Dive Brief:

• Macy's will open a fulfillment center in central North Carolina to serve its growing omnichannel business, the retailer announced last week. 
• The 1.4 million-square-foot facility, set to open in 2024, will have automated direct-to-consumer fulfillment capacity and will employ nearly 2,800 employees when fully operational, according to the press release.
• The facility, in China Grove, will provide significant support for the company's omnichannel capabilities; when fully operational it will account for nearly 30% of Macy's digital supply chain capacity, nationwide.

Dive Insight:

The $584 million project is part of the retailer's wider push to grow its e-commerce operational capacity. In February, the company announced plans to move and expand its Houston distribution center into a 1-million-square-foot facility in Tombhall, Texas.

Macy's is also investing in new automation technology for its Portland, Tennessee, and Martinsburg, West Virginia, distribution centers in an effort to better support its digital business, according to the press release.

"This state-of-the-art facility is a significant milestone for Macy's, Inc. as we invest in strengthening our omnichannel ecosystem," Dennis Mullahy, chief supply chain officer of Macy's, said in a statement. "It will support growth of our business as a leading omnichannel retailer."

Macy's is one of several department store brands investing in new supply chain initiatives to support their omnichannel businesses. The company is following a similar path as competitors like Nordstrom, which began changing its fulfillment center strategy in 2019 in order to manage both its omnichannel and in-store sales. Nordstrom stores doubled as fulfillment centers to better leverage inventory and improve speed and efficiency.

Late last year, J.C. Penney launched a partnership with DoorDash to build out its omnichannel capabilities and offer same-day delivery. Like Macy's, J.C. Penney has suffered heavy financial losses in recent years amid the pandemic and a changing retail landscape, and has turned to omnichannel in an effort to remain competitive.

Macy's, which operates approximately 725 stores across its brands, according to its website, has been working since February 2020 to turn around its struggling sales through its Polaris strategy. The three-year plan, which aims to stabilize and reposition the company for growth, includes digital acceleration and reworking its supply chain to better service omnichannel sales, according to a 2020 company statement.

Despite suffering major setbacks during the pandemic, Macy's announced in August 2021 that the Polaris plan was "working." In its most recent earnings, comparable sales were up 28.3% while digital sales were up 12% year over year and up 36% from Q4 of 2019. Comps for the full year were up 43%. Digital sales grew by 13% from 2020, and digital penetration stood at 35%.