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Macy’s Online Sales Expected to Grow in 2Q15

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Recent initiatives

On August 3, Macy’s (M) announced that it is rolling out same-day delivery of products purchased on its macys.com and bloomingdales.com websites, as well as on the company’s mobile-enabled websites, to nine additional markets:

  • Atlanta, Georgia
  • Boston, Massachusetts
  • Dallas, Texas
  • Honolulu, Hawaii
  • Las Vegas, Nevada
  • Miami and Ft. Lauderdale, Florida
  • New York City and Western Long Island, New York
  • Orange County, California
  • Philadelphia, Pennsylvania

Macy’s previously introduced same-day delivery in eight markets in fall 2014. Aside from same-day delivery, Macy’s is also implementing several other strategies to strengthen its online sales, including merchandise expansion and its buy online, pick up in-store facility. In June 2015, Macy’s partnered with zTailors to provide customized alterations on online purchases.

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Digital IQ Index

Macy’s ranks second and Bloomingdale’s ranks sixth in the Digital IQ Index, which is compiled by benchmarking and education firm L2. Nordstrom (JWN) is the most digital-savvy department store based on this index. Department stores account for 5.7% of the portfolio holdings of the SPDR S&P Retail ETF (XRT). Macy’s and Nordstrom together constitute 2% of XRT.

Online sales vital

Sales through online channels are growing rapidly across all department stores. Online sales growth is helping in reducing the impact of sluggish sales in Macy’s (M) brick-and-mortar stores. Macy’s, Kohl’s (KSS), and JCPenney (JCP) do not provide separate sales numbers for online sales, as these companies follow an omnichannel approach. Under this approach, the companies implement strategies that benefit both stores and online channels.

Upscale department store Nordstrom reported a 19.7% growth in sales from Nordstrom.com and an impressive 50% rise in the sales from its Nordstromrack.com and HauteLook businesses in 1Q15.

Aside from the strategies discussed at the beginning of this article, Macy’s is also investing in enhancing the online capabilities of its Bluemercury beauty business. Macy’s online sales also help serve international consumers, as the company ships its online orders to 100 countries.

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