This is a trend with the big retailers along with private labeling products. They are coming around to the higher gross margin by selling direct online and also owning products they make. This is good news for some, bad for others in the pure play business.
Federated Invests $100 Million to Attract Web Business
NEW YORK (April 5, 2007) - In an effort to boost its direct-to-consumer businesses, Cincinnati-based Federated Department Stores is injecting approximately $100 million in capital this year and next into Macys.com, Bloomingdales.com, Bloomingdale’s By Mail, Macysweddingchannel.com and Bloomingdalesweddingchannel.com.
“Our online sales continue to grow at a rapid pace as the national expansion of Macy’s and Bloomingdale’s attracts new customers to our stores, Websites and catalog,” Terry Lundgren, Federated chairman, president and CEO, said in a Wednesday release. “In particular, we are seeing exceptional growth in online sales in new Macy’s markets such as Illinois, Michigan, Minnesota, Missouri, Oklahoma, Texas and Utah.”
The $100 million investment accompanies $130 million invested in Federated’s direct-to-consumer businesses for 2006 and 2007, the company said. The additional funds will also be used to build and improve the company’s direct-to-consumer warehouse management system and toward enhancements to increase traffic to macys.com.
Under the new capital plan, Federated will also build a new 600,000 sq.-ft. distribution center in Goodyear, Ariz. Serving primarily as the West Coast shipping point for Macys.com, the new facilities will employ more than 500 full-time associates and is due for completion in spring 2008, the company said.