On the heels of another strong quarter, Macy’s today announced the launch of a new curated digital marketplace, which will further build upon the department store’s success in e-commerce and digital.
The marketplace platform will allow third party merchants to sell their products via macys.com and bloomingdales.com, which will help introduce an expanded assortment of products across multiple categories. Macy’s partnered with marketplace technology company Mirakl to create the platform, which is set to launch in the second half of 2022.
The move mark’s Macy’s next step in expanding its already growing digital business. In a call with investors, Macy’s CEO and chairman Jeffrey Gennette said the company’s digital business is on track to generate $10 billion in sales by 2023, excluding revenue expected from the new marketplace platform.
Gennette said the marketplace was the best way to address the demand Macy’s was seeing for different brands the retailer did not currently offer.
“We have a very successful digital business now,” Gennette said in the call. “And the marketplace announcement that we made today was the next natural step in our evolution as a digitally led omnichannel retailer.”
In the third quarter of 2021, digital penetration represented 33% of net sales at Macy’s, up 10-percentage points from 2019. Digital sales increased 19% year over year and grew 49% compared to 2019.
As Macy’s digital business soars, shareholders are pressuring the company to do more to capitalize on this growth. In October, Jana Partners LLC took a stake in Macy’s and sent a letter pressuring the retailer to split its online and store businesses to capitalize on an impressive digital growth in the last few quarters.
Saks Fifth Avenue’s parent company Hudson’s Bay Co. did this in March when it split the retailer’s website and stores into two separate businesses. According a report in Sourcing Journal, Macy’s Inc. recently hired the person behind this split, suggesting the potential for a similar move down the line.
This month, Macy’s shareholders NuOrion Advisors, LLC sent an open letter to the Macy’s board chairman asking for the formation of a “Digital Special Committee” to oversee specific proposals for its digital business. In the letter, shareholders said they want Macy’s to pursue investments from private equity firms for Macys.com and allow shoppers to use cryptocurrency to make payments.
The new marketplace platform represents the next step for Macy’s to bolster its digital business.
“We know that we can grow our digital business faster,” Gennette said. “We can generate more profitability. We can get more depth and breadth of assortment and really address new brands and emerging trends for a customer who looks to us to be able to do that.”
