The Real Story Behind Macy’s Sales Declines and Store Closures, Part 2

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In the previous post, we uncovered some of the driving factors behind recent sales declines at Macy’s, one of America’s oldest and most iconic retailers. These struggles have resulted in two announcements of mass store closures within the past year.

InfoScout analyzed the shopping occasions of 12,801 Macy’s shoppers between June 2015 and June 2016, using our proprietary mobile apps to capture physical and digital receipt images of customer purchase data. We also supplemented this data by surveying 499 Macy’s shoppers to get firsthand accounts of their experiences and find out why Macy’s is losing share of wallet in its physical stores.

Our research uncovered a number of revealing facts and trends about Macy’s shoppers, which we discussed in Part 1:

  • 37% are shopping less frequently at Macy’s.
  • 32% haven’t shopped at Macy’s within the last six months, causing Macy’s to miss out on key seasonal purchase cycles.
  • The top frustration of less frequent Macy’s shoppers is high prices, cited by 50% of shoppers.
  • Other frustrations include store location (23%), customer service (15%), product selection (12%), and poor store organization and merchandising (10%).

 

Purchase data from actual Macy’s shoppers shows that the challenges facing Macy’s go deeper than “people would rather shop online.” Competition from e-commerce is certainly a challenge for all brick-and-mortar retail stores, but InfoScout data proves e-commerce is far from the only challenge that is causing Macy’s share of wallet to shrink.

Explaining Macy’s Low Share of Wallet and Where Their Customers Are Going

Of 21,776 panelists who purchased merchandise in the apparel, electronics, entertainment, health and beauty, sports, and toys categories, 15,494 purchased these products at Macy’s stores. That translates to a closure rate of 71%. But as we look further down the leakage tree, we see that Macy’s brick-and-mortar stores only own a 6% share of wallet.

If Macy’s owns 6% share of wallet, who’s getting the other 94%? The top two beneficiaries of Macy’s struggles are mass retail giants Walmart and Target at approximately 17% and 16%, respectively, followed by Best Buy (7%), Kohl’s (6%) and Costco (5%). Only 6% of purchase dollars are going to Macys.com.

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The Amazon effect is not as significant as one might expect, with the online retailer earning less than 4% share of wallet for Macy’s brick-and-mortar shoppers. However, when InfoScout analyzed the purchase data of Macy’s lapsed shoppers – those who hadn’t shopped at Macy’s in the last six months – we found that these shoppers increased their spend at Amazon by 10% after they stopped shopping at Macy’s.

While e-commerce is certainly a challenge, the data mentioned previously shows that more Macy’s customers are shopping at other brick-and-mortar stores than online. InfoScout confirmed this trend in a survey of Macy’s customers, who were asked where they have been shopping or will be most likely to shop for items that they would normally purchase at a Macy’s store.

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52% said they would turn to non-department stores such as Walmart, Target or Kohl’s, while 33% said they’ll go to other department stores such as Nordstrom, JC Penney or Neiman Marcus. 23% said they would go to apparel retailers such as Gap, H&M or Forever 21.

Of course, e-commerce is getting its fair share of business from Macy’s shoppers. 31% of survey respondents said they’ll shop at Amazon. 19% will shop at another department store website, 18% will shop at an apparel retailer website, and only 16% will go to Macys.com. This would indicate that the frustrations experienced in Macy’s stores are causing many consumers to abandon Macy’s completely, both in-store and online.

What Can Macy’s Do to Stop the Bleeding?

When shoppers were asked what would motivate them to shop at Macy’s more often, 55% said they could be swayed by easy-to-use coupons and promotions. Better product selection came in second at 15%. 10% would be encouraged by better everyday value on merchandise.

When those who claim to be shopping less at Macy’s were asked how they would feel if Macy’s closed their stores, 54% said they wouldn’t care. 41% would be sad and miss Macy’s. 5% said they would be happy and that it’s time for Macy’s to close. The sentiments of those who shop at Macy’s as often as they always have are more positive. 61% would be sad, 37% wouldn’t care, and only 2% would be happy about it.

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Clearly, the majority of frequent Macy’s shoppers are loyal to the brand, as are a large percentage of those who are shopping less frequently at Macy’s. Collectively, these customers represent a major turnaround opportunity for Macy’s.

For shoppers who are frustrated with pricing and location, offering targeted promotions and discounts for both in-store and online purchases could drive incremental purchases. Also, issues related to selection and merchandising must be addressed. While a large percentage of Macy’s customers are shopping online, not enough are shopping at Macys.com. By delivering a seamless, omni-channel experience, Macy’s can win more online dollars.

Simply attributing store closures and sales declines to the growth of e-commerce is an incomplete, oversimplified rationalization. While a 16% closure rate and 6% share of wallet are disappointing, they also represent tremendous upside for a legendary brand like Macy’s to increase those numbers. Macy’s and other retailers that are struggling with in-store performance need to dig deep into customer behavior and purchase data and adapt accordingly to retain customers and grow sales.
 
InfoScout uses proprietary technology and targeted surveys to provide valuable insights into shopper behavior, purchasing decisions and industry trends. Contact us to schedule a free demo and learn how InfoScout can help you build revenue and enhance your brand.

 

Forget Showrooming, Webroomers spent more this Black Friday

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What is “Webrooming” exactly? In simple terms, it’s shopping online before buying in the store. In realistic terms, it’s simply another tool in an “informed” shoppers arsenal. A strategy to navigate the chaos that can only be found on the busiest shopping days of the year. After all, “browsing” in a big toy store with a herd of other parents trying to get the hottest toy and best deal doesn’t seem at all possible. So shoppers might want to have a plan.

 

But how does Webrooming impact the retailer-shopper interaction? InfoScout analyzed almost 300,000 receipts from shoppers who purchased items on Black Friday. Over 500 shoppers who made at least one purchase from a key retailer during this period completed a mobile survey to determine how webrooming impacted their shopping experience.

 

I mean, how many shoppers are really webrooming anyway? Webroomers were a slight majority in this group of holiday shoppers, with 51% stating they were looking online before visiting the actual store. The highest percentage of Webroomers made a purchase in Target (63%) or Toys R Us (62%). By contrast, slightly less than 35% of the shoppers surveyed reported Showrooming, which is the act of browsing products in store before buying them online. That’s right, Webrooming is actually more common than Showrooming.

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When are these Webroomers searching online? The majority (63%) are online looking 12 hours or less before their in-store visit. And another 17% are online while they are in the physical store location.

 

What exactly did Webroomers look at while they were online? Black Friday specials, of course!! 74% were online looking at Black Friday specials. But check out the shoppers who made a purchase in Toys R Us!! 80% of these shoppers were comparing prices to other retailers before their in-store trip – that’s almost double the shoppers for any other retailer. Top websites Toys R Us shoppers were comparing? toysrus.com (80%), walmart.com (56%), target.com (60%), and amazon.com (52%).

 

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So can retailers really benefit from Webrooming? Webrooming seems like a win-win for both shoppers and retailers. Compared to shoppers who didn’t spend time online before going to the store, Webroomers were more tactical in their approach – visiting a fewer number of stores but spending more overall.

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It’s important to note that with an ever growing group of digitally armed – saving savvy shoppers, retailers will be forced to implement marketing plans that are smart, releavant, flawless, and above all perfectly timed. The retailer must be able to easily provide shoppers with the basics (price, product, promotion, and place) thereby allowing the shopper to feel confident in knowing they made the right plan.

 

While Black Friday sales might have been disappointing for many retailers and many didn’t even shop on Black Friday, there is still time to woo shoppers in December as they look to complete their holiday shopping.

 

About the Data:

These insights were powered by InfoScout’s ability to trigger real-time surveys based on observed shopping behavior. The data in this article was sourced from a survey completed by 500 of our 300,000 active panelists, triggered on Tuesday, 12/1/2015 to shoppers who made Black Friday purchases in 2015 (11/26/2015).

Black Friday’s Top Sellers by Retailer – Did Apple’s iPad ‘throw in the towel’ against the Amazon Fire?

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After the Apple iPad dominated Black Friday in 2013 and 2014, most pundits predicted another strong holiday season for the tablet. Although the iPad remains near the top of the charts as a best seller once again in 2015, InfoScout’s early read on the top items this year favors ‘throws’, ‘towels’ and the Amazon Fire tablet.

 

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* After $200 manufacturer rebate

 

About the Data
More than 300,000 Americans snap pictures of their everyday shopping receipts via InfoScout’s mobile apps: Shoparoo, Receipt Hog and Receipt Lottery. The first 150,000 receipts (151,337 to be exact) reported on Thanksgiving night and Black Friday were analyzed to provide a quick read on this year’s hottest items based on unit sales and dollar sales for each major retailer.

 

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For further information, please contact press@infoscoutinc.com