Macy’s Store Closure Announcement Supports Shift to Ecommerce
By: Jason Nyhus
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Macy’s recent announcement that it’s closing 100 stores to invest additional funding into its digital business is the latest example of how ecommerce is disrupting the retail industry.
In this bold move to de-emphasize its brick-and-mortar business, Macy’s chief executive Terry Lundgren pointed to the importance of building and maintaining a strong online channel, saying on CNBC, “We have the third largest internet company in America in the categories that we sell.” Also adding, “We are benefiting from the fast pace of online spending.”
It’s a smart move considering quarterly reports show same-store sales being flat or down, while ecommerce is often growing 25-30% a year. Not to mention the 17% gain in the company’s stock following the announcement.
The takeaway here is not that this announcement spells doom and gloom for the retail industry. Rather it’s a shift in how consumers want to interact and buy from their favorite retailers.
As the New York Times article points out, retail is far from struggling, “The great American consumer is very much alive. It’s just that people aren’t shopping like they used to, reluctant to pay full price or even leave the couch — cutting deep into the business of many top retailers.”
Edward Yruma, managing director at KeyBanc Capital Markets agrees adding, “Given the convenience of ecommerce, the consumer needs a really good reason to go to a store and park their car. It has to be exciting and have something new, because if not, why wouldn’t I sit on my couch in my pajamas and shop on my iPad?”
Every retailer needs to think seriously about their online strategy. Especially as we head into the busy holiday season when all signs point to another big year for online retail.
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