Macy’s Stops Reporting Online Stats, Blames Too Much Channel BlurWritten by Evan Schuman
Arguing that “the line between stores and the Internet is blurring so much,” Macy’s (NYSE:M) has become the first major publicly held retailer to stop reporting its E-Commerce stats. Setting aside the fact that Macy’s would always see less disclosure—especially to rivals—as a nice thing, the move signals an important step for omni-channel/merged-channel retailing.
The day when in-store, mobile and online are so intermixed that they can’t be meaningfully broken out is the same day true merged-channel retailing has happened. For Macy’s, that day happened on Tuesday (Feb. 26).
“Candidly, it’s getting so hard to know what’s a store sale and what’s a mobile sale and what’s Internet. It’s getting harder to figure out the lines between them,” Macy’s CFO Karen Hoguet told analysts on Tuesday. When asked for some E-Commerce projections, she said: “I really can’t give you that number. I mean, I don’t know it. But clearly, the growth is continuing very aggressively. But sometimes, it’s being bought on a mobile device sitting in a store. So I’m not sure how to define that.”
Macy’s itself is doing what it can to help blur those distinctions yet more, as the chain expands its already announced plans to use its stores as E-Commerce distribution centers. The concept is that the inventory for certain stores, considered fulfillment stores, could be leveraged to fulfill any online orders. On Tuesday, Macy’s said it would sharply increase the number of stores participating in that program.
“We currently have 292 stores enabled to fulfill goods, up from only 23 a year ago. And by the fall of this year, we expect to have a total of approximately 500 stores for filling orders, which represents about 85 percent of our business,” the CFO said, adding that such a figure is “a significant number and we may increase it from there. In the future, we expect these fulfillment locations will be key to offering faster and even same-day delivery and also will enable the customer to buy online and pick up in-store.”
A key—and arguably the key—part of this plan involves pricing optimization. The problem is the very nature of the fast-paced apparel segment, where not only are styles short-lived, but demand varies sharply between various geographies. That forces products to be steeply discounted quickly.
The game is keeping up margin by finding any way possible to delay those markdowns for as long as possible. But that idea, which seemed straightforward enough on conference room whiteboards, proved to be much more challenging when deployed. “In terms of price optimization, I think that’s proven to be a lot harder than we had expected it to be, and we’re still working on how to optimize pricing across the company. But that has not been as easy to do as we had hoped early on,” Hoguet said. “We’ve built algorithms to help us determine from where to pull the inventory, and we are learning more each day about how we need to refine these formulas.”