Don’t rain on Macy’s parade just yet

As the media and Wall Street parse the news that Macy’s may shed more than 10,000 jobs in the wake of poor earnings, we decided to see what the data says about Macy’s prospects.

What we found is although the retail giant clearly has challenges; it’s in an enviable position in the world of apparel. Because Macy’s clothes shoppers are a particularly loyal group of consumers.

Consider this:

Macy’s apparel shoppers give 12 percent of their apparel wallet to the chain, according to Checkout TrackingSM. That’s twice the share that Macy’s buyers spend at their No. 2 choice -- JCPenney.

The key to Macy’s future may be geography. The top driver of where apparel sales will go after a Macy’s store closes will be the proximity of other apparel stores. If Macy’s is wise in choosing which stores to close, its loyal apparel customers won’t be forced to abandon the retailer. They’ll just have to drive a bit further.

But many of the stores Macy’s plans to close are in small to medium markets. There may be few, if any, comparable retailers in the area. And the next-closest Macy’s may be quite far away. In such cases, Macy’s will be looking to convert its loyal brick-and-mortar shoppers into loyal online shoppers.

Marshal Cohen, chief industry analyst for The NPD Group, put it like this:

“Fewer stores focused on more unique product will bring more connectivity with their core customers, rather than trying to be something for everyone and competing with an ever widening range of retailers,” Cohen said. “This repositioning -- closing stores that the specific markets have outgrown and migrating to online shopping -- is critical in creating a path for growth in a new retail paradigm and increasing world of competition.”

For more details on Macy’s share of wallet, take a look at the chart below.

Share of Apparel Wallet Macy's Buyers
Macy's 12%
JCPenney 6%
Target 5%
Kohl's 5%
Walmart 5%
Nordstrom 4%
Victoria's Secret 4%
Old Navy 3%
Marshalls 3%
T.J.Maxx 2%
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