Macy’s made headlines this week by announcing plans to close 14 stores after a particularly successful holiday season. Genius and runner up in L2’s 2014 Digital IQ Index: Department Stores had been known for one of the iconic retail brands with an Amazon-proof, omnichannel business model. So why the closings?
A look at Macy’s plans shows a move toward a more digital, fulfillment-focused future. The brand is opening a fulfillment center in Tulsa, Oklahoma and will continue to ramp up its ship-to-store an in-store pickup program. Macy’s spent and estimated $2 billion on technology and e-commerce in the past five years, which is now paying off. The retailer can potentially support the same number of sales or more at a lower cost.
In this retail environment, who is opening stores? T.J. Maxx, Burlington, and Ross plan to open more than 25 stores each. By no accident, all are ranked Feeble or close to Feeble in L2’s Digital IQ Index: Big Box. Without solid e-commerce, in-store inventory search, and pickup programs the only way to succeed is to build stores closer to consumers.
As Maureen Mullen said in today’s Clicks to Brick clinic, the game of retail has changed. Previously, successful stores were in driving distance to a large segment of the population without cannibalizing each other. Now, offline/online strategies are a more forward-thinking, low-cost route to the same effect. As an example, Home Depot who topped L2’s Big Box Index put a hard stop on new stores this year.