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Macy's (M) Omnichannel Strategy, Private Brands to Lift Sales

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Macy's, Inc. (M - Free Report) sustained focus on price optimization, inventory management, merchandise planning and private label offering are the primary catalysts aiding the company in catering to 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 has undertaken initiatives – Macy’s Backstage off-price business, the launch of Star Rewards program, Growth50 stores, and expansion of Bluemercury – to keep itself on growth trajectory.

The company had also 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 enables 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.

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.

Nevertheless, this Zacks Rank #2 (Buy) company 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 30.4% so far in the year outperforming the industry’s growth of 26.1%.

Market pundits believe that the industry is likely to benefit from steady economic growth, buoyant consumer confidence and rising disposable income. These are likely to fuel the company’s top-line growth in fiscal 2018. The Zacks Consensus Estimate of revenues for the third quarter and fiscal 2018 is pegged at $5.44 billion and $25.31 billion, reflecting an increase of roughly 3% and 2%, respectively.

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