Macy's Brings Back Consumer Electronics With Best Buy Partnership--Update
September 08 2015 - 5:37PM
Dow Jones News
By Suzanne Kapner
Macy's Inc. executives have lamented for months that consumers
are spending money on things the department store chain doesn't
sell such as food, travel and electronic gadgets. Now, Macy's is
attempting to strike back.
The retailer announced Tuesday that Best Buy Co. will open 10
shops in Macy's stores in November. The 300-square-foot shops will
be staffed by Best Buy employees and will sell Samsung Electronics
Co. smartphones, tablets and smartwatches as well as speakers,
headphones and accessories from Samsung and other brands. Apple
Inc. products such as the iPhone or iPad aren't part of the
agreement.
The arrangement brings together two brands that are struggling
to stay relevant amid changing shopper behavior. After growing
strongly for years, Macy's sales have slipped as consumers have
come to favor gadgets and experiences over the typical department
store fare of apparel and home furnishings.
"We are seeing customers gravitating to restaurants,
recreational services, health care and electronics, rather than to
traditional general merchandise, apparel and furnishing
categories," Karen Hoguet, Macy's chief financial officer, told
analysts last month on a conference call to discuss the retailer's
quarterly results, when sales dropped 2.6% from a year ago.
Best Buy, meanwhile, has been faced with an onslaught of
competition and pricing pressure from online retailers that has
resulted in consumers browsing its stores but buying elsewhere,
often for a lower price. Jeffrey Shelman, a Best Buy spokesman,
said the Macy's test would give Best Buy additional ways to reach
shoppers.
Jeff Gennette, Macy's president, said in a news release that
customers had expressed an interest in electronics, but that it was
too soon discuss next steps.
"Apparel has been losing out to consumer electronics in terms of
consumer spending for a decade," said Craig Johnson, the president
of Customer Growth Partners, a market research firm. "If you can't
beat 'em, join 'em."
The partnership with Best Buy will mark the first time Macy's
has sold consumer electronics on a regular basis in several years.
Macy's Herald Square flagship store in New York City had a J&R
electronics store located inside until remodeling on the property
began in 2012. While some Macy's stores have carried electronic
items around the holidays, they were stocked as seasonal products
and in limited quantities, according to spokesman Jim
Sluzewski.
The Best Buy deal mirrors other partnerships Macy's has struck
in recent years with Sunglass Hut and Finish Line. The arrangements
allow Macy's to broaden its offerings while bearing minimal expense
because the brands pay a fee for the space and shoulder the cost of
maintaining and staffing the shops. This so-called concession model
is widely used in Europe, but has been slower to catch on among
U.S. department stores.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 08, 2015 17:22 ET (21:22 GMT)
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