Macy’s Gets Boost From Dot-Com Biz
There were a few reports around the holiday season noting that
chains were releasing total sales figures but not identifying the contribution
online was making to the top line. Many thought this especially puzzling
considering the marketing efforts that many were making to drive business online.
Now,
January sales figures are coming in and at least one company, Macy’s Inc.,
is shown to have benefited from its online efforts with sales of Macys.com
and Bloomingdales.com jumping by a combined 23.9 percent for the month. Total
same-store sales for Macy’s two chains were up 3.4 percent in January.
Online sales were up 26.6 percent in the fourth quarter for the two
sites, improving same-store performance by 0.7 percent during the period for
the company.
Discussion Questions: What do you take away from
the contribution that Macys.com and Bloomingdales.com are making to the
total business? Should department stores, in particular, be putting greater
emphasis on thier online strategies?
Macy’s has been very aggressive in the past year about using e-commerce to drive sales to its website as well as its stores. I received several e-mails per week about free shipping and other offers intended to drive traffic to their site, and I also found that their assortment is much broader and deeper than some of their traditional department-store competitors. So it’s not surprising that Macy’s is seeing results from its efforts…the only surprise is the number of competitors who haven’t caught up.
This could be a situation where online takes a life on its own. We all know the department store model is flawed and unless there is a huge improvement in service, selection and pricing, middle of the road brands will continue to suffer. Online shopping speaks to a different group entirely. A group that likes the Macy’s label but not the in-store experience that goes with it. So yes, they should focus on the online side of the business.
Macy’s online efforts are laudable; however, it also may be one of those plus-over-little situations that tends to happen when retailers focus even a wee bit on their online presence (those “Online sales leaped 500%!” headlines that we all got used to in the early aughts). With other retailers’ refusals to break it all down, context is missing.
When the internet came along, shoppers were given new options. Those options and behaviors have evolved. If this audience is not served, they go elsewhere–the audience is expanding. Am I missing something?
As I said a few weeks ago (and will likely say in a few weeks when it comes up again) in most situations, online sales are replacing in-store sales, so it makes little sense to talk about them “benefiting” a store–any more than we would talk about a store “benefiting” from being open on Tuesdays–as if this were some kind of add-on.
What’s needed is a clear number “we lost X% in-store, but got back Y% online”…. Without that, double (or even triple) digit gains online mean little.
I agree with many of Carol’s points.
Identifying Macy’s percentage increase over last year for the clearance-driven month of January, (one of the lowest volume months of the year), doesn’t shed a lot of insight on annual performance.
Also, Macy’s hasn’t spelled out what percent online sales represents to the total sales pie.
Although online and offline will be distinguished in retailing for a long time, the greatest successes will come from a merger of the two, and bringing the best of both to the other. It’s not a horse race, for two horses, but one in which the winning retail team has two horses pulling in tandem.
Macy’s new focus on their online channel is critical to their success as a business. They are doing a great job, but I think they still have a long way to go, though; particularly in the product selection. Especially on bloomingdales.com, the product available is significantly different from what is found in the bricks & mortar stores. I think this causes customer dissatisfaction and results in decreased sales for both channels.
They could also take advantage of the medium and improve their product categorization and display online. Lately when I walk in to a Macy’s, the environment frequently feels disheveled. The site also has that feel.
All of that said, great work making progress in what I am sure is a challenging internal environment that likely doesn’t want to invest heavily in the online channel.