Macy’s To Expand Ecommerce Division

General merchant Macy’s says it will boost its ecommerce presence and add about 725 positions over the next two years to support its Macys.com and Bloomingdales.com websites. Macy’s aims to incorporate a multichannel strategy that will allow customers to shop seamlessly in stores, online and via mobile devices, the company said.

Macy’s has seen strong growth in its online channel. In the first 10 months of fiscal 2010, its online sales at Macy’s were up by about 29% compared with the same period last year. This is in addition to growth of about 20% in fiscal 2009 and 29% in fiscal 2008.

“Macy’s announcement is a logical expansion of the multichannel retailing environment that shifted from idealistic to expected,” says David Wertheimer, CEO of ecommerce agency Canopy. The company’s goal of seamless shopping between store, web and mobile “is where all retailers are headed, and it’s exciting to see Macy’s making a public commitment to that strategy.”

In all, Macy’s says it expects to add nearly 3,500 full-time, part-time and seasonal holiday associates in the next two years in relation to the growth of its online businesses. This includes a new online fulfillment center to be built near Martinsburg, WV, announced in November, and the expansion of a fulfillment center near Portland, TN, announced in September.

Macy’s expects to expand its Macys.com merchandising and marketing organizations in New York by about 260 positions over the next two years. The retailer will increase its site development and operations in San Francisco by roughly 200 positions over the next two years.

Bloomingdales.com expects to expand its merchandising, marketing and operations organizations in New York by about 115 positions over the next two years and is negotiating a lease for additional office space in Manhattan, and Macy’s Systems & Technology organization, which supports the macys.com and bloomingdales.com e-commerce technology platform, expects to add about 150 positions over the next two years at its central campus in Johns Creek, GA, and increase its workforce there to more than 1,200 employees.

Sucharita Mulpuru, vice president and principal analyst, eBusiness, for Forrester Research, says the announcement shows that Macy’s has high expectations for growth.

But Mulpuru says Macy’s should be cautious, as the move may come at an expense to its retail stores.

“The risk I see for Macy’s is that they are likely going to reduce their assortments in stores,” Mulpuru says. “They also risk accelerating their same store sales declines because customers will just think there’s nothing there, and most customers don’t like dealing with store associates who are going to be critical in this ‘save the sale, order online and get it shipped to you’ strategy.”

Amy Africa, chief imagination officer at consultancy Eight by Eight, likes that Macy’s is including the mobile channel as a part of its growth strategy. With that, she thinks it’s okay that a major retailer like Macy’s is upping its game.

Africa says mobile marketing helps convert in-store users in ways that most folks can’t imagine. Though ratings and reviews and comparison shopping can dramatically move the needle, Africa says most big companies lump mobile into the Internet marketing category.

“People are using their phones in-store to look for better pricing or to find out reviews on the products,” Africa says. “Just go to a Best Buy and watch the checkout. People show their smartphones to log into their rewards accounts coupons all the time.”

Macys.com finished at the bottom of the sixth annual ForeSee Results E-Retail Satisfaction Index, which was released last week. Though he couldn’t comment on Macy’s reasoning behind the hiring of 725 people, ForeSee Results CEO Larry Freed said it will hopefully translate to better performance for them.

Macys.com scored 75 out of 100 in the index, down four points from its 2009 score and 11 points behind top-scorer Amazon.com.

“Although increasing staff alone will not do it, they need to do a better job of meeting their customers’ needs and expectations,” Freed said. “A drop in satisfaction leads to a drop in customer loyalty of 5% and slight decreases in their likelihood to purchase online, recommend the retailer to others and overall satisfaction with Macy’s as a company.”

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