Macy's Inc recently announced its plans of closing 35 to 40 underperforming stores to focus its operation on online shopping.
Reuters reports that Macy's plans to close the stores early in 2016. It would also announce on a later date which among the 770 stores it operates will be closed. Macy's operates a total of 885 stores all over the world.
For the past five years, the company had closed a total of 52 stores and opened 12 new ones to make the most out of its omnichannel approach to its customers. More and more US retailers are focusing on eCommerce as increasing numbers of customers prefer shopping online. Consumers fins online shopping easier and more convenient over shopping in brick-and-mortar stores.
August this year, Macy's Chinese joint partnered with Alibaba Group Holding Ltd to develop a store on Tmall, the giant Chinese tech company's online marketplace.
According to Fortune, the stores that will be closed accounts for 1% of the company's sale, which is about $300 million last year. But those stores represent 5% of Macy's fleet, which means those stores are producing really awful results.
Macy's has beefed up its eCommerce operations in the past several years to speed up its online order delivery services, and provide same-day delivery services, or in-store pick up of orders made online. Macy's is considered a retail leader in the eCommerce industry, making an estimated $3 billion a year through its digital operations. This means, Macy's has little need for brick-and-mortar stores that doesn't support eCommerce or aren't generating enough sales.
However, this does not mean the company has no need for physical stores since brick-and-mortar stores are still crucial to supporting the retail store's eCommerce business, according to CEO Terry Lundgren.
"Physical stores remain absolutely vital to our omnichannel strategy, which provides local touchpoints and tailored merchandise assortments for shoppers in nearly every major market," said Lundgren.
Macy's is not the first big company to shutdown physical stores and focus on Ecommerce. Toys "R" Us Inc., Best Buy Inc., and Staples Inc., have previously shut outlets as well to give way for online distribution.
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