Closeout retailer nixes shopping by clicks
July marked the end of discount retailer Tuesday Morning’s e-commerce site. Online sales totaled just one percent of the store’s overall sales, and were not seen as a priority amidst the company’s current turnaround efforts. Interim CEO Michael Rouleau, former CEO of Michaels Stores, told investors in April that Tuesday Morning would focus on 12 short-term priorities in the next six months, including improvements and clean-up efforts to physical stores, creating a company identity, and improving cash management.
Tuesday Morning’s Facebook page and website told shoppers that its web sales would be shut down to “return to its roots.” The discount retailer asked shoppers to “keep an open mind” about the move and not be too specific in their merchandise searches, describing closeout shopping as a “treasure hunt.” This move comes as a big surprise to many shoppers, as online shopping continues to grow year-in and year-out. One woman in particular held Tuesday Morning’s latest endeavor in disregard, according to this article. “Brick-and-mortar is a dinosaur,” said Amy Goldman, a 38-year-old Dallas resident who shopped Tuesday Morning’s online store for household items. She viewed the decision as a “very backward decision” in a digital world. Furthering her case, she added, “I was working 60-70 hour weeks; I didn’t have time to walk through their stores and then not find what I was looking for.”
The radical move by Tuesday Morning is even more shocking when realizing how other brick-and-mortar retailers are approaching e-commerce. Stores like Best Buy, Target, and Walmart are spending billions of dollars to improve their online stores, and building new distribution centers throughout the country. But, closeout retailers have been traditionally slow to embrace e-commerce. TJ Maxx dipped its toes into web sales in 2005, but shut down the online store after just a year, citing inventory management as the key problem in its web sales. Just this year, TJ Maxx made another attempt in e-commerce after acquiring online retailer Sierra Trading Post and its online sales and inventory management software, in December.
Despite reporting $812 million in revenue for 2012, Tuesday Morning does not see itself as an online retailer. Nearly a year ago, Becker Drapkin Management LP reaped a five percent stake in the company. Gaining control of four board seats, the management group fired longtime CEO Kathleen Mason, who praised the web store as a money making asset to the company. Mason is suing the company, claiming she was let go after informing the board she had cancer. Tuesday Morning disagrees with the allegation.
Abandoning e-commerce may be the first step in sabotaging future sales growth for Tuesday Morning. Worldwide online sales, accounting for $224.3 billion dollars in 2012, continue to grow at a staggering rate. It is also important to note, according to U.S. census data, online sales account for nearly five percent of all consumer goods sales, and analysts project that number will double in the next five years. Brick-and-mortar sales are growing, however, census data shows the growth is much slower, at just five percent annually.