In a market that is spooked by escalating trade war between the United States and China, Macy's, Inc. (M - Free Report) has managed to score a decent run in the bourses. Although not fully immune to retail headwinds, shares of this department store retailer have surged 34% compared with the industry’s growth of 22% in the past three months. This Zacks Rank #3 (Hold) has also comfortably outperformed the S&P 500 that advanced approximately 3%.
Retail is no more constrained to its brick-&-mortar existence. Instead it is rapidly accepting the concepts of an increasingly digitized world as advancing technology and digital transformation are playing key roles in evolving consumer shopping patterns. Retailers are now focusing more on enhancing omni-channel capabilities, optimizing store fleet and restructuring activities, and Macy’s is no exception to that.
Macy’s Gets its Act Together
Macy’s sustained focus on price optimization, inventory management, merchandise planning and private label offering are the primary catalysts aiding in meeting customer-oriented demand and improving in-store shopping experience. In an attempt to increase sales, profitability and cash flows, the company has been taking steps such as integration of operations as well as developing omni-channel capabilities and online order fulfillment centers.
Moreover, the company had introduced various innovative services including Apple Pay, Same Day Delivery, Enhanced Shopping Apps, Innovation in Stores Selling Technology, Macy’s Image Search and Macy’s Wallet/Bloomingdale’s Wallet. The company’s “Buy Online Pickup in Store” initiative is also gaining traction. Macy’s has added a new feature to its mobile app called Mobile Checkout, which allows customers to scan bar codes of items and pay via smartphones.
Macy’s acquired STORY, a concept store, to enhance the in-store customer experience. Further, it has taken a minority stake in b8ta, a technology retailer that enables customers to try, buy and learn about new tech products. The company’s investment is seen as part of enhancing customer shopping experience at its The Market @ Macy's, a store-within-a-store retail concept, currently operating at 10 Macy's nationwide.
Macy’s had earlier highlighted that it plans to open roughly 100 Backstage locations within Macy's stores in fiscal 2018. During the first quarter of fiscal 2018, the company opened 18 Backstage locations and plans to open another 40 locations in the second quarter.
Amid a competitive retail scenario, Macy’s has taken several strategic initiatives to adapt to the ongoing changes in the industry. However, analysts pointed that the company’s strategic investments in long-term endeavors may put pressure on margins in the short term.
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