Dial "M" for Market Magic

When it comes to holiday dominance, sometimes the old ways are best. For the majority of my shopping, regardless of the season, I stick with the big "M."

Macy's has been the crown jewel of the holiday season for more than 150 years and hasn't missed a step. As if being up a healthy 30% for the year wasn't enough, the company has announced the addition of 83,000 employees to be brought in for the holiday season, an increase of nearly 4% from last year. 

Old dog, new tricks
The saying may be cliche, but it couldn't be more fitting for this retailer. Personally, I enjoy every visit to Macy's, from the selection and layouts to great deals and friendly customer service. I could easily write a biased piece about my mattress purchase, but I'll stick to the more important e-commerce element for now.

The official results from the U.S. Commerce Department revealed a whopping 15.8% increase in online spending from 2011 to 2012, bringing online sales to a total of 5.2% of total retail spending. Results are expected to continue climbing in 2013, with more than $61 billion expected in November and December alone. No doubt Macy's will be in the fray with the online juggernauts, striving to best it's 41% growth in online sales from 2011. E-commerce contributed 2.2% to same-store sales growth, lightening the load for the brick-and-mortar locations.

Macy's will be open at 8 p.m. on the evening of Thanksgiving, meaning I can get to the store four hours earlier than last year. I have no plans to do so and am disappointed with the Thanksgiving hours, but the bad press will pass because the other large retailers are following suit. The difference is that Macy's will have its usual sales and markdowns during those four extra hours in addition to consistent promotions and offerings during all of November and December.

My father used to tell me that Macy's "invented the holiday season," so it seems only fitting that many Americans will wake up to the company's parade, talk about the retailer's sales at dinner, and be heading out with hopes of some Macy's magical discounts.

Leading the pack
When Thanksgiving hours were announced, Macy's was most often mentioned first and foremost. However, Macy's is leading the way beyond Black Friday. A close friend of mine works for Kohl's and jokingly believes that the company mimics Macy's in many aspects of its marketing.

Rather than be critical of Kohl's, I commend the company for following the mall giant and pursuing a spot at the top of holiday profits. However, whether entirely true or not, I find it amazing how one company has the influence to sway competitors with a simple sale, something that Macy's always features, no matter what time of the year.

Kohl's has the benefit of not having to compete directly with Macy's from a geographical perspective because it is not often (if ever) positioned as a mall anchor. It will also continue to reap the benefits of further K-Mart closings as Sears Holdings continues to shift its focus from brick-and-mortar stores to online and personalized models.

Revenue at K-Mart dropped slightly more than 2% in the third quarter, meaning that Kohl's has an opportunity to cash in if K-Mart isn't able to "ship your pants" as often this holiday season. 

Making it personal
The three stores I've mentioned compete in the big-box retail sector with each other, but more importantly with the likes of Target, Wal-Mart, and Amazon.com. All of these stores among so many others are making the effort to give consumers the most convenient and personalized shopping experience.

K-Mart may not be around in the future if quarterly losses for Sears continue to rise toward $1 billion. Kohl's Rewards has seen success in test stores so far, but the company has some ground to make up after an 18% drop in quarterly net income. 

In the online arena, Macy's has the upper hand on just about every retailer in the areas of clothing and home goods. "Savings passes" are available for anyone and everyone this holiday season, regardless of if you are a regular shopper or a loyal Macy's customer. Between its brands, personal marketing, and top-notch service, Macy's knows that e-commerce and overall profits depend on your experience, not the average or majority.

Sales were up 3.3% for the quarter and will continue to climb on the success of Omnichannel retailing, which allows customers to order online and arrange for pickup or delivery. The retailer that offers more great options has the best chance to make the narrow cut of spots in your portfolio. 

Invest in where you shop
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The article Dial "M" for Market Magic originally appeared on Fool.com.

Kyle Vaughan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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