Macy's Inc. risks losing to online giants

In the wake of six straight quarters of falling sales, Macy’s Inc. has announced plans to close 100 brick and mortar stores as it faces fierce competition from online retailers. The most recent closures make up only 14 percent of the department store giant’s total stores. Macy’s, however, plans to close most of its other stores by early 2017.

Macy’s focus on its internet storefront cannot come soon enough. Online retailers, such as Amazon.com Inc., continue to attract crowds of consumers with programs like Amazon Prime, which offers free two-day shipping as well as a multitude of other benefits in exchange for a yearly fee. Shipping an item to New York via Macys.com, on the other hand, costs $9.95 if using the standard shipping method, for which transit time takes up to six business days. The express shipping method, for which transit time takes up to two business days, costs $29.95. To Macy’s credit, in-store pickup is a feature in its online store available in certain areas. However, since Macy’s still has many stores standing, it is difficult to understand why same-day and next-day shipping options are not available in at least major metropolitan areas, such as New York City.

Amazon Prime offers unlimited photo storage, access to video and music platforms, priority access to sales and free two-day and same-day shipping for its $99 yearly fee. There is, however, still hope for Macy’s, which boasted the 15th highest revenue intake in 2014, which accumulated $28,105,000 in worldwide retail sales. That rank puts them behind several online retailers, including the Apple Store/iTunes, which accumulated $32,879,000, and Amazon.com, Inc., which accumulated $83,391,000.

As online retailers expand into niche markets, such as pantry items, grocery products and cloud storage services, Macy’s will need to find its own niche market if it wishes to stand a chance against online retail giants. Macy’s recent quarterly trends would indicate that this niche market may be found in apparel. Its apparel sales have improved as of late, while handbag, fashion jewelry and watch sales continue to be feeble.

Macy’s has announced plans to offer same-day delivery options in more U.S. markets than Amazon.com Inc., which would imply more than a million Macy’s items eventually being eligible for same-day delivery in certain metropolitan areas. If this system is not implemented quickly and priced reasonably, Macy’s risks losing even more of its millennial customer base. Time will tell whether or not Macy’s will continue to successfully do what it has done for over 150 years: supply reasonably-priced goods to middle-class consumers.

OpinionsOpinionsComment