Macy’s has converted space in 35 of its stores to serve as mini distribution centers (DCs) for online orders as the retailer anticipates a continuation of strong digital demand.
The news was announced on the company’s Q3 2022 earnings call Nov. 17. While digital penetration is nowhere near the highs it reached during the pandemic, when online accounted for approximately 40% of sales, according to Macy’s CEO Jeff Gennette, ecommerce is continuing its pre-pandemic growth trend with digital penetration this year at 33%, up from 25% in 2019.
Macy’s hopes the 35 new semi-automated mini-DCs will help it meet this growing digital demand and give it an edge this holiday season. CFO Adrian Mitchell said the new store-based DCs are “a low-cost complement to our existing fulfillment network” and will help reduce shipping costs, improve delivery speeds and ensure better utilization of inventory.
“We’ve got a lot of our inventory that is forward deployed, [and these new mini-DCs represent] about 1 million square feet of supply chain we didn’t have last year,” said Gennette on the call. “We are looking at all of our ship-alone categories to get those closer to the customer, to increase speed of delivery and also mitigate shipping costs.”
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