Zacks Industry Outlook Highlights: Staples, Macy's, Nordstrom and Chico's FAS

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Nov 20, 2013, 09:30 ET

CHICAGO, Nov. 20, 2013 /PRNewswire/ -- Today, Zacks Equity Research discusses the U.S. Retail, including Staples Inc. (Nasdaq:SPLS-Free Report), Macy's Inc. (NYSE:M-Free Report), Nordstrom Inc. (NYSE:JWN-Free Report) and Chico's FAS Inc. (NYSE:CHS-Free Report).

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Industry: Retail

Link: http://www.zacks.com/commentary/29993/

The retail industry is rapidly evolving with a dramatic change in consumer buying habits. Satisfying customers and enriching buying experience require new strategies from retailers today. Modern retailing, interestingly enough, is a new game with new rules.

Despite the gradual rise in consumer discretionary purchases, the sluggish U.S. economy and continued weak in Europe cannot be ignored. Burdened with the lackluster scenario, retailers have largely concentrated on buyers' needs and lured them with innovative products, attractive discounts, free shipping and the ease of shopping through smartphones and tablets. However, these strategies only helped in generating modest revenues.

Thus, retailers essentially need to come up with brilliant strategies, while incorporating technological advancements and utilizing their real estate portfolio to the optimum level. In short, they need to Experiment, Differentiate, Optimize and Transform. In doing so, most retailers today are adopting an "omnichannel" approach, utilizing all possible mediums to engage consumers, including brick and mortar stores, online, and mobile.

Banking on this new mantra, Staples Inc. (Nasdaq:SPLS-Free Report), the world's largest retailer of office products and services and second largest online retailer, launched its first omnichannel stores, what it refers to as "the future of retail."

Simply put, through this omnichannel strategy, Staples hopes to integrate its retail network with enhanced digital capabilities. The company stated that stores will incorporate its .com and mobile assets. Alongside, the stores will feature Staples.com kiosks.

This new era store concept, with all its attractions could well prove to be a game changer in the long run for Staples. Providing shoppers the ease of shopping on their own terms and enriching their in-store shopping experience could be a crucial point of differentiation among other retailers.

In harmony with the evolving retail industry, department store operator Macy's Inc. (NYSE:M-Free Report) also adopted an omnichannel strategy. Despite macroeconomic challenges and cautious consumer spending, Macy's continues to post healthy results. Management largely attributes the credit to its omnichannel strategy aimed at enhancing customers' shopping experience.

Other notable retailers who are dancing to the tune of the omnichannel strategy include Nordstrom Inc. (NYSE:JWN-Free Report) and Chico's FAS Inc. (NYSE:CHS-Free Report).

Trends to Rule Going Forward

Some of the trends that are expected to rule the retail sector going forward include employing more technological solutions, incorporating customer feedback and targeting additional audiences with products and services.

With the growth of the .com era, shoppers have largely adopted new purchasing modes, using the Internet, mobile phones and tablets. Consumers today prefer to use their laptops or smartphones to compare prices of products they want to buy and place orders online, instead of visiting the company's stores. This growing trend has guided major U.S. retail chains to downsize their physical retail operations, and in turn develop their e-Commerce and m-Commerce sites to attract customers.

Other traits that are expected to affect the retail industry are the growth of self-service options for processes such as checking out and finding items in stores. These offerings provide greater convenience and faster transactions, and they satisfy shoppers who prefer to visit brick-and-mortar locations for immediately purchasing predetermined items.

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