Macy’s Inc. announced Thursday that it would be closing 100 stores across the U.S. as it moves to keep up with the rapidly changing retail landscape.
With a renewed focus on better-performing brick-and-mortar locations as well as online shopping and mobile apps, Macy’s is clearly trying to position itself to better cope with the dominance of web retailers such as Amazon.
“We operate in a fast-changing world, and our company is moving forward decisively,” Terry J. Lundgren, Macy’s, Inc. chairman and CEO, said in a news release. “This involves doing things differently and making tough decisions as we position ourselves to serve customers who have high expectations.”
Macy’s says its investments in remaining stores and digital properties will take a range of forms. It plans to infuse “new technology” and create “new in-store events and experiences,” without giving specifics. The 100 stores slated to close are out of a current portfolio of 728 Macy’s stores, including 675 full-line locations. Which locations will be impacted has not been determined yet.
The company says its online business has grown at a compounded double-digit rate in each of the past 15 years and it plans to invest in its sites and apps through improvement in natural language search, faster page loading and simpler procedures for placing and fulfilling orders. The “Buy Online Pickup in Store” option, introduced in 2013, is being refined to improve speed and convenience, according to the news release.
Macy’s says the sales volume loss from the 100 stores is expected to be $1 billion, which it plans to offset through “expense savings” beyond the shuttering of the locations. It does not disclose how many employees might lose their jobs.
For the year to date, Macy’s sales totaled $11.637 billion, down 5.7 percent from total sales of $12.336 billion in the first half of 2015, it reported in another release on Thursday.
Seattle-based Nordstrom has struggled in its own efforts to keep up with the rise of Amazon, as it re-examined its tech strategy in May and announced plans to create a more “seamless experience across stores and online.” The company cut 120 jobs on its tech team in March before announcing a month later that as many as 400 “corporate center” jobs would be slashed.
Meanwhile, retail giant Walmart this week spent $3.3 billion to scoop up the ambitious e-commerce startup Jet.com to do what it can to take on Amazon.
Walmart and Jet said the acquisition “will infuse Walmart with fresh ideas and expertise, as well as an attractive brand with proven appeal, especially with Millennials, the first generation of true digital natives.”
Sanjay Parthasarthy, CEO of the Seattle-based startup Indix, developers of a platform that offers its clients information about millions of online products, thinks Macy’s is taking the wrong approach.
“If Macy’s is closing 100 stores to focus only on omnichannel, it won’t work,” Parthasarthy said. “Omnichannel was a strategy retailers used 15 years ago, but the focus now should be on infinite channels — in store, web, mobile, social, bots, etc. While having a brick-and-mortar presence isn’t a bad thing (Apple does in-person extremely well), it’s critical to know when and how in-person matters.
“Macy’s biggest competition isn’t Dillard’s, Sears or JCPenney. It’s tech-driven, customer experience companies like Amazon, eBates, Pinterest, Facebook and Google. Successful commerce companies look at brick and mortar as a targeted part of a larger strategy and embrace all types of technology to provide the best experience for customers.”