Maxxed Out

By Rachel Wozniak

In a world of online shopping, drones and on-demand delivery – when was the last time you visited a shopping mall? If you answered with something like “I couldn’t tell you” or “those still exist?” then you’re following the shopping trend that is hitting retailers where it hurts.

Department stores used to be the anchors of malls, being the one-stop shop where customers were guaranteed to get their favorite make-up, find a new couch and pick up some new toys for the kids. However, with niche stores available for every category and online making the experience much quicker and without the hassle of leaving the house, these brick-and-mortar stores are quickly reaching their demise.

Macy’s is currently slated to close 200 stores over the next few years – almost an incredible one-quarter of its stores. Other department stores are following, with Sears, JCPenney and Kmart also closing the doors on some of their locations. Since these stores were the staples of shopping malls and contributing a large majority of the rent, entire malls are being forced to charge more to smaller stores who cannot afford it, and eventually are closing their doors entirely all across the nation.

In an attempt to combat these off-price stores, Macy’s has opened a discount store called “Macy’s Backstage,” however; they are concerned that customers do not differentiate between this and the original brand. If the blur is made, it will only cause upset and a refusal to pay full-price at Macy’s when they could get it much cheaper at Backstage. Out of six pilot stores that opened in the fall, only one more will be added in 2016.

Untitled
http://wtop.com/news/2015/08/a-look-at-macys-outlet-stores/

With only light success in their discount brand, Macy’s also has put heavy resources into its digital and mobile sales, which increased with double-digit growth in the past year. Yet despite this upswing, total sales had still declined by 3.7% in 2015 from the harsh decrease of in-store profit. Ultimately, the department store will need to rely and focus on its online shoppers to stay in the game.

As Macy’s is being forced to heavily move digitally, the king of online retail is crossing paths with them as they move brick-and-mortar. Amazon has already opened their first Amazon Books in Seattle, is almost ready to open its doors in San Diego and there are rumors that it plans to open a dozen or more in the future. These are allowing Amazon to engage more personally with customers, enabling them to touch and feel the items, create a store layout that matches their online browsing habits and make returns even easier.

As these two retail options are beginning to dip their feet into each other’s waters, there is one line of stores that is keeping its roots firm and sales soaring: TJX companies, made up primarily of TJ Maxx, Marshall’s and Home Goods.

Untitled1
http://www.livingly.com/Shopping+News/articles/VTkdzx4Fdx1/TJ+Maxx+Marshalls+Launch+Online+Shopping

Each of their stores offers unique and handpicked discount items, including many brands that would be found at much higher prices at traditionally Macy’s or even Amazon. Due to the constant turn over and high variety, customers never know what they’re going to find on their shopping trip, encouraging them to continuously return to browse and see what new deals they can find.

The type of shopping these stores employ is a hunt-and-reward system, where consumers are forced to actively search in crowded shelves of products to find the exact item they are looking for at a price they know they can’t match at other retailers. Even though Macy’s Backstage is an attempt to duplicate this, the establishment and size of TJ Maxx is hard to compete with – having over 2,700 domestic stores compared to Macy’s 900.

While some of the TJX stores they do have an online presence, the options are in limited quantities and not as varietal as the store – they are in no way trying to shift a majority of their sales in that direction.

As the retail game continues to change so much with technology and efficiency, it will be interesting to see if the TJX Companies’ strategy of hunt-and-reward will keep consumers, or if they too will have to join Macy’s and Amazon in considering new strategies to stay relevant.

http://www.chicagotribune.com/business/ct-macys-woes-american-malls-20160513-story.html

http://www.cnbc.com/2016/03/18/the-problem-with-department-stores-comeback-plan.html

http://time.com/money/4166638/macys-sears-department-stores-closing-mall/

https://www.internetretailer.com/2016/02/23/mobile-sales-double-macys-fiscal-2015

http://www.usatoday.com/story/tech/news/2016/03/07/amazon-bookstore-open-san-diego-brick-and-mortar-second/81430768/