Dive Brief:

• As Macy’s sheds stores, market share is fleeing to rivals, according to a report emailed to Retail Dive from retail think tank Coresight Research. Even benchmarked against a sector hit by declining sales, Macy’s saw a 410-basis-point decline in apparel share as annual revenues fell by $3 billion between 2012 and 2017, according to the report. 

• Among respondents who spend less on apparel at Macy’s than they used to, 53% of Prime members said they’ve switched to Amazon versus 22% of non-Prime members, Coresight found. Young consumers are not flocking to Amazon: those ages 18–29 show a below-average rate of switching their apparel spending there from Macy’s, according to the report.

• Other beneficiaries of Macy’s woes are off-price and discount mass merchants, Coresight found. Non-Prime members have redirected their apparel spending to Walmart (23.8%), Kohl’s (23.8%) and T.J.Maxx (21.8%) at either the same or a higher rate than their switch to Amazon. While 53% of Prime members turned to Amazon, Target (19.2%), T.J. Maxx (24.2%), Kohl’s (20.1%), Nordstrom and Rack (13.2%) and Costco (14.6%) have also "gained meaningfully" according to the report.

Dive Insight:

Macy's last month announced the closure of 11 more stores, four of which had been previously disclosed. With those closures, the department store will have completed 81 of the approximately 100 planned store closures announced in August 2016. Including the planned closures, Macy's has shuttered 124 stores since 2015. While the announcement comes amid a generally upbeat holiday sales report, Amazon's apparel gain is notable.

Only struggling Sears has seen a comparable decline in sector share, according to data from Euromonitor International cited by Coresight.

Coresight’s study squares with recent research from digital marketing agency CPC Strategy, which found that more than half (52%) of apparel shoppers (not just Macy’s shoppers) who bought clothing online in the last six months said they shopped at Amazon. 

None of it surprises Lee Peterson, EVP of brand strategy & design at design firm WD Partners. "That’s pretty high," he told Retail Dive in regards to Macy's market share loss measured by Coresight, "But generally I would say in retail it’s 'death by a thousand cuts' and that’s what’s going on. When you lose relevance it starts to go a little bit here, a little bit there. You’re not getting the younger customers, and the older customers are going online because it’s so easy. Macy’s hasn’t done a good job determining what people want — that doesn’t help."

In the old days that would hurt you for a season, he said. But now he sees retail in three big chunks: discounts, convenience and "third wave," which he defines as a special attribute of cool only attained by cultivating unique designs, aesthetics or experiences.

That point shows up in another nugget in Coresight’s report: 37.5% of U.S. consumers surveyed said clothing is now less of a spending priority. "The prominence of value retailers as switching destinations indicates that shoppers have downgraded apparel as a spending priority," according to report author and Coresight CEO Deborah Weinswig.

Brands with a preexisting audience have the upper hand on Amazon, according to CPC Strategy’s report. That requires a brand promise based on more than price. Even off-price retailers and warehouse membership retailer Costco, where shoppers flock for value, offer a treasure hunt atmosphere in stores. And Target has made a concerted effort to boost its merchandising and customer experience in stores, which executives have said is paying off.