Macy’s new strategy has once again proved its effectiveness

After several unsuccessful years, American retailer Macy’s Inc. (M) has chosen a new strategy for its network. Investments in e-commerce and small stores of a new type provided the company with the best-operating profit indicator since 2015 last year. Recently, Macy’s confirmed that it would continue to expand the geography of its presence, but it will do this not at the expense of large department stores but the cost of small stores of a new format. 

In 2022 it is planned to add four such stores, which is an essential turn in the company’s activities, which has been reducing its physical presence for several quarters. New small stores are usually cheaper for Macy’s due to lower rents and fewer employees. But at the same time, new stores allow the company to maintain a presence in many regions. According to Macy’s, the store’s physical presence in the area stimulates online sales. 

The fact is that customers are more confident in online purchases, knowing that they will be able to return the goods without any problems. In addition, the store allows the retailer to offer a service to receive goods ordered online at the point of sale, which is also an essential catalyst for the growth of e-commerce. Digital sales at Macy’s remain strong. In the last quarter, which ended on April 30, they were 34% higher than in the same quarter of 2019 and accounted for 33% of total sales. The pandemic has significantly changed Macy’s business and made it more robust. The retailer’s sales increased by 39.8% to $25.3 billion in the last fiscal year. At the same time, operating profit rose to $2.3 billion compared with a loss of $956 million a year ago, which is the highest figure since 2015.