Macy's to cull stores

BY Australian Retailers Association
10 September 2015

Macys, macy'sUS department store, Macy's, will close 35 to 40 underperforming stores by early 2016 in what is says is a bid to optimise its approach to omni-channel.

The closures represent around one percent of total Macy sales.

“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 Terry J. Lundgren, Macy’s chairman and CEO.

“As new shopping centres are opened, however, many customers change their shopping habits and often the sales volume of a store gets divided among the new and nearby, existing centres. Each year, we prune some stores that are our weakest performers so that we can concentrate our resources on the best locations and maintain a strong physical presence. At the same time, we open a small number of new stores to fill gaps in our market coverage or where we have outstanding real estate opportunities.

“Macy’s is already one of the largest and fastest-growing digital platforms in the country. Our fast-growing digital offering, including robust apps and mobile-enhanced websites, integrate with our stores to provide an unparalleled omnichannel shopping experience for customers wherever, whenever and however they prefer to shop. As a result, we are able to attract new customers and grow sales profitably,” Mr Lundgren said.

“Macy’s stores today are places to shop, relax and be entertained – much like they have for generations. Moreover, all Macy’s stores today can fulfill merchandise orders direct to consumers’ homes, serve as convenient locations for customer pick up of merchandise bought online, and are the origination point for same day delivery in 17 local markets.

“While making the decision to close stores is difficult, we know it is necessary for us to remain competitive as customer shopping patterns continue to change.”

The locations of the 35 to 40 stores will be announced at a later date, once the company completes analysis and makes final decisions. The stores’ annual sales volume, net of sales expected to be retained in nearby stores and online, is expected to be roughly US$300 million.

Macy’s currently has 770 Macy’s stores. Over the past five years, 52 Macy’s stores have been closed and 12 new Macy’s stores have been opened.

In other news, the company has signed an agreement with US technology retailer, Best Buy, to test licensed consumer electronics departments in 10 Macy’s stores, set to open in early November 2015.

The concessions will span around 300sqft and be staffed by Best Buy employees. Products will include Samsung smartphones, tablets, and smart watches, as well as audio devices  and accessories from Samsung and other brands.

Macy’s president, Jeff Gennette, said he was delighted that consumer electronics will return to selected Macy’s stores through the test.

"Our customers have expressed interest in electronics for self purchase and gift giving, and this collaboration with Best Bu yreinforces Macy’s as a shopping destination throughout the year for the products that are most in demand,” said Mr Gennette.

“We will test and learn, along with Best Buy, through the holidays and into 2016 before deciding on next steps.”"

Macy’s Inc has annual  sales of US$28.1 billion, and including the Macy's brand operates 885 stores in 45 US states, under the names of Bloomingdale’s, Bloomingdale’s Outlet and Bluemercury, as well as the macys.com, bloomingdales.com and bluemercury.com websites. Bloomingdale’s in Dubai is operated by Al Tayer Group under a license agreement.

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Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $310 billion sector, which employs more than 1.2 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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