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Wednesday, September 9, 2015
E-COMMERCE CLICK AND COLLECT WEAKNESS
Closing stores exposes a weakness of Click and Collect for E-commerce.
Macy’s is closing 40 underperforming, continuing a years-long shrinking of its fleet as growth has become more elusive.
plans to close between 35 and 40
of its namesake department stores early next year, a move that comes as
the retailer’s sales growth has stalled and many shoppers have stopped
visiting the malls that are home to its stores.
The stores that will close generate about 1% of company sales or $300
million last year, Macy’s said. But they represent about 5% of its
fleet, underscoring how awful the results at those stores must be. That
will leave the Macy’s fleet with about 730 stores, down from 810 about
five years ago. (The company also operates the upscale Bloomingdale’s
chain, which was not affected by the closings.)
The department store chain has worked in recent years to beef up its e-commerce capacity
so that stores can help it speed up online order delivery, and offer
customers services like same-day delivery in key markets or in-store
pick up of online orders. Macy’s is often ranked among retail leaders
like Nordstrom JWN0.50%
in terms of e-commerce firepower, well ahead of rivals like J.C. Penney JCP-0.95%
and Kohl’s KSS0.52%
. It now gets about $3 billion a year through digital means by some estimates.
All that has meant that Macy’s has little need for any stores that
don’t support e-commerce, or that aren’t traffic generators. On the
other hand, successful brick-and-mortar stores remain crucial to
supporting e-commerce, according to the company’s chief executive.
“Physical stores remain absolutely vital to our omnichannel strategy,
which provides local touchpoints and tailored merchandise assortments
for shoppers in nearly every major market,” said CEO Terry Lundgren in a
The move also comes as traffic continues to fall at many malls,
particularly lower-end and middle-end ones. Despite Macy’s higher end
position compared to Penney or Sears, hundreds of its stores co-anchor
weak malls with those two retailers, which have also been closing many
stores in recent years.
In its second fiscal quarter of 2015, Macy’s saw comparable sales fall 2.1%
and lowered its sales forecast, continuing a string of disappointing
results for a recently high-flying retailer. Macy’s growth strategy has
begun to pivot away from the traditional department store model to one
that includes opening a T.J Maxx-style chain of discount stores, international expansion, and acquisitions (the Bluemercury beauty store chain.)