Macy's withdraws from China
Macy’s is closing its online store on Tmall, Alibaba's Chinese-language B2C e-commerce platform, marking the department store's exit from the country. The e-store will stop all operations on December 31.
The closing marks the department store's second major withdrawal from China, which houses one of the world's largest consumer markets, following the close of its Chinese-language e-commerce site Macys.cn in June.
The department store announced the end of its partnership with Fung Group's Fung Retailing Ltd in May.
According to experts, Macy's lack of success in the Chinese market comes down to a combination of being distracted by the need to re-focus efforts on its native business, the lack of a physical presence in China, and an inability to integrate itself in a way that appeals to Chinese consumers in the country's crowded e-commerce market.
“There was definitely a focus on getting the U.S. business turned around, and management wanted to be laser-focused on that challenge; the business was tough, they were closing stores, and they were focused on getting that fixed,” said Stephen Rector, president of Bakertown Consulting and a former employee of Macy’s in an interview with Digiday. Rector worked with Macy’s to develop its Chinese e-commerce operations throughout 2017 and 2018.
On top of the department store being unable to carry certain products in the Chinese market due to the limitations of local distributor partnerships, a specific shortcoming on Tmall came down to algorithms, which pushed Macy's ranking down in favor of single-category brands.
“Tmall algorithms don’t help a department store — if you look at other stores on Tmall, they’re focused on one category,” Rector told Digiday. “For Macy’s, it was an uphill battle with the algorithm."
Despite this frustration, Rector said American retailers need not give up on Chinese expansion.
“It’s a huge opportunity, but you have to have patience,” he said. “I would say [Macy’s exit] is disappointing; I understand why they did it, but for other retailers, it’s not a reason not to enter the market.”
Macy’s will now use its U.S. e-platform to ship to Chinese consumers.
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