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.
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.
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.
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.