Macy’s feeling the heat from Amazon and other Connected Society theme companies
Macy’s, the country’s largest department store chain, said sales at its stores had fallen 2.1 percent in November and December compared with the same period in 2015. Terry J. Lundgren, the company’s chairman and chief executive, said in a statement that while the trend was “consistent with the lower end of our guidance, we had anticipated sales would be stronger.”He attributed the decline to “broader challenges” facing much of the retail industry.
Source: Macy’s Will Cut 10,000 Jobs After Poor Holiday Sales – The New York Times
The news that hit yesterday regarding the closing of 68 Macy’s locations wasn’t actually “news” — remember, the retailer announced just this past August that it was closing 100 stores, these were just the first set to be publically identified. And we guess the 10,000 jobs were to be expected when you close nearly 10% of your locations.
No, the news here was Macy’s CEO Terry Lundgren admitting that things are must worse than even he thought sales from the recent Holiday season were “…the lower end of our guidance, we had anticipated sales would be stronger.”
It’s not a good thing when things come in worse than your worst-case scenario.
With Sears throwing in the towel and other brick-and-mortar retailers posting less than stellar numbers, all the while Amazon (AMZN) and others reported record sales, we have to view things through our thematic perspective and take a look at the landscape overall.
Sure, Amazon’s success is a great thing for our Connected Society theme, which looks at the increasingly digital lives we all lead and impact on everything from how we shop, communicate and entertain ourselves. And the impact of online shopping hitting record levels is also good for logistics companies such as UPS and FedEx; however, there are concerns even there. One one hand Amazon and other online retailers are pushing the limits of the brown-uniformed legions of UPS workers and the company is ever-expanding, on the other hand, Amazon is also expanding its own logistics operations across planes, trucks and even local deliveries. Is there a point that the bubble bursts for UPS? Not anytime soon, but something to put in the tickler file.
But the impact of a fledgling Macy’s and other retailers goes way beyond just the fate of those Mall anchor stores. One has to consider that with all those empty stores, what happens to the traditional American mall itself? Who fills that space? How are the other smaller stores impacted by declining traffic?
These are all things we consider when we look at the situation through our thematic lens. For instance, during a couple of the trips we made to malls over the holiday season, one thing became quite apparent, particularly at two of the largest malls on the East Coast (Tyson’s Corner in Virginia and the Palisades Mall in New York). While it took some outmaneuvering to swipe a parking space from let’s call them “less aggressive” motorists and the corridors were certainly bustling with people, very few people were carrying more than 1 bag and most had none at all. Lots of people. Lost of browsing. Not much ringing of the register.
