Macy’s recent Q3 2017 sales figures were less than desirable. Retail experts warn that retailers who aren’t doing enough to grow their businesses as competition from online heats up, namely Amazon, will lose out.
It’s likely that every American child over the age of three has heard of Macy’s. It could be said that the US department chain is famous for being famous.
Yet despite all this fame, Macy’s third quarter earnings report was “pretty ugly” according to retail consultant, Jan Kiffen, who spoke to CBNC recently following the retailer’s sales slump of 4.6 percent, comparable to the same time last year. Shares tumbled 10 percent following the news.
US department chains Khol’s and Dillards, also reported sales figures which represents the current tough retail landscape, one where everyone is doing it hard, as e-commerce giant Amazon presents sturdy competition for anyone in the retail market.
Looking ahead, Kiffen told CBNC that those retailers who have full-line department stores, including Macy’s, Nordstrom and J.C. Penney’s, need to rethink its real estate portfolios and shrink them down in order to win more sales online.
Macy’s needs to shut down at least 100 more stores, and strategise on being a more efficient size, if it wants to climb back up, according to Kiffen.
“You just can’t have 6, 7, 800 stores right now in America if you’re a full-line department store retailer.” Instead, he says these retailers should focus on being a size where they can be “more efficient and more effective,” and this is in relation to digital sales being a vital component of retail revenue these days.
Kiffen says that Amazon represents stiff completion for retailers, and companies like Khlol’s, J.C Penney’s and Macy’s are going to see lower online sales returns “for a very long time.”
Earlier this year, Macy’s announced it will close 100 stores following disappointing holiday sales, in order to tunaround its performance and reverse the downturn of in-store sales.
Macy’s says it will save US $500 million a year as a result of the strategic move, starting in 2017, and will invest a further US $250 million in its digital arm to boost its e-commerce operations.