Macys is to shutter stores as consumer shopping patterns continue to change

Macy's is to shutter stores as consumer shopping patterns continue to change

US department store retailer Macy’s Inc is to close 35 to 40 underperforming stores early next year as it ramps up its omnichannel focus.

The stores, which are due to close by early 2016, represent around 1% of the total sales of $28.11bn booked by Macy’s in its last financial year – or around 5% of its total store count. The retailer suggests that the stores’ combined annual sales volume, net of sales expected to be retained in nearby stores and online, is expected to be roughly $300m.

“Physical stores remain absolutely vital to our omnichannel strategy, which provides local touchpoints and tailored merchandise assortments for shoppers in nearly every major market,” explains Terry Lundgren, Macy’s chairman and chief executive officer.

However, he also suggests that as new shopping centres are opened, 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 digital offering includes apps and mobile-enhanced websites that integrate with its stores. The role of its stores has also evolved to “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,” Lundgren adds.

“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.”

Macy’s Inc operates 770 Macy’s stores and, in the last five years, 52 Macy’s stores have been closed and 12 new Macy’s stores have been opened.

During its most recent financial year to 31 January, net income increased 2.7% to $1.53bn, and comparable store sales climbed 1.4%.

At the time, Stifel analyst Richard Jaffe said: “We believe Macy’s continued focus on improving the customer shopping experience through both ease of shopping and through a better product assortment, will continue to help the company gain share and drive sales profitably.”