Why Does Messi Store Close?

After six consecutive quarters of declining sales,

The decision was made to improve and improve the company's operation status.

Messi's department store, which has 158 years of history, is the largest chain corporation in the United States. The speed of closing stores has increased dramatically in recent years. In January 2015, Messi announced that it had closed 14. In September of the same year, it announced another 35-40 closes. In August 2016, it closed nearly 100 stores in the United States, which accounted for 15% of the total number of entities in the United States, accounting for 4% of the company's annual sales.

Why do I have to close the shop again?

Messi's Department reported recently that its operating income fell 7.4% in the first quarter of this year, down 5.6% from the same period last year, the biggest decline since the global financial crisis in 2008 and the worst performance in seven years.

Profits in the second quarter were $11 million, compared with $217 million in the same period last year.

Messi store official said that after six consecutive quarters of declining sales performance, the company decided to close the shop in order to better improve and improve the company's operation status.

Messi's department store will also be accompanied by new layoffs. This is also aimed at concentrating the existing resources, allowing excellent employees and more funds to concentrate on those outstanding stores to enhance their competitiveness.

From last summer to the end of last year, the stock price of Messi's department had shrunk by nearly half, and its same store sales also fell for several consecutive quarters. This performance has left analysts with no optimism about their earnings expectations.

Although Messi stores did a good discount to consumers in early July, and made some efforts in publicity and promotion, the two quarter's earnings performance was slightly better than expected. But compared to the overall situation, the prospect of Messi's department store is still not optimistic.

Brian Duke, a capital market analyst at RBC Capital Markets, Royal Bank of Canada, said the group's basic data seemed to have hit bottom.

Jeff Kinnit, who will take over as chief executive of Messi department next year, said that most of the shops that are closing down have been declining in recent years, closing a large number of stores to create better shopping experiences for customers in other profitable stores, and also to invest in fast-growing online shopping. Lundgren,

Karen Hoggett, chief financial officer of Messi, pointed out that as more and more consumers are keen on

The department store market in the United States has been saturated, and consumers' demand for physical shopping can hardly support the existence of so many department stores.

Analysts also believe that most department stores in the United States should reduce the size of their stores. Although this will hurt sales figures, the funds, inventories and talents invested in the loss stores will be pferred to better performing stores, which will ultimately help improve overall performance.

The rise of online shopping has made consumers accustomed to convenience and discounts, and the demand for department stores has been further reduced. Many department stores have opened discount stores.

The magazine points out that the practical significance of Messi's department store lies in the fact that

The rise of such electricity providers, as well as the boom in selling products by countless start-up companies in New York Brook forest area, is even hard for old department stores to cope with.

Although Karen Hoggett also affirmed the impact of the electricity supplier, but he said in a recent conference call, Messi's department store has an advantage.

Compared with rival Amason's physical store, the store area of Messi's store is much larger than that of Amason.

After all, nearly 90% of retail pactions in the United States are carried out online.

Analyst Poonam Goyal said Messi's department store finally began to move in the right direction.

But analysts are still wondering whether Messi can solve the problem of declining sales and customers turning to online shopping.

What can we do to save lives?

Messi, chief executive officer of department store, Terry Lundgren, said most stores will close at the beginning of next year, and the closing of the store will be part of the strategic pformation and operation of the company.

According to reports, this store plan is Messi department store to stimulate sales growth, and online retail giant Amazon and discount retailer TJX competition and other latest initiatives.

Some analysts believe that measures such as Guan Dian will help Messi department store recover rapidly, but others think there are other problems to be solved.

Brigitte Weisshall, analyst at Morningstar Equity Research, believes that Messi's move will be a long way to improve profitability and focus on higher opportunities for return on investment.

It is reported that Messi stores will shift their focus to online shopping after closing stores.

With the change of consumers' shopping habits, the convenience and low price offered by online shopping make many consumers no longer so keen on shopping in large shopping malls.

When Amazon began to enter the fashion industry and had successfully attracted more and more fashion brands to enter, Lundgren said he no longer expected consumers to spend more money on Messi's physical stores.

Analysts estimate that Amazon has accounted for about 7% of the total apparel market in the United States, and that proportion will reach 19% by 2020.

According to their estimates, Amazon's clothing sales have exceeded all American retailers except WAL-MART, the largest retailer.

Magazine analysts pointed out that Amazon's performance will continue to rise, and is expected to surpass Messi stores in 2017 to become the top selling clothing retailer in the United States.

{page_break} therefore, in order to better adapt to the consumer habits of consumers and facilitate the shopping of consumers, Messi stores will focus more on online shopping.

Lundgren also said that the closure of the store is also to shift the focus of the operation of the company to the construction of the electricity supplier department.

In addition to closing some of the physical stores, Messi stores will try new store operation mode.

According to Business Insider, a well-known US financial and technology website, in June of this year, Messi stores refurbished some stores in Ohio and opened up a new "store in store" mode.

Consumers can experience more products and services in the new Messi department store.

For example, when you join a Spa store in a department store, you can also relax in a Spa store when you shop.

In addition, the department stores opened up a healthy life experience area for consumers.

There are healthy fruit and vegetable drinks, sportswear, and skin care products.

Customers can feel the effects of different products here, and professional salesmen will answer questions for consumers at any time.

Pointed out that in this strategic pformation plan, in order to deal with discount retailer TJX, Messi stores will launch more price promotions.

For example, some of Messi's department stores have launched a "LastAct" price reduction clearance area.

Here, consumers can scour all kinds of big brands at very cheap prices.

In addition, Messi stores will also offer new stores that sell luxury and cosmetic products, and expand service delivery services on the same day in the us to better compete with Amazon.

Lundgren said: "we are doing business in a rapidly changing world. Our company must continue to innovate and move forward on the basis of past traditions."

But the company's strategy to boost its performance has been considered "too confusing" by the outside world.

Johnson, President of Customer Growth Partners, a retail consultancy, believes that these measures are not enough and should attract more "millennials" (18-25 years old) consumers.

Switch to the new battlefield of e-commerce

The recession of physical retailers is not just a problem for the Messi family, but the physical retailers in the US are having a hard time.

Since the beginning of this year, major retailers have been showing disappointing sales figures, and the wave of closing stores seems to be spreading throughout the US retail industry.

WAL-MART has closed 269 stores this year, and Sears announced that it will close 78 stores. Sears plans to close 18 poorly managed stores, WAL-MART said.

Other large chain enterprises such as Taghit (Target), Jesse Pani store (JCPenney) and Sears (Sears) have closed stores in recent months.

In addition to the department stores, some luxury brands have been shut down.

According to data from overseas institutions, eight leading luxury brands have closed nearly 40 stores in just 3 months this year, among which men's luxury brand Zegna (Zegna) has topped the list of stores, closing 15 stores in the first quarter.

Luxury brands in Italy have become the worst hit areas. Gucci stores (Gucci), Bottega Veneta, Prada (Prada) and other stores closed the top.

Faced with the heavy losses of the entity store, many retailers have to face fierce competition in the high-end market and rely on continuous cost cutting to maintain company revenue.

However, as the performance of e-commerce platform is getting more and more gratifying, more and more retailers are starting to switch to e-commerce platform.

For the sale of e-commerce platform, there was a view that consumers would not buy a $4000 brand handbag online, but reports from some research institutions showed that the latest consumer study found that in the past year, 27% of consumers bought at least 1 luxury items on the Internet platform, which is 17% higher than the previous year.

So, in addition to the official website of the major brands, another main battleground is Amazon's third party retail platform.

Data show that in the past year, 98% of the customers interviewed said they had bought goods on Amazon, so as luxury brands pay more and more attention to online sales, it is likely that there will be direct competition between the official website of the brand and the third party platforms such as Amazon.

It is pointed out that the reason for this trend is that the "millennial generation" consumers have completely changed their buying habits of electricity suppliers and luxury goods, and the shopping habits of older consumers are changing.

Data show that over the past year, more than 1/3 of the "millennial generation" consumers are shopping on e-commerce platforms, or even buying valuable luxuries. Even the percentage of elderly consumers over 61 who buy luxury goods on e-commerce platforms has reached 6%.

It is estimated that luxury brands will account for 40% of their total sales in 2020.