Messi Department Store Frequent Shop Self Rescue Prospects Are Still Not Optimistic.

Macy s, which has 158 years of history, is the largest chain corporation in the United States, located in Pioneer Square, New York.

When it opened in 1924, it was known as "the largest store in the world", and the old retail business in the United States has closed 77 stores in the past six years. The speed of closing stores has greatly increased in recent years. In January 2015, Messi announced that it had closed 14 stores, and announced another 35-40 closure in September. In August 2016, it closed nearly 100 entities in the United States, accounting for 15% of the total number of entities in the United States, accounting for 4% of the company's annual sales.

Why do I have to close the shop again?

Messi's Department reported recently that its operating income fell 7.4% in the first quarter of this year, down 5.6% from the same period last year, the biggest decline since the global financial crisis in 2008 and the worst performance in seven years.

Profits in the second quarter were $11 million, compared with $217 million in the same period last year.

Messi store official said that after six consecutive quarters of declining sales performance, the company decided to close the shop in order to better improve and improve the company's operation status.

Messi's department store will also be accompanied by new layoffs. This is also aimed at concentrating the existing resources, allowing excellent employees and more funds to concentrate on those outstanding stores to enhance their competitiveness.

From last summer to the end of last year, the stock price of Messi's department had shrunk by nearly half, and its same store sales also fell for several consecutive quarters. This performance has left analysts with no optimism about their earnings expectations.

Although Messi stores did a good discount to consumers in early July, and made some efforts in publicity and promotion, the two quarter's earnings performance was slightly better than expected. But compared to the overall situation, the prospect of Messi's department store is still not optimistic.

Brian Duke, a capital market analyst at RBC Capital Markets, Royal Bank of Canada, said the fundamentals of the group

It seems to have hit the bottom.

Jeff Kinnit, who will take over as chief executive of Messi department next year, said that most of the shops that are closing down have been declining in recent years, closing a large number of stores to create better shopping experiences for customers in other profitable stores, and also to invest in fast-growing online shopping. Lundgren,

Messi, chief financial officer of the department store of Karen Hoggett, pointed out that as more and more consumers are keen on online shopping, the department store market in the United States has been saturated, and consumers' existing demand for physical shopping simply can not support the existence of so many department stores.

Analysts also believe that most department stores in the United States should reduce the size of their stores. Although this will hurt sales figures, the funds, inventories and talents invested in the loss stores will be pferred to better performing stores, which will ultimately help improve overall performance.

The rise of online shopping has made consumers accustomed to convenience and discounts, and the demand for department stores has been further reduced. Many department stores have opened discount stores.

Fortune pointed out that the real significance of Messi's department store is that in the face of the rise of electricity providers such as Amazon, as well as the boom in selling products by many start-ups in New York's Brook forest area, even old department stores are hard to deal with.

Although Karen Hoggett also affirmed the impact of the electricity supplier, but he said in a recent conference call, Messi's department store has an advantage.

Compared with rival Amason's physical store, the store area of Messi's store is much larger than that of Amason.

After all, nearly 90% of retail pactions in the United States are carried out online.

Poonam Goyal, analyst at Bloomberg, said that Messi's department store finally began to move in the right direction.

But analysts are still wondering whether Messi can solve the problem of declining sales and customers turning to online shopping.

What can we do to save lives?

Messi, chief executive officer of department store, Terry Lundgren, said most stores will close at the beginning of next year, closing the store.

Part of the operation adjustment.

According to Reuters, the store's plan is Messi's latest move to stimulate sales growth and compete with online retail giant Amazon and discount retailer TJX.

Some analysts believe that measures such as Guan Dian will help Messi department store recover rapidly, but others think there are other problems to be solved.

Brigitte Weisshall, analyst at Morningstar Equity Research, believes that Messi's move will be a long way to improve profitability and focus on higher opportunities for return on investment.

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The Wall Street Journal reported that Messi stores will shift their focus to online shopping after closing stores.

With the change of consumers' shopping habits, the convenience and low price offered by online shopping make many consumers no longer so keen on shopping in large shopping malls.

When Amazon began to enter the fashion industry and had successfully attracted more and more fashion brands to enter, Lundgren said he no longer expected consumers to spend more money on Messi's physical stores.

Morgan Stanley analysts estimate that Amazon has accounted for about 7% of the total apparel market in the United States, and that proportion will reach 19% by 2020.

According to their estimates, Amazon's clothing sales have exceeded all American retailers except WAL-MART, the largest retailer.

Analysts at fortune pointed out that Amazon's performance will continue to rise and is expected to surpass Messi's department store in 2017 and become the number one clothing retailer in the US.

Therefore, in order to better adapt to the consumer habits of consumers and facilitate the shopping of consumers, Messi stores will focus more on online shopping.

Lundgren also said that the closure of the store is also to shift the focus of the operation of the company to the construction of the electricity supplier department.

In addition to closing some of the physical stores, Messi stores will try new store operation mode.

According to Business Insider, a well-known US financial and technology website, in June of this year, Messi stores refurbished some stores in Ohio and opened up a new "store in store" mode.

Consumers can experience more products and services in the new Messi department store.

For example, when you join a Spa store in a department store, you can also relax in a Spa store when you shop.

In addition, the department stores opened up a healthy life experience area for consumers.

There are healthy fruit and vegetable drinks, sportswear, and skin care products.

Customers can feel the effects of different products here, and professional salesmen will answer questions for consumers at any time.

The Wall Street journal points out that in order to deal with the discount retailer TJX, Messi's department will launch more price promotions in the strategic pformation and adjustment plan.

For example, some of Messi's department stores have launched a "LastAct" price reduction clearance area.

Here, consumers can scour all kinds of big brands at very cheap prices.

In addition, Messi stores will also offer new stores that sell luxury and cosmetic products, and expand service delivery services on the same day in the us to better compete with Amazon.

Lundgren said: "we are doing business in a rapidly changing world. Our company must continue to innovate and move forward on the basis of past traditions."

But the company's strategy to boost its performance has been considered "too confusing" by the outside world.

Johnson, President of Customer Growth Partners, a retail consultancy, believes that these measures are not enough and should attract more "millennials" (18-25 years old) consumers.

Switch to the new battlefield of e-commerce

The recession of physical retailers is not just a problem for the Messi family, but the physical retailers in the US are having a hard time.

Since the beginning of this year, major retailers have been showing disappointing sales figures, and the wave of closing stores seems to be spreading throughout the US retail industry.

WAL-MART has closed 269 stores this year, and Sears announced that it will close 78 stores. Sears plans to close 18 poorly managed stores, WAL-MART said.

Other large chain enterprises such as Taghit (Target), Jesse Pani store (JCPenney) and Sears (Sears) have closed stores in recent months.

In addition to the department stores, some luxury brands have been shut down.

According to data from overseas institutions, eight leading luxury brands have closed nearly 40 stores in just 3 months this year, among which men's luxury brand Zegna (Zegna) has topped the list of stores, closing 15 stores in the first quarter.

Luxury brands in Italy have become the worst hit areas. Gucci stores (Gucci), Bottega Veneta, Prada (Prada) and other stores closed the top.

Faced with the heavy losses of the entity store, many retailers have to face fierce competition in the high-end market and rely on continuous cost cutting to maintain company revenue.

However, as the performance of e-commerce platform is getting more and more gratifying, more and more retailers are starting to switch to e-commerce platform.

For the sale of e-commerce platform, there was a view that consumers would not buy a $4000 brand handbag online, but reports from some research institutions showed that the latest consumer study found that in the past year, 27% of consumers bought at least 1 luxury items on the Internet platform, which is 17% higher than the previous year.

So, in addition to the official website of the major brands, another main battleground is Amazon's third party retail platform.

Data show that in the past year, 98% of the customers interviewed said they had bought goods on Amazon, so as luxury brands pay more and more attention to online sales, it is likely that there will be direct competition between the official website of the brand and the third party platforms such as Amazon.

CNBC pointed out that the reason for this trend is that the "millennial generation" consumers have completely changed their buying habits of electricity suppliers and luxury goods, and the shopping habits of older consumers are changing.

Data show that over the past year, more than 1/3 of the "millennial generation" consumers are shopping on e-commerce platforms, or even buying valuable luxuries. Even the percentage of elderly consumers over 61 who buy luxury goods on e-commerce platforms has reached 6%.

CNBC also predicts that the luxury sales of e-commerce platforms will turn three times in 2025 to 80 billion US dollars.

At the same time, it is estimated that the sales of luxury brands will reach 40% of the total sales volume in 2020.

Therefore, the sales growth on the electronic business platform is the next battleground that the major brands attach great importance to.