Macy's Rethinks Web Plans in China

Macy's Inc. has shelved an online-expansion plan in China, the latest retailer to do so as economic growth slows in the world's second-largest economy.

The company had planned to begin online sales of a private-label brand in China in the spring, after buying a minority stake last year in Chinese retail company VIPStore Co. 

Macy's, one of the largest U.S.-based department-store operators, has put those plans on hold because it needs to learn more about Chinese shoppers, not because it is concerned about China's slowing economy or appetite for luxury goods, said Macy's spokesman Jim Sluzewski.

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

In May 2012, when Macy's announced the partnership with VIPStore, Macy's Chief Executive Terry Lundgren said he believed it was "a good match for our current interests in selling to Chinese consumers and understanding the market."

Consumers can still order online from Macy's U.S. website and get those goods delivered to China, part of an international strategy started by the company in 2011. Macy's currently sells online to customers in China on a "very limited basis," Mr. Sluzewski said.

Macy's move follows Neiman Marcus Group Inc.'s closure this year of a mainland warehouse to fill orders for the high-end department-store chain's China e-commerce site. Neiman Marcus, which opened the e-commerce site in December, now ships products from its U.S. warehouses because that is more efficient, said Ginger Reeder, a company spokeswoman.

Domestic e-commerce companies in China also have retooled their strategies in the country's fiercely competitive e-commerce market.

In January, Chinese Internet portal NetEase shut down its luxury commerce site, NetEase Premier, after it was in operation for less than a year.

China's booming e-commerce space—which, by some measures, overtook the U.S. this year as the world's largest online retail marketplace—has attracted Western entrants such as handbag maker Coach Inc. and Inditex SA's Zara fast-fashion brand in recent years. Online retail sales in China have increased more than 70% annually since 2009 and are expected to reach $539 billion by 2015, according to consulting firm Bain & Co.

Macy's invested $15 million last year for the minority stake in VIPStore, with plans to sell its private-label brands on a dedicated section of luxury site omei.com, which is operated by VIPStore.

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. 

Source: Wall Street Journal by Kathy Chu