February 26, 2014, 10:28 AM

Macy’s customers will soon be able to buy online and pick up in stores

The department store chain plans to expand its pilot program to all its stores this spring. It also plans to test same-day delivery.

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It’s a commonplace these days for retail chain executives to say they want to serve the customer however she wants to shop, in stores or online. Macy’s Inc. will be taking several more steps in 2014 to implement that philosophy.

As at many store-based retailers, the strategy of integrating bricks and mortar with the web is called “omnichannel,” and that was a term Macy’s chief financial officer Karen M. Hoguet used several times yesterday as she discussed the company’s financial results for the fourth quarter and the full fiscal year that ended Feb. 1, 2014.

In the biggest of these cross-channel initiatives, Macy’s will roll out to all its roughly 675 full-line department stores this spring a buy online, pick up in store program that it tested last fall at 10 stores in the Washington, DC, area. The 37 standard Bloomingdale’s stores, also part of Macy’s Inc., already allow in-store pickup of orders placed at Bloomingdales.com. Not included in the program are Bloomingdale’s outlet stores and some Macy’s furniture and specialty stores.

The in-store pickup program will enable Macy’s to test same-day delivery of online orders, Hoguet told analysts yesterday, as the company now has visibility into inventory companywide, in stores and distribution centers.

“One of the things that has us excited about the buy online, pickup in store test, and that's going to help us really lay this foundation for same-day delivery, because we have the capability now of knowing exactly if that inventory that a customer is ordering is in a specific store. And if that inventory is in a market, obviously it’s easier to get to the customer on the same day,” Hoguet said, according to a transcript from Seeking Alpha.
Hoguet also noted that stores increasingly play the role of showrooms in a good way for web-only shoppers.  “We continue to find our stores to be important even for our online-only buyers, whether it would be to check out a color, try something on, browse to get ideas, or make a return,” she said.

In another sign of the the company’s focus on integrating store and web, Hoguet said Macy’s is rotating employees between the two channels. “We're moving people around so that they get different experiences, whether it be store merchandizing or dot-com, and that's helping also to enhance really this collaboration,” she said. “So I would say we are at the very early stages of that and that's why I'm so excited about the growth going forward because I think the combination of these teams working together is going to be very powerful.”

Macy’s has stopped breaking out its online sales, taking the position that stores and the web are now so interconnected that it’s not meaningful to separate sales by channel. However, Hoguet did indicate that online sales were strong in the fourth quarter for both Macy’s and Bloomingdales, without providing details.

Macy’s reported yesterday sales of $9.202 billion for the 13-week fourth quarter, down 1.6% from $9.350 billion in the 14-week quarter of the previous fiscal year. Severe weather also limited sales in January, Hoguet said, and the corresponding lift in online sales did not come close for making up for the bricks-and-mortar shortfall. Earnings increased 18% in the fourth quarter, a pleasant surprise to Wall Street that resulted in a sharp uptick in Macy’s stock price yesterday.

For the full fiscal year ended Feb. 1, 2014, Macy’s reported:

  • Net sales of $27.931 billion, an increase of 0.9% from $27.686 billion a year earlier.
  • Net income of $1.486 billion, up 11.3% from $1.335 billion.

The company reiterated earlier projections of comparable-store growth in 2014 of between 2.5% and 3%. That includes sales at Macys.com and Bloomingdales.com as well as at the company’s 840 bricks-and-mortar stores.

 

 

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