Online sales brought in 37% of Macy’s Inc.’s total sales in its fiscal Q1 2021 ended May 1, up from 24% of sales in Q1 2019. The apparel department store’s online sales reached $1.7 billion for the quarter, a 34% year-over-year increase from Q1 2020, and a 32% increase over Q1 2019, Macy’s reported.
Macy’s provided comparisons to Q1 2019 in addition to Q1 2020 because of the changes in shopping behavior last year that were likely attributable to the pandemic. Macy’s says the Q1 2019 comparison provides a better comparison.
Net sales reached $4.71 billion in Q1, a 56.0% increase from $3.02 billion in Q1 2020, but a 14.4% decrease from $5.50 billion in Q1 2019. Because of the pandemic, Macy’s and other department stores struggled last year. Many physical store locations were closed for weeks or months because of the coronavirus. Plus, once stores reopened, shoppers still avoided indoor spaces, like large indoor department stores.
Macy’s attributes its strong quarter to consumers with more household savings, more socializing outside of consumers’ homes, as well as the U.S. stimulus package and vaccine rollout, CEO Jeff Gennette told investors according to a SeekingAlpha transcript.
“The stimulus encouraged more customers to use cash and debit cards instead of credit, and the increased level of vaccinations boosted store traffic—all encouraging signs as consumers move towards a post-pandemic lifestyle and start to spend more for in-person activities, travel and events,” Gennette said.
The average Macy’s customer spent 10% more in Q1 2021 compared with Q1 2019. Macy’s reported sales in categories fueled by the pandemic haven’t slowed down, such as furniture, sleepwear, and luxury items like fine jewelry and fragrance. Plus, categories that didn’t perform well during the pandemic are now starting to rebound, such as luggage and apparel. In Q1 2021, apparel had an 8 percentage point improvement compared with Q4 2020.
Macy’s is confident sales growth will continue throughout the year and is not a short-term “pop.” One reason is its new buyers. In Q1 2021, Macy’s acquired 4.6 million new customers, a 23% increase from Q1 2019, Gennette said. Of these first-time shoppers, 3 million were brand new, and 1.6 million were “dormant customers” that Macy’s reactivated. What’s encouraging is that its newly acquired shoppers are making repeat purchases. Of the new customers Macy’s acquired in 2020, 17% of them returned for an additional purchase in Q1 2021. Plus, many of these new customers were online buyers.
“Our digital channel is feeling much of this activity. 47% of our new customers in the first quarter made their initial transaction through digital, an increase of 74% compared to Q1 of 2019,” Gennette said. “And even more encouraging is that 82% of digital orders in the first quarter came from repeat customers, the highest penetration of repeat orders we’ve seen in a single quarter.”
Adding pay-in-installment button Klarna has helped Macy’s acquire customers, especially younger ones, Macy’s says. In October 2020, Macys.com added Klarna to its website, which allows shoppers to break up purchases into smaller chunks and pay over time. It has since added the button to its other brands, including Bloomingdales and Bluemercury.
“With Klarna, we continue to see higher spend per visit and an increased acquisition of new younger customers. 45% are under 40,” Gennette said.
The goal is to convert these new shoppers into loyalty program members to ensure they repeat purchases. Macy’s is working to do that through personalization, such as suggesting personalized sizes and colors to shoppers, and customizing the browsing experience around what Macy’s knows about its shoppers, Gennette said without revealing more.
“Our opportunity is to make sure that they’re not a one and done—that they’re not coming in for a single purchase,” Gennette said. “All of what we’re doing with data analytics, everything that we’re doing with personalization is really helping us make sure that we’re moving them through our loyalty channel.”
Macy’s has several other new digital initiatives that it hopes will continue to drive results, such as providing more specific delivery dates for online orders and launching an improved returns experience in the Macy’s app. It also is experimenting with live video shopping, in which its store associates will host live events “to make online shopping just as social and fun as in-person,” Gennette said.
The brand says Macys.com’s conversion rate was 4.0% in Q1 2021, which is up 9% compared with last year, and 60% of its sales are via mobile devices. For its other brands in Q1 2021, online sales are 40% of sales at department store Bloomingdales and 21% at cosmetics brand Bluemercury.
Macy’s is No. 13 in the 2021 Digital Commerce 360 Top 1000.
For its fiscal Q1 ended May 1, Macy’s reported:
- Net sales of $4.71 billion a 60.0% increase from $3.02 billion in Q1 2020
- Net income of $103.0 million compared with a $3.581 billion loss in Q1 2020
- Comparable sales increase of 63.9% compared with a 10.0% decrease in Q1 2019
Percentage changes may not align exactly with dollar figures due to rounding.
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