The Real Story Behind Macy’s Sales Declines and Store Closures, Part 1

post-1-macys-department-store-shoppers

Earlier this summer, Macy’s announced that it would be closing 100 stores – about 15% of the company’s total properties – after six straight quarters of sales declines. This news follows the January announcement that Macy’s would be shutting down 40 stores. Macy’s will reportedly focus on improving the shopping experience at more successful stores and continuing to develop its omni-channel strategy.

Of course, Macy’s is not alone when it comes to closing stores. Sports Authority will soon cease to exist, and other iconic retail brands such as Walmart, Target, JC Penney, Sears and Kohl’s have been part of the recent wave of brick-and-mortar store closures.

When identifying reasons for the struggles of Macy’s, it’s easy to point to the growth of e-commerce. However, this is an oversimplification of far more complex issues. Understanding the real story behind the struggles of Macy’s requires much closer analysis of actual sales data and consumer behavior.

InfoScout used physical and digital receipt images of customer purchase data, captured by InfoScout’s proprietary mobile apps, to analyze the shopping occasions of 12,801 Macy’s shoppers between June 2015 and June 2016. We also surveyed 499 Macy’s shoppers to dig deeper into their perceptions of Macy’s and what is driving their shopping behavior.

These insights paint a fact-based picture of the problems facing Macy’s and how they are negatively affecting share of wallet for the company’s brick-and-mortar stores.

Customers Are Shopping Less Frequently

Survey data states that 63% of consumers shop at Macy’s with about the same frequency as they always have, while 37% shop less often. By tracking actual Macy’s consumer spend, we find that these shoppers last shopped at Macy’s:

  • Within the last month (11%)
  • 1-2 months ago (21%)
  • 3-6 months ago (30%)
  • 7-12 months ago (38%)

Last Macy's Shopping Trip

According to this purchase data, 38% of Macy’s shoppers haven’t shopped at Macy’s within the last six months. As a result, Macy’s is missing out on the seasonal purchase cycle that is essential to the success of any department store.

The decrease in shopping frequency can be partly attributed to the fact that most Macy’s customers aren’t shopping for other people. 74% are purchasing merchandise for themselves, with only 30% buying for their children, 26% buying for their spouse or significant other, and 24% buying for another family member.

who people are shopping for at Macy's

Price, Store Location, Selection and Merchandising Frustrate Shoppers

When asked to identify issues and frustrations experienced while shopping at Macy’s, half of those who shop less frequently at Macy’s said the prices are too high. 40% of those who shop as often as they always have also reported pricing issues. Mobile devices provide consumers with total price transparency, so when prices aren’t competitive, sales are inevitably lost.

The second biggest frustration (23% for less frequent shoppers and 15% for those shop just as frequently) is the fact that a Macy’s store isn’t close to where they live. One could reasonably deduce that these shoppers would rather shop online or at another closely located retail store than travel farther to Macy’s, especially if the prices aren’t worth the trip.

Customer service is another problem, according to 15% of less frequent shoppers. 12% are frustrated by poor product selection, saying that Macy’s doesn’t have the products or brands they want. 10% said the store isn’t well-organized or merchandised.

frustrations while shopping at Macy's

Although Macy’s prides itself on competitive pricing and product selection, purchase data from actual Macy’s shoppers clearly indicates that Macy’s is failing to deliver on this promise. When combined with customer service and merchandising issues, shoppers could easily become disillusioned and take their business elsewhere.

InfoScout data tells us that a large percentage of Macy’s customers are shopping less frequently and identifies the most common frustrations that have contributed to this trend. But what is this doing to Macy’s share of wallet? Who is benefiting from sales declines at Macy’s, and what can Macy’s do to win back those dollars? We’ll discuss these issues in detail in the next post.

InfoScout uses proprietary technology and targeted surveys to provide valuable insights into shopper behavior, purchasing decisions and industry trends. Contact us to schedule a demo and learn how InfoScout can help you build revenue and enhance your brand.