Macy’s Scores Big in Online Sales

Defying the gloom and doom predicted for high-end, brick-and-mortar retailers, Macy's posted a 4.1 percent December gain in same-store sales, buttressed by a whopping 52 percent boost in online sales. Their secret weapon: e-commerce. 

 

"We have taken a number of steps to make the shopping experience online mirror the stores, and vice versa," said Jeff Kantor, chairman of Macys.com. "We want customers to be able to shop Macy's whenever, wherever and however they prefer. Reaching customers through stores, online and mobile gives us a lot of flexibility."

In a breakout move, Macy's Chief Executive Terry Lundgren shifted the 850-unit chain from its bricks-and-mortar basics to an e-tech retail engine. The Macy’s website is now serviced by 1,150 workers, and with new warehouses and 300 stores serving as e-commerce fulfillment centers, online orders are seldom out of stock. The investment in e-tech seems to be paying off. A company spokesman noted that Macy's Internet transactions exceeded $2 billion for the first time in 2012.

Macy’s 15-year-old Internet strategy has hit a few bumps in the road. "The department-store sector invested early, before a lot of the technology was developed, and built these homegrown solutions that had a hard time tying systems together," said Sucharita Mulpuru, a vice president and principal analyst of e-business at Forrester Research. "Macy's has done a really good job of recognizing those challenges and is probably one of the most advanced of the department stores as a result."

Being the country’s 800-pound gorilla in specialty-apparel has given Macy’s a decided inventory advantage. Its recent "store-to-door" strategy allows stores to act as fulfillment centers for online orders, which means stores need no longer resort to discounting at the end of the season to move product. Giving customers greater access to inventory, a new 1.3 million-square-foot distribution center was recently set up for e-commerce orders in Martinsburg, West Virginia. Macy’s currently has three such warehouses.

 

Macy’s also fully exploits the use of iPads. In the jewelry departments of several smaller stores, iPads show consumers merchandise that’s available but not in stock. In addition, their Herald Square flagship store recently unveiled a 39,000-square-foot shoe department in which iPod Touch devices double as cash registers, greatly simplifying checkouts.

"Digitally, they've crossed the chasm of the worst of it—they've figured out how to integrate their systems so the biggest expense is behind them," said Ms. Mulpuru. "Now they have to take the assets of what's remaining and replicate success."

If you’re a brick-and-mortar retail executive, you’ve got to take notice of what Macy’s and other giant retailers are doing. E commerce and the e-tech revolution that’s driving it will soon impact every retail sector. You either arm yourself with the tech-and-tools to better serve customers or you fall behind. 

 

Image courtesy of marin/FreeDigitalPhotos.net