Macy’s just announced it’s closing 100 stores by early next year, following six consecutive quarters of declining sales.
There’s a lot of reasons for Macy’s struggles, but a big part of it has to do with the rise of Amazon and other online stores.
But Macy’s CFO Karen Hoguet still believes there’s one major advantage its retail stores have over its e-commerce competitors: physical space.
During the earnings call with analysts, Hoguet said:
“And let’s not forget the critical importance of stores for most of our vendors. We have the ability of showing merchandise and providing instantaneous not only purchasing, but also the ability to put outfits together in a store, which, again for many customers, to be able to see the colour, feel the fabric, see how it fits, it’s still where the lion’s share of where this merchandise is being sold.”
Hoguet may have a point. Despite all the talk around online shopping, nearly 90% of all US retail sales still occur in offline retail stores. It’s one reason why more and more e-commerce shops, including Amazon, are opening their own physical retail stores these days.
But online shopping is growing fast, especially in the fashion apparel space, which has historically been owned by Macy’s. It’s no surprise that Amazon has doubled down on expanding its fashion offerings, launching its own clothing brands recently, while continuing to grow its market share in the space.
In fact, if the current pace keeps up, Amazon is expected to take over Macy’s as the largest apparel retailer in the US by 2017, according to market research firm Cowen & Co.
Still, investors seem to like Macy’s latest move: its stock jumped more than 17% on Thursday after announcing the change.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.