Macy's Spends Big to Ship Nationwide from North Carolina?
Macy's Spends Big to Ship Nationwide from North Carolina?
A new release out of Macy's makes you wonder what is going on with their supply chain planning.
The reports are they are planning on introducing a $584M facility in North Carolina, based on a report which says the facility will launch in 2024.
The new facility will serve 30% of its volume and ship nationwide.
This is odd to me for a few reasons:
1 - That is a lot of cash to drop on a new fulfillment center. Is it totally necessary or are they playing financial games with tax breaks?
There are many providers where you don't have to put that much cash up-front to establish large fulfillment centers. Instead that is converted to operational expenses.
Macy's does have the volume to justify it, but I am not hearing enough how this is part of an optimized supply chain strategy.
2 - The amount of money on this new facility is in the range of similar facilities from Amazon. Is the facility as efficient as Amazon? Big question.
3 - Unlike Target, Macy's is not terribly focused on shipping directly from its stores -- which are more often attached to (declining) malls and not stand-alone.
What then is the path to lower its supply chain costs?
4 - UPS must overjoyed since Macy's is a UPS customer. If you are shipping nationwide from North Carolina, you must be pretty comfortable using an end-to-end carrier rather than trying to use different partners or breaking up the fulfillment process into various components/legs of the journey.
"We ship nationwide from North Carolina" said almost no one.
5 - Half a billion dollars could probably have been used to upgrade and modernize their store experience.
I still feel that despite the growth in their digital ecommerce business, Macy's cannot win on digital alone. If it wants to win, it needs to present a coherent plan for getting customers back into its stores consistently.
Which means retail stores remodeling. i..e that half a billion in cash could have been put on concept stores that would help them transform physically.
