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.

 

Spring Cleaning: Scrubbing Deeper with Household Products Purchase Data

Spring Cleaning is a time when consumers use their daily household cleaning products to scrub deeper than just the surface. This holds true for panel data as well; sometimes the most impactful insights are hidden from plain view, waiting to be discovered with a little extra elbow grease. For example, take a look at some top-line metrics for common products in the household category.

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This view gives us a quick bird’s-eye view of how each subcategory is performing. For example, bath tissue has a relatively high basket size of about $95, suggesting that it’s purchased on large stock-up grocery trips. Bath tissue also has the highest purchase frequency, meaning that the category is purchased (by each household) an average of 7 times per 52 week period.
 
Interestingly, dish detergent and fabric softener have almost identical purchase frequencies of 4.0 and 4.1 (respectively). However, these numbers are just averages. They don’t tell us anything about the underlying distribution. Datasets with similar means but different distributions can be problematic; imagine if we treated {0, 5, 10} the same as {4, 5, 6}. An insights professional looking to understand these categories more thoroughly will want to scrub a little deeper past the surface.
 
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A shopper histogram is the perfect complement to shopper metrics because it takes the averaged metrics and shows you the full distribution of the data. The graph above paints a bigger picture than the averages alone for these two categories. Here, we see the underlying distribution for each category’s purchase frequency. Fabric softener is a divisive category; shoppers either buy it all the time (8+ times per year), or very rarely (just once per year). By contrast, dish detergent has a steadier distribution; more shoppers fall near the mean (buying 4 times per year).

 

Why is this important? As a marketing manager, it’s easy to make assumptions based on data averages. Shopper metrics alone would lead you to believe that two disparate categories have identical purchase cycles. In reality, fabric softener has two shopper segments of ‘extremists,’whereas dish detergent has fewer ‘extremists’ and a greater number of average, once-per-quarter shoppers. It’s easy to miss these crucial segments by glancing at a bird’s-eye view of the data.
 
Want to ‘scrub’ even deeper? Are you curious about which brands in the household category are favored by your shoppers? Get in touch with us at contactus@infoscoutinc.com and we’ll be happy to help you out!.

Walmart and Kohl’s Winning Share Among Shoppers on Black Friday

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InfoScout analyzed the baskets of more than 160,000 Black Friday transactions made from midnight through 1:00pm Friday at brick-and-mortar retailers to see how shopper spending shifted compared to last year’s big event.


Walmart, Kohl’s, and Best Buy are the stores capturing a greater overall share of Black Friday dollars, along with a greater proportion of trips and shoppers. Early data shows Target experiencing the largest declines in terms of transactions and dollars.

 

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 161,849 receipts reported by 1pm on Black Friday were analyzed to provide a quick read on this year’s performance by retailer.

 

Stay tuned to the InfoScout Blog for further analysis of Black Friday 2015. For further information, please contact press@infoscoutinc.com.

Holiday Spending Jumps 29% among Online Shoppers

Forget Cyber Monday, this Thanksgiving weekend online shoppers eschewed packed parking lots, doorbusting brawls and languishing lines to kick-off the holiday shopping season.   Early data from nearly 40,000 Americans* who share their e-commerce shopping activity with InfoScout indicates that online sales are up 29% from Thanksgiving and Black Friday one year ago.

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Which online retailers are leading the pack?  Among the four largest sites we’re tracking in real-time this weekend, Amazon has a clear lead with nearly 41% share – a slight gain from last year.   While Walmart’s overall e-commerce sales appear to be up from a year ago, the brick-and-mortar giant’s share of cyber sales is slightly down versus is its biggest online competitors.  By contrast, BestBuy is rapidly gaining virtual ground thanks to a well executed Cyber Savings campaign that includes free shipping on orders of $35 or more.  Meanwhile, eBay continues its “Countdown to Cyber Monday” campaign which is effectively giving their competitors a three-day head-start in the race for consumers’ limited dollars this holiday season.

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With overall online sales up 29% this Black Thursday & Friday, it begs the question of whether online shoppers are going online earlier this year, or whether they are shifting their spend from physical retail to e-commerce.  By studying both the online and offline purchases reported by Amazon’s holiday shoppers, InfoScout found that their Black Thursday & Friday spend in stores dropped 38% year-over-year to $153.43.  Meanwhile, their average spend at Amazon.com grew 67% to $83.27.  If this trend continues, Amazon’s loyal shoppers will spend more on Amazon.com next Black Friday than they will in all brick-and-mortar retailers combined!

 

Data methodology:
InfoScout’s 40,000 Omnichannel Panelists provided real-time visibility into their Thanksgiving Day and Black Friday shopping both online and in-store.  The data in this study includes purchases at all major e-commerce sites including Amazon, Walmart, eBay, BestBuy, Target, Apple (and more) by 8,793 panelists who also reported their online shopping activity to InfoScout more than one year ago.  The margin of error in the market share analysis is <2% absolute.   The confidence intervals for Amazon, Walmart, BestBuy, and eBay in the market share analysis in 2014 are ±2.78%,±2.61%,±2.48%, and±0.9%,  respectively.  The 95% confidence interval for the first chart on normalized $ spent is ±8.26 for the year 2014.   For more information related to InfoScout’s panel representation and data, visit our data page.