Macy's CEO Thinks Amazon Threat is Overstated

Last year, Wall Street firm Cowen & Co. famously predicted that Macy’s would be be dethroned by Amazon.com as the top apparel retailer in the U.S. But Macy’s CEO Terry Lundgren believes that Macy’s nearly 800 stores offer a huge advantage over Amazon. He noted that shoppers typically order multiple sizes of the same piece of clothing, keep the one that fits, and send the rest back.

According to a Cowen research report published in July, Amazon’s apparel business was on pace to hit $16.34 billion for the year, compared to $22.2 billion for Macy’s in 2015. But as Amazon pushes further into fashion beyond basic clothing, it could get dinged by all that merchandise being sent back.

“They’re going to have an interesting challenge when they start getting all those returns coming back online,” said Lundgren. He added, “The large, large majority of online purchases which are returned in our case come back to stores because they’re so convenient. And so we at least have a shot at selling them something else.”

Despite closing 36 stores this year, Macy’s is now the fourth largest U.S. internet retailer according to eMarketer, with annual online sales in 2015 of about $5 billion. Their position as a leader in the online market is a result of years of multi-billion dollar investments in integrating its stores and its digital business. The ability to handle returns of online orders is key to generating traffic to stores.

Source: Fortune.com