Why Did AJ Wright Go Out of Business?

In a free-market economy, businesses rise and fall depending largely on their profitability and the condition of the consumer market. This is especially true of retail stores because they are directly consumer-driven.

Practically speaking, retail stores are often expensive to initiate and even more expensive to maintain. When a retail corporation sets out to launch a store chain, their ultimate cost will depend on whether the facility is constructed from scratch (where the corporation has to finance the construction), or they utilize an existing building (where the corporation has to pay the rent for the building and the property taxes). Understandably is a huge risk and an investment of time and resources for the corporation to make. And if the projected income – or more importantly – the projected profitability of the retail store chain is not met, the corporation can make the decision to close the store chain.

This was the case with the AJ Wright retail store chain all across the United States. AJ Wright was a store chain launched by the TJX Corporation – the same company that owns stores such as T.J. Maxx, Marshalls, and Home Goods. T.J. Maxx and Marshalls stores were highly popular with consumers. So TJX wanted to design a chain of stores that could offer consumers T.J. Maxx/Marshalls quality items at lower prices – especially for those people who, because of the bad economy at that time, could not afford to shop at T.J. Maxx and Marshalls. For as logical as this premise was, unfortunately it was not appealing to the majority of existing and potential TJX consumers, and the AJ Wright store chain went out of business as of February 2011.

The premise that birthed AJ Wright was not new. In fact there are many retail chains that have built their businesses on the same premise, and have been quite successful. But for whatever reason, out of all the stores owned by TJX Corporation, AJ Wright was the only chain that lost money. In fact, data shows that the quarterly numbers prior to the announcement of the closings, show revenue at T.J. Maxx and Marshalls as having risen 1%. Home Goods revenue rose 3%. However AJ Wright fell about 2%.

When you consider that this lack of performance likely carried over across an expanse of several years, it is clear as to why this proved to be a huge hit to the TJX Corporation. In December of 2010, TJX made the announcement that they would be eliminating all of their AJ Wright stores by the end of February 2011. Some stores would be converted to T.J. Maxx and Marshalls stores, and some would be closed outright. Over 4,000 AJ Wright jobs were eliminated. While some of the employees were left unemployed, many of them were transferred to existing T.J. Maxx, Marshalls, and Home Goods stores.