Despite the case that
Michael Kramer presents at Investopedia, I still don’t believe that Macy’s decline or the decline of brick-and-mortar chain stores more generally is being caused by online:We could go on, but honestly, these numbers paint a dismal picture for the state of the company and retail as a whole. The company has declining sales, declining margins, swelling inventories, and dwindling receivables. The ship is headed in the wrong direction.
I turned to Macy’s income statement and what jumped out at me were rising costs, especially cost of operations, interest, an non-recurring expenses in the face of declining sales.
I think that what has happened to retail is two things. They’re being pressed on prices (Amazon’s retail generally operates at a loss) and large, national chains must try to appeal to the mass market. That has resulted in making the experience of going to a Macy’s store a miserable one. If you get a comparable price online and can avoid the miserable experience, is it any surprise that online is growing? It’s still a relatively small segment of the total retail picture.
I think this parallels the airline industry. Air travel has gone from being a luxury experience to a commodity one. From the Gold Leaf Service on the Rocky Mountaineer to the Greyhound bus. Who wouldn’t avoid it?
On line sales grew 13% the past 12 months, continuing a long term trend – For the reasons you cite, plus increasing comfort with the process.
However many consumers still use brick and mortar to touch and feel the goods. They then buy on-line. I wonder how long this can go on before the brick and mortar option is obsoleted and buying on line becomes a blind experience.
Online buying is already a blind experience for us. For one thing, few local stores seem to have what we’re interested in, so touch and feel aren’t possible in many cases. Secondly, the whole point of buying online, for us, is convenience as much as price. Shopping “twice” for a product takes more time than buying blind. Finally, product reviews (on Amazon at least) are finally becoming decent and frequent enough to make judgments and liberal return policies make “blind” purchases risk-free.
The only brick-and-mortar stores I go to now are grocery, hardware, and occasionally Walmart or Target. I don’t think I’ve set foot in a department store in well over a year and the only time I’ve gone to a mall is to visit a mobile phone kiosk to get a mifi. But then again, we just don’t buy much anymore.
I haven’t shopped at big retail stores for years – except for Costco. Macy and malls are simply boring to me.