02/06/2017
Is Hudson’s Bay Trying to Buy Macy’s? Experts Weigh In
The rumor mill was spinning at full speed late last week when it was reported that Hudson’s Bay is in talks to buy Macy’s. While the acquisition is nothing more than speculation at this point, the deal could have large-scale implications for the two retailers and the retail industry at large should it materialize.
It is no secret that Macy’s has been struggling. Once the poster child for the ominchannel era, the iconic American department store chain has seen sales continue to shrink as shoppers flock to discount and e-commerce retailers in droves. Shoppers no longer view a trip to the mall as a day-long social event, and as foot traffic in many malls continues to dwindle large footprint department store chains like Macy’s have been hard hit.
This is not to say Macy’s is content to sit on the sidelines and see its business dwindle ? far from it. The retailer has made some bold moves over the past few months to try and right the ship, including the announcement in January that it will be closing 68 underperforming stores. While in-store sales have been dragging Macy’s has actually seen an uptick in its digital business, posting double-digit gains at both Macys.com and Bloomingdales.com in Q3 2016.
As Macy’s continues to realign its operations to reflect consumers’ changing shopping behavior, its future remain uncertain. Will it continue to close stores and focus on e-commerce sales? Will it be bought out and/or partner with another mega retailer to steady the ship? Time will tell. The latest rumors of a sale to Hudson’s Bay have yet to be confirmed and neither side has issued a statement, but when there is smoke there is often fire.
RIS asked a group of retail experts to comment on what the potential sale could mean for the industry and the two iconic retailers. Below are their responses:
“It would be a very interesting combination as there is a tremendous need for transformation in the department store category. The sector is tremendously overstored and somewhat dependent on the success of getting people to malls. We used to have to shop and now we have to want to shop to go to those stores. The biggest issue I see in a combined entity would be the sheer number of stores that would have to be reduced. At the same time, whether separate or together they must give customers a reason to come to those stores and work with mall owners as well to drive traffic. Then finally, they need to transform technologically to compete effectively with Amazon. The good news for Macy’s is they are one of the leaders in RFID technology and have seen great results with comps for those items tagged. Retailers must turn their locations into advantages to compete with Amazon on local delivery. RFID is key to that because you must have an accurate inventory count to ship from store. Macy’s is ahead of most in this area.”
– Greg Buzek, founder and president, IHL Group
“Hudson’s Bay’s takeover of Macy’s would be a self-destructive move ? a consolidation of two sick entities that will be forced to cut jobs in order to heal some symptoms while likely creating more damage. Customers are bound to have an even worse experience with the combination of the two fledgling companies ? and so the same evolution will continue as customers move away from the traditional retailers and to Amazon. Acquisition or no acquisition, retailers like Macy’s and Hudson’s Bay can continue to operate status quo, and fall off the map one by one, or they can understand that the Amazon model ? the online marketplace ? is the future of retail.”
– Adrien Nussenbaum, U.S. CEO and co-founder, Mirakl
“It’s hardly surprising to see more consolidation in the department store sector as companies continue to battle Amazon for the mid-market consumer. An acquisition makes sense in the short term and alleviates pressure from investors for continued growth in value, but the real question is does this move the needle in the company’s ability to re-engage that core consumer in the longer term? Hudson’s Bay continues to show positive signs in their assortments. However it’s a whole different play to do this across a portfolio the size of Macy’s. The good news is, Hudson’s Bay is not new to the acquisitions and mergers arena. It could be just the stimulus Macy’s needs.”
? Stuart Aldridge, Principal, Columbus Consulting
“Should the acquisition happen, the conversation will quickly turn to what Hudson’s Bay will do with all of this real estate, inventory and a struggling brand. We believe the answer is omnichannel. They must evolve the brand from their current almost bargain basement feel with harried and undereducated staff to an omnichannel experience center. This means better equipping their sales force with selling tools, product information and simple customer delivery (like in store pick up programs), creating engaging and interactive store experiences and looking at how to refresh and personalize the shopping experience online, on the phone (something Macy’s has traditionally struggled to get right) and in the store. The loyalty for this 159-year old retail veteran has been wavering for some time, but we know that today’s consumer loves innovation and with the right personalization and customer influence strategy in place, Macy’s and Hudson’s Bay can right the ship, energize their customer base and compete at the level with even the most agile of e-commerce retailers.”
? Jennifer Sherman, senior vice president of product and strategy, Kibo
It is no secret that Macy’s has been struggling. Once the poster child for the ominchannel era, the iconic American department store chain has seen sales continue to shrink as shoppers flock to discount and e-commerce retailers in droves. Shoppers no longer view a trip to the mall as a day-long social event, and as foot traffic in many malls continues to dwindle large footprint department store chains like Macy’s have been hard hit.
This is not to say Macy’s is content to sit on the sidelines and see its business dwindle ? far from it. The retailer has made some bold moves over the past few months to try and right the ship, including the announcement in January that it will be closing 68 underperforming stores. While in-store sales have been dragging Macy’s has actually seen an uptick in its digital business, posting double-digit gains at both Macys.com and Bloomingdales.com in Q3 2016.
As Macy’s continues to realign its operations to reflect consumers’ changing shopping behavior, its future remain uncertain. Will it continue to close stores and focus on e-commerce sales? Will it be bought out and/or partner with another mega retailer to steady the ship? Time will tell. The latest rumors of a sale to Hudson’s Bay have yet to be confirmed and neither side has issued a statement, but when there is smoke there is often fire.
RIS asked a group of retail experts to comment on what the potential sale could mean for the industry and the two iconic retailers. Below are their responses:
“It would be a very interesting combination as there is a tremendous need for transformation in the department store category. The sector is tremendously overstored and somewhat dependent on the success of getting people to malls. We used to have to shop and now we have to want to shop to go to those stores. The biggest issue I see in a combined entity would be the sheer number of stores that would have to be reduced. At the same time, whether separate or together they must give customers a reason to come to those stores and work with mall owners as well to drive traffic. Then finally, they need to transform technologically to compete effectively with Amazon. The good news for Macy’s is they are one of the leaders in RFID technology and have seen great results with comps for those items tagged. Retailers must turn their locations into advantages to compete with Amazon on local delivery. RFID is key to that because you must have an accurate inventory count to ship from store. Macy’s is ahead of most in this area.”
– Greg Buzek, founder and president, IHL Group
“Hudson’s Bay’s takeover of Macy’s would be a self-destructive move ? a consolidation of two sick entities that will be forced to cut jobs in order to heal some symptoms while likely creating more damage. Customers are bound to have an even worse experience with the combination of the two fledgling companies ? and so the same evolution will continue as customers move away from the traditional retailers and to Amazon. Acquisition or no acquisition, retailers like Macy’s and Hudson’s Bay can continue to operate status quo, and fall off the map one by one, or they can understand that the Amazon model ? the online marketplace ? is the future of retail.”
– Adrien Nussenbaum, U.S. CEO and co-founder, Mirakl
“It’s hardly surprising to see more consolidation in the department store sector as companies continue to battle Amazon for the mid-market consumer. An acquisition makes sense in the short term and alleviates pressure from investors for continued growth in value, but the real question is does this move the needle in the company’s ability to re-engage that core consumer in the longer term? Hudson’s Bay continues to show positive signs in their assortments. However it’s a whole different play to do this across a portfolio the size of Macy’s. The good news is, Hudson’s Bay is not new to the acquisitions and mergers arena. It could be just the stimulus Macy’s needs.”
? Stuart Aldridge, Principal, Columbus Consulting
“Should the acquisition happen, the conversation will quickly turn to what Hudson’s Bay will do with all of this real estate, inventory and a struggling brand. We believe the answer is omnichannel. They must evolve the brand from their current almost bargain basement feel with harried and undereducated staff to an omnichannel experience center. This means better equipping their sales force with selling tools, product information and simple customer delivery (like in store pick up programs), creating engaging and interactive store experiences and looking at how to refresh and personalize the shopping experience online, on the phone (something Macy’s has traditionally struggled to get right) and in the store. The loyalty for this 159-year old retail veteran has been wavering for some time, but we know that today’s consumer loves innovation and with the right personalization and customer influence strategy in place, Macy’s and Hudson’s Bay can right the ship, energize their customer base and compete at the level with even the most agile of e-commerce retailers.”
? Jennifer Sherman, senior vice president of product and strategy, Kibo
