August 13, 2014, 12:25 PM

Macy’s expects a holiday boost from buy online, pickup in store

The option is now available in all 675 full-line Macy’s stores, and customers like it, the retailer says.

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Macy’s Inc. disclosed today that its customers can now pick up online orders in all of its full-line stores, and that the positive shopper reaction to the recent rollout suggests the service could boost its store sales this holiday season.

“We haven’t even marketed this capability, and we’re already finding many customers like this option,” chief financial officer Karen Hoguet told analysts today in discussing the company’s second quarter earnings. “And once in the store these customers are often buying other items as well.”

She said it is premature to predict how many shoppers will use the service. “Hopefully, as the fall season moves on we’ll understand better how it’s being used and it’s potential,” she said. “We’re excited by what we’ve seen so far and expect to be a help in the holiday season.”

Macy’s announced in February plans to roll out buy online, pickup in store to all its 675 full-line department stores, following a successful test in Washington, DC. The option already was offered by Macy’s Inc. subsidiary Bloomingdale’s. Excluded are some Macy’s specialty and furniture stores and Bloomingdale’s outlet locations.

Macy’s, No. 8 in the 2014 Top 500, has stopped reporting its online sales, saying that what it calls its “omnichannel” initiatives—such as buy online, pickup in store—make it hard to distinguish online from offline sales. But Hoguet emphasized that the company will continue to invest in technologies designed to tie the web to its stores.

She said the company has invested in computer systems that link its bricks-and-mortar and online assets; is building a new e-commerce distribution center in Tulsa, OK; and “testing like crazy” digital technologies in stores. While she did not elaborate, one example of a digital technology Macy’s has been trying out is the ShopBeacon service from Shopkick that detects a customer with a Macy’s mobile app when she enters a store, enabling the retailer to send her in-store offers.

“You can assume omnichannel and technology investment will be an ongoing part of our capital budget and expense,” Hoguet added.

For its fiscal second quarter ended Aug. 2, Macy’s reported:

  • Total sales increased 3.3% to $6.267 billion from $6.066 billion in the same period a year ago. The company did not break out its online sales.
  • Comparable-store sales increased 3.4%. When including store departments operated under license by outside suppliers, such as athletic shoe brand Finish Line Inc., same-store sales increased 4.0%.
  • Net income increased 3.9% to $292 million from $281 million.

For the first two quarters of its fiscal year, Macy’s reported:

  • Sales increased 0.7% to $12.546 billion from $12.453 billion.
  • Same-store sales were up 0.8%, 1.5% when including departments licensed to third parties.
  • Net income increased 3.6% from $498 million to $516 million.

Macy’s got credit for working to tie together its stores and the web in a recent Interbrand survey that moved Macy’s up to No. 16 from No. 40 in brand value among North American retailers, largely on the strength of the company’s cross-channel initiatives.

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