Amazon.com, Inc. (AMZN), Wal-Mart Stores, Inc. (WMT), Macy’s, Inc. (M): The Next Evolutionary Step

Wal-Mart Stores, Inc. (NYSE:WMT) plans to build new warehouses specifically for online orders. And, like Macy’s, it plans to ship items from excess inventory in its stores. Since Wal-Mart Stores, Inc. (NYSE:WMT) has 4,000 U.S. stores and 158 warehouses, this approach might work, but many analysts suggest this strategy will hurt profitability because it will tie up store employees with online orders.

JCP gets left behind
Billions were spent to update J.C. Penney Company, Inc. (NYSE:JCP)‘s  stores. Just this past quarter, J.C. Penney Company, Inc. (NYSE:JCP) burned through $970 million, most of which was spent on renovations. These changes failed on two levels.

First, management upset loyal customers with the wrong kind of changes. It tried Wal-Mart’s “everyday low price” approach, yet its customer base responds to sales and coupons. Second, it hasn’t done much to address its e-commerce division.

Department stores must learn how to upgrade their brick and mortar units while improving the online shopping experience. Had J.C. Penney Company, Inc. (NYSE:JCP) done this, it could have pulled business away from other retailers and eventually decreased some fixed costs in its stores. Instead, it burned through cash for renovations, and sales still continue to decline.

Conclusion
Amazon ushered in the next phase of retail. Now, retailers must find new ways to compete. Stores like Macy’s and Wal-Mart Stores, Inc. (NYSE:WMT) are making strides to satisfy evolving customer demands. J.C. Penney’s changes have only hurt the business. For all these firms, adaptation is the key to avoiding extinction.

The article The Evolution of Retail originally appeared on Fool.com and is written by Marie Palumbo.

This article was written by Michele Milheim and edited by Chris Marasco. Chris Marasco is Head Editor of ADifferentAngle. Neither has a position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com.

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