Macy's (M) Shelves Internet Expansion Plans In China, But It Isn't Worried About Slowing Chinese Economy

  @SophieXSong on October 07 2013 10:31 AM
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    A Macy's store. Reuters
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    Customers stand outside Macy's store in New York. REUTERS/Brendan McDermid
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Macy’s, Inc. (NYSE:M) is putting off an online-expansion plan in China, which included online sales of a private-label brand, but not because the department store operator is worried about the slowdown in the world’s second-largest economy, as many others are.

The Cincinnati, Ohio, company said its plans are on hold because it needs to learn more about Chinese shoppers, said Macy’s spokesman Jim Sluzewski, the Wall Street Journal reported on Sunday.

"While our company has interest in international markets over the long term, we have no current plans for an expanded presence in China," said Sluzewski.

Last year, Macy’s purchased a $15 million minority stake in Chinese e-commerce company VIPStore Co. and announced that the U.S. retailer will sell a selection of its private-brand merchandise to Chinese consumers through a Macy’s section on Omei.com, a China-based online retailer of in-season luxury and fashion brands operated by VIPStore, according to the Internet Retailer.

“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,” said Terry J. Lundgren, chairman, president and CEO of Macy’s, at the time of the purchase.

That market will have to wait a while longer for Macy’s offerings, but in the meantime, Chinese consumers can order from the U.S. Macy’s website and get them delivered to China, according to the Wall Street Journal.

Earlier this year, fellow American retailer Neiman Marcus Group Inc. closed a mainland warehouse that was established to fill orders for the company’s e-commerce site, and is now shipping from its U.S. warehouses because it is more efficient, Ginger Reeder, a company spokeswoman said.

China is now the world’s largest online retail marketplace, having grown more than 70 percent annually since 2009, and is expected to reach $539 billion by 2015, according to Bain & Co., making it a lucrative and essential market for western retailers.

China is among the countries where Macy's believes there is "a lot of growth and a big opportunity for lots of stores," Macy's Chief Financial Officer Karen Hoguet said during a May analysts conference, according to the Wall Street Journal

However, expansion into China won’t be easy by any means. Amidst an economic slowdown, even domestic Chinese e-commerce companies are readjusting their strategies to survive in the competitive market. Internet portal NetEase shut down its luxury commerce site, NetEase Premier, in January, after less than a year in operation.

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