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NEWS & EVENTS

Why Walmart is soaring while Macy's flounders

The most recent earnings reports from Walmart and Macy’s paint a stark picture of how one retailer is finding its way amid a retail landscape increasingly dominated by e-commerce giant Amazon while the other struggles to regain its footing.

Walmart, the world’s largest retailer, saw rising sales and revenue during the fourth quarter, reflecting its focus on a more efficient in-store experience, deep discounts offered over the holidays, and better options for those choosing to shop online. But Macy's saw sales and revenue fall short during that same three month period as fewer customers browsed its aisles.

"The key difference between Macy’s and Walmart is that Walmart is still able to drive customers to its stores in a way that Macy’s is simply failing to do,’’ says Neil Saunders, managing director of the retail analytics firm Global Data. While Walmart’s grocery offering is a key factor in drawing a steady stream of foot traffic, “the wider truth is that Walmart has also remained relevant to the shopper while Macy’s has failed to differentiate.”

At a time when many retailers are having difficulty enticing consumers to shop in person rather than online,  sales at Walmart stores in the U.S. that had been open at least a year rose 1.8% in the fourth quarter. The retailer also saw a 1% uptick in revenue to $130.9 billion during the three-month period that ended Jan. 27.

Walmart boosted revenue by paring inventory, which decreased 7% during the fourth quarter as compared to the same period the previous year. The retailer also offered deep discounts during the all-important holiday period.

"We’re confident the continued execution of our strategy will drive sustainable growth in traffic and sales," Walmart CEO Doug McMillon said, according to a transcript of a conference call.

Walmart has also been putting more emphasis on customer service, and making its stores and offerings more appealing, with aisles that are better organized and lined with fresh produce and a broader array of premium products.

Macy’s meanwhile is having a more difficult time getting shoppers in the door. Despite shuttering dozens of stores to boost cash and streamline its operations, revenue dropped 4% to $8.5 billion in the fourth quarter of last year. During that period, sales at stores open at least a year, including licensed locations, declined 2.1% from that quarter the previous year. .

The department store chain closed 66 stores in the last fiscal year, and is planning to shutter another 34 in addition to considering what to do with 50 other sites, including its flagship store In New York City’s Herald Square.

"Macy’s has lost control over its store operations, with many stores falling well below the standards consumers expect,'' Saunders says. He added that additionally "Macy’s stores are in locations which are far more challenging as many are in malls and centers where people just aren’t visiting like they used to.''

Retailers are also having to boost their digital offerings at a time when consumers are increasingly buying items ranging from appliances to apparel from Amazon and other online sites.

"Walmart is . . . .making an enormous effort on the e-commerce front,'' says  Clement Thibault, senior analyst at the global financial platform  Investing.com.. Walmart has beenaggressively scooping up online marketplaces, including Jet, which it purchased last year for roughly $3 billion, and outdoor clothing retailer, Moosejaw, which it bought in February for $51 million.

Walmart shoppers can also now get free two-day shipping of the retailer's most popular products if they spend at least $35, or get a purchase even faster by buying it online, then picking it up at a local store.