“Given that digital’s cost model is primarily variable in nature, while the stores channel incurs more fixed costs, we know that the lower payroll and benefits in the digital channel can help to offset the pressure from delivery expense. For Macy’s, however, its digital channel is contributing to its profit at a higher rate than its stores. In many cases, ecommerce growth comes at a cost, as fulfillment expenses rise. “We know that channels such as buy online pick up in store, curbside pickup and same-day delivery will continue to be critical operating practices for us as a digitally led omnichannel retailer.” Macy’s ecommerce channel is profitable “One of the important lessons we learned in 2020 was that we need to meet the rising digital demand from our store inventories if we are to satisfy our customers’ need for speed and convenience and achieve our inventory productivity and turn goals,” Mitchell said on the call. Conversely, the retailer learned over the past five years of store closures that the growth of ecommerce drops “meaningfully” when Macy’s closes a store in a market with multiple stores and “significantly” when it closes the only store in a market, Mitchell said. And looking forward, Macy’s stores will continue to play an important role in its ecommerce growth.įor example, Macy’s digital sales per capita are two to three times higher in markets with Macy’s stores, chief financial officer Adrian Mitchell said on a call discussing the results with investors, according to a SeekingAlpha transcript. In fact, in Q4, 25% of Macy’s digital sales were fulfilled from stores, including curbside pickup and same-day delivery, according to Macy’s. Like many retail chains in 2020, omnichannel was key for digital growth at Macy’s. Ecommerce accounted for 44% of the retailer’s sales in the fourth quarter. Macy’s says it acquired 7 million new customers in Q4, contributing to digital sales growth of 21% year over year to $3 billion. That means digital represented 53% of Macy’s total sales in 2020, double the 25% ecommerce penetration in 2019. Net sales had a steep decline of 29.3% and totaled $17.35 billion in 2020, down from $24.56 billion. The department store crossed $7.71 billion in online sales last year, up 20.9% from the year prior, Digital Commerce 360 estimates. relied on digital in 2020, as the coronavirus pandemic kept its customers out of stores and fueled a 30% decline in total revenue in its fiscal year ended Feb. Jul 26 I Getting Ready for Cyber Season 2022Īug 2 I Don't Let Technology Hold You Back Jul 12 I Connect with consumers via instant messaging and SMS Growing Market Share with Collaborative CommerceĮnvisionB2B I Chicago I June 8-10 | DC360 Event Fulfillment-Model Changes for Buyers and Sellers Ecommerce Effect: Russia-Ukraine Conflict
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