From Forbes on January 24, 2017:
With Macy’s wrapping up the 2016 holiday season with yet another sub-par performance, it seems the beleaguered department store can sum up its shopper sentiment with one statement: to Amazon we shall go! According to Prosper Insights’ January 2017 survey of more than 7,500 U.S. adults, more than three-quarters (76.7%) of Macy’s core shoppers headed to Amazon.com during the fourth quarter of 2016 (October, November, and December), up marginally from the same period one year ago (76.2%) and several points higher than the overall average for shoppers in general (73.4%). [Core shoppers are defined as consumers who shop “most often” at a retailer for any one of the 14 major merchandise categories that Prosper tracks monthly – unaided, write-in questions.]
In early 2016, and fresh off of the disappointing 2015 holiday season, Macy’s reaffirmed its commitment to the shopper experience, entertaining customers, even, in order to improve traffic and strengthen the bonds of loyalty. What difference a year doesn’t make. Macy’s shoppers remain entranced by Amazon, evidenced by the fact that they were more likely to shop the online giant during Q4 2016 than Macy’s itself. While the aforementioned 76.7% visited Amazon, only 67.4% actually shopped Macy’s (or Macys.com), the latter figure declining nearly 2% from the same period a year ago. Further, Macy’s woes extend beyond their core customer base; just over one in five (22.6%) consumers in general indicated that they shopped Macy’s in Q4 2016, lowering slightly from the previous year (23.3%).
I’ve previously written about the unique shopping experience that Amazon provides to its customers. Jeff Bezos & Co. have certainly redefined the meaning of “customer service” in the digital era – where happy shoppers don’t necessarily need face-to-face communication to engender loyalty, increased purchase frequency, and larger transactions. By providing consumers with fair pricing, fast and free shipping, product reviews, easy returns, and assistance as needed, Amazon has quickly gained the public’s trust and is currently sitting pretty as the de facto search engine when the buying process is initiated. Where does Macy’s fall within the experience spectrum? Muddled among the other struggling retailers that continue to discount Amazon’s impact on the retailing industry – their brand egos and old business models distorting the view of how shopping behavior has evolved in the digital age.
Further, Macy’s even appears to be behind the curve compared to its peers. According to Prosper’s most recent list of Customer Service Champions, the so-called “Magic of Macy’s” only propelled the department store to the #10 position, just ahead of Sears (#11). Direct competitors, including Nordstrom (#3), Kohl’s (#4), and JC Penney (#8) ranked in more favorable positions. In second place, Amazon bested the entire department store category, landing behind another direct-to-consumer pioneer, L.L.Bean.
Recent data from Prosper’s January 2017 survey continues to support the apathy Macy’s shoppers seem to have toward the retailer. According to the Net Promoter Score* metric of customer loyalty and brand affinity, Macy’s core shoppers who visited a Macy’s store or Macys.com during Q4 2016 rated the retailer with a 34.8% NPS. While that figure is positive, it also represents an 8% decline from a year prior and is nearly 50% lower than the score these same shoppers awarded Amazon (62.4%). Clearly, Macy’s hasn’t made any traction with shoppers on the experience front over the past year, and the only “entertainment” here is likely stemming from Jeff Bezos – I’m pretty sure he’s getting a good belly laugh out of the predicament Macy’s had found itself in.
Pam Goodfellow is Principal Analyst/Consumer Insights Director for Prosper Insights & Analytics™ and editor of the monthly Consumer Snapshot.
* Net Promoter, NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld