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Why Macy’s Digital Business Is a Key Growth Driver for Future Sales

Sharon Bailey

Can Macy’s Recover from Its Setback in Fiscal 2015?

(Continued from Prior Part)

Macy’s digital business

According to Terry Lundgren, Macy’s chair and CEO, the department store chain is the sixth largest Internet company in the US. In fiscal 2015 ended January 30, 2016, Macy’s online sales grew by double digits.

The company continues to pursue an omni-channel strategy that integrates the store and online businesses. Consumers are increasingly researching products on mobile and online devices. Speaking at the Bank of America Merrill Lynch Consumer and Retail Tech Conference held on March 15, Macy’s CEO reported that female consumers typically start the shopping journey by researching the product on mobile. Women are an important demographic for Macy’s and account for 75% of total consumers. After researching the product on mobile, female consumers typically look at the product at the store and purchase it either in the store or later via desktop, tablet, or mobile.

Top of the game

According to benchmarking firm L2, Macy’s is the most digital savvy department store, ranking number one in L2’s Digital IQ index for department stores. Macy’s Digital IQ score of 142 is higher than the digital IQ score of 141 for both JCPenney (JCP) and Nordstrom (JWN). Rival Kohl’s (KSS) ranks fourth in L2’s Digital IQ index for department stores. The iShares Global Consumer Discretionary ETF (RXI) has 0.4% exposure to Macy’s.

Facilities like buy-online-pickup-from-store, same-day delivery, and the option to return online purchases at physical stores are attracting more and more consumers to digital channels.

Focus on mobile channel

The double-digit growth in Macy’s online business in fiscal 2015 was due to strong mobile traffic and increased conversions, driven by attractive merchandise offerings on macys.com and bloomingdales.com. Also, the company expanded its online capacity with a fulfillment center in Tulsa, Oklahoma.

Mobile business is a key priority for Macy’s as it is the fastest growing digital channel. Macy’s sales on mobile devices more than doubled in fiscal 2015. The company aims to improve its mobile business further by making customer-facing enhancements and improvements in functionality. We’ll look at analyst recommendations for Macy’s in the next part of this series.

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