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Will Online Sales Continue Adding Zeal to Macy's (M) in 2021?

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For several retailers, brick-and-mortar stores were on the bitter side of things during 2020. Thanks to the coronavirus pandemic, store traffic was dented by heightened social distancing norms. Nevertheless, few players managed to navigate themselves out of troubled waters on the back of strong digital presence and associated omni-channel offerings. Macy's, Inc. (M - Free Report) is one of them. This well-known department store chain is adapting to changes in the retail ecosystem by bolstering its online capabilities and revamping assortments. Such efforts are likely to continue boosting the company’s performance as 2021 steps in.

Markedly, shares of the company have more than doubled in the past three months compared with the industry’s rise of 95.3%. Let’s take a closer look at the aspects helping this Zacks Rank #3 (Hold) company maintain its gleam.

Digital is The Way to Go

Consumer’s enhanced inclination toward digital transactions is a boon for retailers. This was well exemplified in Macy's third-quarter fiscal 2020 results, with digital sales surging 27% year on year and contributing 38% to total-owned comparable sales. Digital penetration stood at 38%, up approximately 14 percentage points year over year. Management was impressed with growth witnessed across all metrics including traffic, search and conversion. Also, customers responded well toward the company’s expanded omni-channel offerings such as curbside, store pickup and same-day delivery.

Markedly, the company is striving to improve its mobile and website features to deliver enhanced shopping experience. Macy’s collaboration with Swedish buy-now, pay-later group Klarna is enabling the company to offer online shoppers financial ease and payment flexibility. Also, the tie-up with DoorDash for expediting delivery service, is encouraging. These apart, Macy’s has a lot more to offer for its online consumers in the form of Macy’s Star Rewards, Macy’s Gift Cards, experts’ help and other options. Moreover, the company plans to continue investing in its digital platform, especially in terms of capacity expansion.

Other Growth Efforts

Macy’s is revamping its assortments by focusing on current market trends. The company observed that customers have shifted their spending more toward casual apparel categories to suit their stay-at-home needs amid the ongoing coronavirus pandemic. Also, categories such as home furnishing, fragrances and jewelry depicted double-digit sales growth during the third quarter. Macy’s is on track with boosting offerings in these categories.

Additionally, the company is optimizing inventory across all channels. It is also taking actions across stores to reduce costs. Such endeavors are part of the company’s three-year Polaris Strategy. The company had earlier highlighted that Polaris strategy will help attain gross savings of nearly $2.1 billion by 2022.

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