If imitation is the sincerest form of flattery, then TJX Companies (TJX 0.32%) is probably smiling at the compliment Macy's (M -2.35%) is paying. The department store chain has already said it views its off-price rival, not Amazon, as its biggest threat. Macy's now intends on copying what TJX has achieved with T.J. Maxx and Marshall's by investing in its own off-price Backstage store.

But simply going through the motions won't guarantee success, as any number of retailers have tried to emulate TJX's off-price magic. The demise of Filene's Basement and Loehmann's, both of which were resurrected as online-only retailers, shows that simply plastering a discount price tag on merchandise isn't always a winning formula. And Macy's is taking on its rival in unique ways that will make it even more of a challenge.

Friends shopping at a mall

Image source: Getty Images.

A special kind of company

Few companies of any kind, let alone many retailers, have enjoyed the strategic and financial brilliance exhibited by TJX, a combination that over the past 25 years has allowed its stock to soar by more than 7,300%. Through good and bad times -- and it's had one or two of the latter itself -- the off-price retail leader has outlived and survived changing fashion and consumer tastes as well as emerging trends that run pretty similar to its own model.

TJX Chart

Data by YCharts.

One of TJX Companies' primary strategies for success is rapid in-store inventory turnover on a vast array of products. Morningstar data shows the company turns over its inventory in under 57 days, compared with more than 58 days at industry peer Ross Stores and over 127 days at Macy's. By offering everyday low pricing on its merchandise that is some 20% to 60% below regular department store prices, the discount chain creates a treasure hunt experience that draws in shoppers.

T.J. Maxx and Marshall's aren't selling closeout goods but rather today's fashions, just like fast fashion retailers H&M, Century 21, and Zara, which take styles and trends right off the runways and put them onto store racks in a matter of weeks, not months. Because Backstage is doing things differently, this could be one area where Macy's will experience a problem.

Behind the scenes at Backstage

Two years ago, Macy's launched the Backstage brand that it built from the ground up to feature mostly name-brand merchandise similar to what it sells in its namesake stores, in addition to private-label goods that are designed specifically for the discount chain. That separated it from the outlet stores operated by Nordstrom, Saks, and even its own Bloomingdales that mostly sell items unique to them and put it more in line with T.J. Maxx, Marshall's, and Ross.

Yet that means it risks cannibalizing sales at Macy's, similar to what occurred at handbag maker Coach, which saw sales at its full-price stores plunge as shoppers simply waited for them to end up at outlet locations. It eventually had to put the brakes on the outlet concept, and only now, years later, has it been able to record rising sales.

Also, it seemed as though Macy's would follow the failed path blazed by Filene's and Loehmann's of simply opening up more Backstage stores, but last year, it started opening up store-in-store boutiques under the discount brand. Now, the retailer's new CEO wants to accelerate that strategy and triple the number of Backstage boutiques operating inside Macy's, adding as many as 30 such departments this year to the existing 15. CNBC quotes CEO Jeff Gennette as saying, "We hope that by the end of 2017, what we're going to exit with is a viable off-price concept that is on-mall, not off-mall like our ferocious competitors."

A Macy's Backstage boutique.

Image source: Macy's Backstage.

Taking a different path

The idea is to bring the off-price shopper into the mall, where he or she will discover the broader appeal of the full-price Macy's merchandise. That's somewhat backwards to how most retailers operate, in that they typically have their core customers discover their off-price brand.

That's something TJX doesn't have to worry about, since it's all discount, and Macy's will have the added trouble of trying to wean its customers off discounts once they grow accustomed to the promotions.

This all has the feel of when fast fashion was the go-to trend a couple of years ago, when every retailer joined the fray. Gap converted its Hollister chain to a fast fashion-like outlet and then began implementing the trend at its other concepts, only to find sales tumbled as a result. Department stores also hopped on, with J.C. Penney launching its Belle + Skye line and Sears Holdings -- Sears! -- launching Now & Here.

TJX Companies has made an art of off-price retailing that has seen plenty of imitators fall by the wayside. Macy's has a very high hurdle to clear if it ever hopes to succeed, and it won't be a very flattering look if it fails.