Macy's Hits The Pause Button On Chinese Expansion Plans
By Sam Lewis
Economic slowdown is not the cause of delay in retailer’s new market development
Cincinnati-based Macy’s has decided to delay online expansion plans in China. The department store’s decision was not based upon worries regarding the slowdown of China’s economy, although many retailers share that concern. Instead, Macy’s put its plans on hold to further educate itself regarding Chinese shoppers.
“While our company has interest in international markets over the long term, we have no current plans for an expanded presence in China,” says Macy’s spokesman Jim Sluzewski. In 2012, Macy’s bought a $15 million stake in VIPStore, a Chinese e-commerce company. Macy’s announced that it would sell its private-brand merchandise through a Macy’s section on Omei.com, which sells fashion and luxury brands and is operated by VIPStore. Regarding the 2012 purchase, Macy’s chairman and CEO Terry Lundgren said, “Our relationship with VIPStore will allow us to gain additional experience in the fast-growing Chinese market, and to better understand how consumers across China interact with Macy’s and the products we sell.”
The Chinese market continues to wait for an expanded Macy’s presence, but the well hasn’t run dry for Chinese shoppers seeking Macy’s merchandise. Those interested in purchasing items from Macy’s can do so through the company’s U.S. e-commerce presence and have them delivered to China. The department store chain also holds a firm belief in the Chinese market’s ability to benefit the company. Regarding expansions in China, Macy’s CFO Karen Hoguet said during an analyst conference in May, there is, “a lot of growth and a big opportunity for lots of stores.”
Macy’s isn’t wrong in their assessment of the Chinese market. China is the world’s largest online marketplace for retail sales. Since 2009, online sales have increased more than 70 percent in China, and are expected to reach nearly $540 billion by 2015. With such big numbers coming from, and expected to continue to come from, China, it’s no wonder why North American retailers see so much potential in the Eastern country.
However, expanding in China will not be easy for Macy’s. China is currently undergoing an economic slowdown in which companies in the country are adjusting strategies to get by. Despite the slowdown, and subsequent worries regarding it from retailers around the world, China doesn’t seem to be overly concerned. “Nothing has come as a surprise. The slowdown of the Chinese economy is an intended result of our own regulatory initiatives,” says President Xi Jinping. “I wish to emphasize that based on a comprehensive analysis of all factors, I am fully confident about the future of China's economy.”
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