Winners In Traditional Retailing Prove Competing Online Is Survival Key

It is curious that Sears and Penney's, two businesses with storied traditions of catalog sales - an antecedent which might have given them both knowledge and infrastructure to help launch effective online sales efforts - have both failed to do so.

That could reflect a failure of imagination and technological foresight - or the impact of ruthless pruning of human, intellectual and operational expertise in order to shore up fading margins as the mall-focused strategies began to fail. Either way, it has been devastating. Macy's, by comparison, appears to be thriving, possibly because it recognized the threat while it still had the resources to invest in ecommerce. JL


Elizabeth Winkler reports in the Wall Street Journal:

A clear gap has emerged between stores with solid e-commerce operations and those without. Macy’s has seen the strongest online growth in 2018, climbing 28% in monthly order volume since January. Sears’s online order volume fell 25% from January to May. Penney looks only marginally better than Sears. Though it, too, operated a big catalog business, Penney failed to make the necessary digital investments to stay ahead.
When investors were betting that Amazon would crush every traditional retailer, it didn’t matter how their online sales were doing. Now, a clear gap has emerged between stores with solid e-commerce operations and those without.
At the far ends of each group are Macy’s , which continues to beat analyst expectations, and Sears , whose tailspin appears to be accelerating.
A study by research firm Edison Trends highlights the divergence among traditional retailers. Sears, despite promises by Chief Executive Eddie Lampert to boost e-commerce, has made little progress. Over the last 10 months, Sears’s e-commerce sales were just 17% of Macy’s and Kohl’s , according to a report by Edison Trends, even though Sears’s overall revenue was roughly two-thirds that of Macy’s and about 10% less than Kohl’s.
Among a crop of five retailers analyzed by Edison Trends, including Sears, Kmart, Kohl’s, Macy’s, and J.C. Penney , Macy’s has seen the strongest online growth in 2018, climbing 28% in monthly order volume since January. Meanwhile, Sears’s online order volume fell 25% from January to May.
Penney looks only marginally better than Sears. Though it, too, operated a big catalog business, Penney failed to make the necessary digital investments to stay ahead. Investors, who were already disappointed by Penney’s weak first-quarter results and the sudden departure of Chief Executive Marvin Ellison, should keep a wary eye on those numbers.
As Sears shutters stores—it announced another 60 closures last month—e-commerce could have been the company’s future. Instead it has fallen far behind traditional retailers, and is way, way behind its big competitors, Walmart and Target . Maybe Sears should have stuck with the catalog.