Macy's Uses Web Site To Make Stores More Attractive

(MoneyWatch)  Macy's, an icon of the traditional American shopping experience, is enhancing online operations to secure its future.

Macysbelieve.com, a seasonal site that combines entertainment, charity and shopping while promoting both online and store visits, is a case in point. Macy's is developing such "sitelets" to drive online sales, but also to build its brand overall. The retailer has invested about $300 million in its web, phone and mail business over the past three years with the money devoted primarily to improving its customers' online experience. Its ancillary sites such as Believe are an important part of the initiative.

Macysbelieve.com uses the Yes, Virginia There Is a Santa Claus homage to Christmas as an invitation to site visitors, who are encouraged to write a letter to Santa and drop it off at a Macy's store. On delivery, the company makes a donation to the Make A Wish Foundation. The video invitation comes from Macy's "stars," the celebrities and designers representing its private label initiatives, including Jessica Simpson, Carlos Santana, Donald Trump and Martha Stewart. While the effort promotes online shopping on the Believe site with a click through to Macys.com, the retailer's encouragement of store visits also supports its tremendous investment in real estate. The store/web interrelationship is further enhanced through an online service called "Find It In Store" that allows customers interested in particular clothing to check size and color availability at any local Macy's. In Florida, the company is testing a service that allows in-store shoppers who can't find what they're looking for at a store to place an electronic delivery order from any checkout counter.

Macy's said combined sales from macys.com and bloomingdales.com rose by 23 percent in the third quarter of 2008 and by 32 percent in the first nine months of fiscal 2008. Macy's expects its direct business to generate about $950 million this year, with online representing the "vast majority" of sales, said a spokesman who didn't provide additional detail.

The store-focused initiatives demonstrate that Macy's isn't as interested in pure Internet retailing as, say, Wal-Mart. By adding web-based services, Macy's offers its store customers amenities that it and the regional department stores it acquired and controversially renamed didn't. Retailers pay for stores so they can trot consumers past product displays and sell them more than they thought they wanted. Balancing web and store shopping has been a dilemma for many established retailers. Some, like Bed, Bath & Beyond, have taken years to make a wholehearted commitment to the Internet. Still, giving up sales to online entities such as Amazon.com that don't pay for real estate galls traditional retailers.

While Macy's is trying to strike its own balance between store and online shopping, it has a way to go, as its basic retail Web site is still a bit dowdy. However, its cash and creative investments suggest that it's at least making progress.