CINCINNATI, United States — It has been an indisputably painful year for Macy's Inc. The iconic department-store chain has lost roughly half its market value while struggling to show investors it has the right remedy for flagging sales.
The company's earnings report Thursday did little to change the perception it's flailing. Macy's said comparable sales in the latest quarter fell 4 percent from a year earlier, continuing a long run of declines.
If Macy's were to make a Christmas list in the next couple of weeks, I can guess what would be on it: a lucrative lease-back deal for its crown-jewel Herald Square store, perhaps, and huge uptake for its revamped Star Rewards loyalty program.
But at the top of that list should be a more clearly defined e-commerce strategy, because lately Macy's hasn't provided evidence it has much of one.
At an investor presentation earlier this year, CEO Jeff Gennette said the retailer was "committed to getting continued double-digit growth" online.
Forgive me for not being bowled over by his ambition. After all, Macy's has been delivering double-digit e-commerce growth for a while now — 33 straight quarters.
And Macy's still seems to be underperforming the wider retail industry when it comes to digital.
Department stores face serious structural challenges, and digital channels are among their best tools for addressing them.
But, more importantly, the trajectory Gennette spoke of is so vague it could portend wildly different outcomes. "Double-digit" growth could be anything from 10 percent to 99 percent. Online sales growth of, say, 40 percent year-over-year would smoke much of the competition. But 10 percent growth would make Macy's a laggard.
On top of that uncertainty, Macy's has put forward some pretty underwhelming e-commerce plans for the crucial holiday season.
The retailer will offer its Black Friday deals online all day long on Thanksgiving — fine, but so will virtually everyone else. And it's talking up a new subscription service called Macy's Wine Cellar. That sounds like a pleasant-enough gift idea, but also a bit out of left field. Macy's is an authority on accessories, clothes and housewares — not consumable goods.
It's not that Macy's hasn't done anything this year to prove its seriousness about e-commerce. It has expanded same-day delivery to 15 additional U.S. markets. But it hasn't offered a plausible strategy for kicking the online business into a noticeably higher gear.
And Macy's seems to have goals without roadmaps for achieving them. For example, Gennette has expressed a preference for the click-and-collect format because it's more profitable than shipping goods to customers' homes and because people tend to spend more when they come into the store to retrieve orders. Okay, great, but how are you going to get more shoppers to opt for that service?
The lack of specifics stands out even more when compared to Macy's concrete plans for fixing its brick-and-mortar stores. It has pledged to remove duplicative merchandise and stop confusing customers with too many sale events and complex pricing, among other steps.
I get why Macy's aimlessness on e-commerce hasn't been particularly gnawing at investors lately. There are so many salvage efforts to track at this company right now, it's almost easy to overlook.
Macy's is overhauling its marketing, bulking up on private brands and expanding its Backstage off-price concept. It's also closing 100 stores while grappling with how to hang onto some of the sales from those locations.
But investors gloss over Macy's online mediocrity at their own peril. Department stores face serious structural challenges, and digital channels are among their best tools for addressing them. In August, Macy's named a new president, Hal Lawton, who has deep e-commerce know-how from his time as a senior leader at eBay Inc. The ingenuity of his ideas — and his ability to execute them — will be highly important in shaping Macy's fate.
By Sarah Halzack; editor: Mark Gongloff.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.