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Retail chains feel pressure from low consumer spending

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Several department store chains report quarterly earnings this week. Macy’s, which reports on Wednesday, announced recently that it’s expanding same-day delivery services and has built a distribution center with the capacity to ship 325,000 orders a day.

Still, it’s been tough on retailers this year. First it was too cold. So cold, in some regions, people couldn’t even shop. Then this: “Because of the strength of the dollar, you’ve seen less tourist traffic coming to the U.S., and when they get here they’re shopping less,” Bridget Weishaar, retail and senior equity analyst at Morningstar, says.

On the bright side, department stores like Macy’s and Nordstrom have been fighting to stay ahead of online retailers like Amazon. Weishaar says stores have one big advantage:
“They have stores and Amazon does not. So they really need to make use of that edge.”

In its stores, Macy’s uses an app to alert your mobile phone as you approach, say, a pair of shoes it thinks you might like. But Andrew Frank, research vice president at Gartner, says everyone’s still learning.

“Retailers are still not completely settled on how to respond to challengers like Amazon,” he says. Learning how to use all the consumer data out there could take years.

 

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