Projected Impact...........................................................................................................................8
Risks and Mitigation......................................................................................................................10
Next Steps......................................................................................................................................11
References......................................................................................................................................14
Executive Summary
The purpose of this report is to present a comprehensive proposal aimed at increasing TJX's
business operations through digital transformation. By utilizing innovative technologies such as
artificial intelligence (AI), FinTech, Internet of Things (IoT), and extended reality (XR), TJX can
enhance the customer experience, expand the overall company’s market reach, and drive
projected long-term financial growth.

The report itself delves into several technological solutions tailored to address key points within
TJX's operations. These solutions include implementing AI chatbots for customer support,
integrating digital wallet options like AfterPay, use of IoT for seamless checkout experiences,
incorporating AR into the mobile app for enhanced visualization, and rebuilding the mobile app
for improved consistency and accessibility.

The proposed digital transformation is projected to drive major impacts for TJX, including
increased revenue, improved customer satisfaction, and enhanced operational efficiency. A
Tableau dashboard attached below shows these trends as promising and fruitful.

Various identified risks discussed in the proposal include data security concerns, AI chatbot
reliability issues, exploitation of new technologies, financial risks, biases in AI, and integration
challenges. Mitigation strategies involve engaging third-party security experts, ensuring AI
chatbot accuracy, implementing robust fraud prevention measures, and providing comprehensive
training for employees.
Key next steps include hiring a reputable digital security firm, refining AI chatbot capabilities,
piloting the "Just Walk Out" technology, negotiating favorable terms for AfterPay integration,
collaborating with software developers for app redesign, and conducting pilot store renovations.
Employee training and change management are prioritized to ensure successful implementation
and adoption.
Overall, the proposed digital transformation initiative presents a strategic roadmap for TJX to
modernize its operations, enhance customer experiences, and drive sustainable growth in the
dynamic retail landscape.
Introduction
Description
TJX Companies consist of TJ Maxx, Marshalls, HomeGoods, Sierra, and tjmaxx.com,
marshalls.com, and sierra.com in the US alone. TJX is combined with TJX Canada and also
owns Winners and HomeSense. It is combined with TJX International, which consists of T.K.
Maxx in the U.K., Ireland, Germany, Poland, Austria, the Netherlands, and Australia, as well as
HomeSense in the U.K. and Ireland, tkmaxx.com, tkmaxx.de, and tkmaxx.at in Europe.
However, for the purpose of this proposal, our consulting team has decided to narrow our scope
to solely US stores before implementing any global changes (2022 Annual Report).
The company’s mission statement is to deliver great value to its customers every day, and TJX
can accomplish this by offering a rapidly changing assortment of merchandise at better prices
than regular retailers daily (2022 Annual Report).
Industry
The TJX Companies, Inc., the leading off-price retailer of apparel and home fashions in the U.S.
and worldwide, was ranked 87th in the 2022 Fortune 500 company listings. Beyond its
successful brick-and-mortar businesses, TJX Companies sees opportunity and growth to grow its
customer base among their six current e-commerce sites. The retail industry for apparel and
home fashion is highly competitive, with numerous factors influencing customers' choices. TJX
Companies compete based on various elements including brand recognition, fashion trends,
pricing, quality, and product selection (Success Factors 2023).
Background
TJX is the parent company of a portfolio of off-price department stores. Founded in 1987 as a
subsidiary company under Zayre Corporation, TJX has since expanded to over four thousand
department stores worldwide. Headquartered in Framingham, Massachusetts, TJX historically
sets itself on the Forbes 500 largest companies based on revenue. Under CEO Carol Meyrowitz,
TJX has almost doubled its revenue since her takeover in 2007 (Forbes).
Financial Information
Financial statements do not appear for a single store (EX: TJMaxx) but appear only for the
entirety of TJX Companies, which is beneficial for plans to continue to interconnect the
businesses in this proposal for more fluidity. In the 2023 fiscal year, TJX Companies generated
$4.1 billion in operating cash flow driven by a record net income of $5.5 billion. TJX Companies
was able to return $3.6 billion to shareholders through its buyback and dividends program, the
most ever returned in the company’s history. Overall, the financial statements appear strong as
TJX moves into this new year with significant cash under its belt to take on our digital
transformation proposal (Success Factors 2023).
Current Business Operations and Opportunity
Customer Service:
TJX offers many options pertaining to customer support: from calling their customer support line
to leaving an inquiry message for a follow-up response. There are different tools online that offer
support for returns, gift card balances, specific store information, and so much more. Where
some of TJX’s competitors have an advantage is many of them have transformed the customer
support operation into a user-friendly system typically operated by a chatbot. In-person customer
support is almost entirely traditional in the sense that a live customer support representative can
aid with issues mostly pertaining to in-store purchases and returns.
Payment Strategies:
TJX Companies strategically renovate and upgrade its stores across its retail banners to enhance
customers’ shopping experience and help drive sales. Although TJX offers a self-service format,
it trains its store associates to provide friendly and helpful customer service in checkout and
seeks to staff all stores to deliver a positive shopping experience.
Payment Methods:
TJX typically offers customer-friendly payment and return policies. It accepts a variety of
payment methods including cash, credit cards, and debit cards as well as offering TJX-branded
credit cards in the U.S. through a bank, but the company does not own the customer receivables.
Cardholders receive 5% back in rewards when making purchases at T.J.Maxx, Marshalls,
HomeGoods, Sierra, and Homesense stores or their websites.
Mobile App:
Currently, there is no singular app that includes the variety of stores associated with TJX
Companies. The apps in motion operate for TJ Maxx, HomeGoods, Marshalls, and Sierra.
However, none of these apps boast an overall rating of over three stars, making it apparent that
TJX must take action to improve the company’s online presence. Many reviews paint a picture of
an app that is never fully functional across the board (whether that be TJ Maxx, Marshalls, etc.)
and an app that contains basic problems with redeeming points and the rewards programs.
Proposal and Future Business Operations
Overview
Our proposal’s goal is to benefit TJX by allowing it to extend its reach to new markets, both in-
person and online, so that business operations can become more efficient and effortless. These
changes, if implemented correctly, will allow for a digital transformation that will augment
overall brand perception among new target audiences and exponentially increase financial
growth in the long term.
Technology
Artificial Intelligence Chatbot:
Initial research into TJX led our team to discover that customer support capabilities are
extremely lacking. From the app malfunctioning to hardships in handling specific issues, TJX
needs more concentration centered on an AI chat assistant that can aid in navigating and triaging
specific requests for support. This chatbot can address the reputation of bad customer support
online and draw more customers into the digital marketplace (Kazmi 2023).
FinTech: Digital Wallet
TJX Companies could open merchandise to a wider demographic market if the company
included an online payment option on a multi-installation payment plan, such as AfterPay. Thus,
those on a paycheck-by-paycheck budget are still able to afford the larger items that some TJX
stores offer, such as furniture or large decor. To ensure responsible payments, we propose to
include AfterPay for online orders of more than the base price of $100 (Stalder 2021).
Internet of Things and Generative AI “Just Walk Out” Payment:
Proposals for a variety of IoT capabilities integrated into the customer experience can easily
reestablish the identity for department stores as convenience. Examples of this technology could
include sensors that connect the customers’ digital wallet to their TJX account which recognizes
tangible items in their shopping cart so that having to wait in line at a checkout is replaced with
simply walking out of the store. Enhanced cameras would assist in verifying the items purchased
when walking out while prioritizing the customer experience during the transaction. Back-end
information from the “just walk out” method can also track inventory, customer preferences, and
spending using deep learning tools (Amazon Staff 2023).
Extended Reality Incorporation within Mobile App:
Implementing virtual reality and augmented reality technologies into the mobile app and website
can revolutionize the shopping experience for customers, particularly when it comes to furniture
and home decor purchases. By leveraging these technologies, customers will have the ability to
visualize how a piece of furniture or home decor item would look in their own living spaces
before making a purchase decision. AR technology can integrate the items into the customer's
real-world environment through their smartphone or computer camera. Customers can point their
device at the desired location in their home, and the app will overlay the digital representation of
the product, allowing them to visualize how it would look and fit in their space (Arm Editorial
Team 2023).
Mobile App
The primary objective in rebuilding TJX Companies' mobile app is to increase its consistency
across all of its businesses. As a team, we need to provide an opportunity for all the companies,
which have distinct websites and apps, to come together and let customers know that they are
connected through TJX. To provide a single location to shop at each of the TJX companies, we
decided to develop a new app that integrated each of them.
App Pages: Designed on Wix.com
Home Page: Description: Stores Page: Description:
This page shows all This page of the app
the companies owned shows more in depth
by TJX and where the the businesses owned
user can click to view by TJX. The user is
the social media able to press on any
platforms used by of the stores to see
them. Users can also the locations closest
see the biggest sales to them and their
across TJX right now. hours of operation.
The customers and This can benefit the
company can benefit company by
from easy access to customers having
each branch of TJX easy access to store
all in the same place. information.

Rewards Page:
 Description: Shop Page: Description:
This page shows the The shop page shows
user’s personal TJX items available at
rewards and prompts each TJX store. The
the user to sign in or user can click on an
join the rewards at item or tap View All
the top of the page. to see everything
Then, the user has the available at each
option to register for store. This screen can
the rewards help the company
program by stay connected
completing the form. through each store
This can benefit the and make it easier for
company by raising customers to shop at
awareness about the multiple stores.
rewards program.

Settings Page: Description: Profile Page: Description:

In the Settings page, This page of the app
the user can tap on shows the user’s
My Profile to view personal profile
their orders and where they can sign
personal information. into their account and
They can also utilize view purchases. They
the AI Chatbot and can also choose to
VR Room Design. apply for the TJX
These can be Rewards Credit Card
beneficial for the and see a short
company by description of the
improving customer benefits. This can aid
satisfaction. the company by
promoting the
rewards program.
Projected Impact

The Stock Prices graph shows the effects a digital transformation could have on TJX
Companies. After a digital transformation, it is estimated for companies like TJX to have a stock
price growth rate of 29.83% per year which was calculated at 2.48% per month. This graph
shows the next three years of the projected stock price growth along with the past 3 years.
The Net Sales graph shows how the digital transformation could increase TJX Companies
Net Sales Year to Year until 2027. It shows the past three years of Net Sales and the projected
increase in net sales for the next three years. After a digital transformation a company is
expected to grow an average of 20.8% after 8 years. This is shown in the graph by a 2.6%
increase per year.
The Gross Profit and Revenue graph shows how the TJX Companies revenue and gross
profit can continue to grow year after year. For the year ending January 31st 2024, TJX
Companies gross profit was $4.883 Billion which was an increase of 28.87%. After a digital
transformation it is estimated for a business to increase revenue by 23.9% in 6 years. This was
expressed as a 3.98% increase per year. For TJX Companies there is a 6.5% estimated increase
in gross profit percentage per year which can continue to grow with the increase in revenue, net
income, and stock prices after the digital transformation.
Risks and Mitigation
Initial risks associated with this proposal primarily include security concerns revolving around
the increase in customer data used to enhance the customer experience. With this exponential
increase in customer data, the risk of confidential information being leaked by hackers also
increases. To mitigate this, our consultation team recommends hiring a highly reputable third-
party digital security company to oversee the overwhelming collection of customer data to
safeguard their information.
Another notorious risk is the introduction of AI chatbot customer assistance, which without
oversight can be deemed as a risk when encountering inappropriate or off-topic prompts that
could negatively affect the reputation of the company. On this same note, ensuring that the AI
chatbot is outputting correct information to the customers they are aiding is crucial. Having an IT
department well-trained in the engineering of AI chatbots is crucial to mitigate these risks.
With the proposal for the “Just Walk Out” technology, it is practical to foreshadow the effects of
those who seek to take advantage of a system that is built to aid the customer experience by
finding ways to defraud the system through any unseen loopholes not considered during testing
and research. Mitigating this must involve smart cameras as a first line of defense with store
representatives as the last line of defense. Through feedback from specific stores, we can update
and continue to build a functional system that prevents theft while promoting the shopping
experience.
Implementing a new and costly system that overall could benefit the company in the long term
does come with financial risk if poorly managed and executed. To mitigate this, we recommend
formulating a thorough plan that integrates the company’s financial standing with the rate of
implementation in order to maintain a healthy pace of change for customers, employees and
business operations. Prioritizing cost-effective spending on these proposals while adapting to
overall feedback will be crucial in effectively adopting this digital transformation.
The bias of computer vision will always stem from the creator(s) of the software used to monitor
customer trends, characteristics and shopping patterns. Inadvertently, the risk for collecting this
information could be the collecting information that is both sensitive in nature and irrelevant to
the customer’s shopping experience (e.g. storing information on a customer’s face). The most
effective theory to mitigate this risk is by leaning on a well-trained IT department, utilizing AI,
that can scrub this information.
To mitigate the risk of higher default rates associated with implementing AfterPay, several
proactive steps can be taken. Initially, conducting rigorous credit checks and setting appropriate
limits for customers can assess their repayment capabilities, thereby lowering the risk of defaults.
Furthermore, ensuring clear and transparent terms and conditions for AfterPay installment plans
is crucial to ensure that customers fully comprehend their obligations, reducing the potential for
confusion or disputes. By implementing these measures, TJX can leverage the benefits of
AfterPay while minimizing the inherent risks associated with installment payments.
This digital transformation entails significant changes in business processes, technology
infrastructure, and employee roles. Without adequate change management strategies and
employee training programs, there exists a risk of resistance to change, skills gaps, and
productivity disruptions. To resolve that this transformation goes as smoothly as possible,
ensuring buy-in from employees, providing comprehensive training on new technologies, and
fostering a culture of continuous learning and adaptation are essential.
Integrating new digital systems with existing systems can pose significant challenges, including
compatibility issues, data migration errors, and disruptions to ongoing operations. A detailed
integration strategy with thorough testing protocols is essential to minimize these risks and
ensure a smooth transition. To help mitigate these risks one could conduct thorough
compatibility assessments and system testing before integrating new digital systems or engage an
experienced specialist to assist with the integration process.

Next Steps
A principal value of TJX is the safety and security of their consumer's confidential information.
In order to branch off to our remaining next steps, hiring a third-party digital security is
imperative. To implement this step for TJX, MinnTex recommends proposing a contract for hire
that is open to bid on. Once the time to bid for this contract expires, an analysis of the
capabilities and accreditation of the companies would be necessary to prevent hiring an ill-
equipped firm. From there, an executive or majority decision should be made for the bid that
qualifies and fiscally make sense.
In the process of incorporating an AI chatbot into the mobile app of TJX Companies it is
imperative to discern what the chatbot can be used for. The goal for the platform is to create
conversations that are specifically designed to walk customers through fixing common issues and
answering common questions. It is also important to identify common customer service issues
that can be solved by the chatbot. TJX will need to choose an AI chatbot platform that takes into
account flexibility, integration potential, and natural language processing skills. A smooth
interface with current systems can guarantee that the chatbot can retrieve relevant information
and offer customized support. Some of the best AI chatbot developers for a mobile app include
BotsCrew and Botsify. Prices vary greatly depending on what company is chosen with a typical
in-house chatbot development being about $10,000/month. After choosing the company TJX can
work to create the perfect AI chatbot for the new mobile app.
Our consultation for TJX on implementing the Just Walk Out technology into their stores starts
with the parameters of the system itself without introducing the consumer, yet. Having the
technology to check items consumers pick up and put down while linking their banking
information safely to an account that is not only precise with what location the consumer is at,
but also the items and quantity of those items the consumer purchases when walking out. This
starts with a specific bar code that the consumer will scan with their personal device that will
signal to TJX the consumer is now inside shopping with their device. Additionally, sensors must
be installed on the shelves that are able to read and process which products they are monitoring
and when the product is either picked up or put down. Smart Cameras can be used as a risk
mitigation when sensor error. From there, a virtual cart system would have to be developed and
synchronized with all the TJX stores implementing the JWO method of shopping and through the
application the consumer used to scan mentioned earlier. Finally, a sensor at all trafficked exits
to indicate when the consumer has exited the store with their device. Once this process has been
complete a charge can be billed to the consumer from their stored banking information and an
email notification containing their receipt.
As part of our digital transformation strategy for TJX Companies, negotiating AfterPay terms
involves a collaborative effort to establish favorable transaction fees while ensuring a seamless
payment process for TJX customers. The negotiation focuses on guaranteeing competitive
transaction fees while ensuring one-quarter of the full purchase price is received at the time of
purchase, with the remainder being distributed over subsequent installments. Alongside the
processing fee of 6% plus $0.30 per transaction, considerations include the merchant discount
rate (MDR) ranging from 3% to 7% according to AfterPay, impacting the overall cost to TJX.
This negotiation process includes implementing clear payment terms such as the upfront one-
quarter payment and biweekly installments for TJX customers and defining consequences for
missed payments, including account freezes and late fees. Additionally, understanding AfterPay's
$15 chargeback fee per occurrence is crucial, with TJX potentially needing evidence to support
its claim in such instances. Once terms are finalized, integration into TJX's online payment
options occurs, with thorough testing and communication of AfterPay's availability to customers.
This strategic approach will not only provide added flexibility for customers but also contribute
to driving sales growth and enhancing TJX’s competitive edge in the digital marketplace
(Finance Magnates, 2023).

When developing a new mobile app for TJX companies it would be strategic to work with a
software developer. A developer could help bring technical expertise to the table and could
ensure the app is built efficiently and effectively. This commitment to the reliability of the
mobile app will help ensure reliability and a user-friendly app. A developer would also be able to
provide ongoing support and maintenance after the launch of the app to make sure the app
remains up to date and meets the company's needs. To start working with a software developer,
TJX should first make a budget plan. This could either come out of existing funds for the digital
transformation or additional funding. App developer hourly rates typically hover around
$50/hour, with basic app developments from $16,000-$32,000 and more complex apps running
from $32,000-$48,000. Some of the top software development companies include Mercury
Development and Goji Labs. Once a budget and company are chosen, TJX can work with the
developer to create a new mobile app.

Once a blueprint for a new store is created with the digital transformation technologies in mind,
TJX should select 10 of the highest earning stores and renovate those primarily, tracking
satisfaction, theft, and revenue rates, as well as any other pertinent KPIs. Thus, TJX will be able
to view how well these new upgrades are being accepted within the stores’ communities and can
therefore create a business plan for how quickly to implement the change accordingly across the
rest of the nation.

With the implementation of a new app and new technology across the store, it is practical to
imagine that some workers may become overwhelmed with the wide array of changes if not
trained correctly. Therefore, it should be a priority in the implementation process to create a new
training manual for how to operate each respective technology and how to reduce risks when
things go wrong. TJX Companies’ business model is one that appreciates and relies on real-life
customer service, so this implementation plan aims to highlight that aspect by bridging the gap
between the technology and its operators. If employees are confident in their knowledge of the
online tools that they utilize, the store they work for will reap the benefits.
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Division of Work:
 Executive Summary:
o All
 Introduction:
o Description – VK
o Industry – BG
o Background – BG
o Financial Information – VK
 Current Business Operations and Opportunities
o Customer Service - LM
o Payment Strategies - BG
o Payment Methods – LM
o Mobile App – VK
 Proposal and Future Business Operations
o Overview – VK
o Technologies:
 AI Chatbot – BG
 FinTech – LM
 IoT and Generative AI – BG
 Extended Reality – VK
o Mobile App – MP
o Projected Impact – MP
 Risks and Mitigation
o All
 Next Steps
o All