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How Did Macy's Beat Net-a-Porter in L2's Latest Digital Ranking?

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Net-a-Porter: less digitally savvy than Macy's?
Net-a-Porter: less digitally savvy than Macy's?

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L2, a New York University think tank that specializes in retail economics, has released their first-ever ranking of department stores based on digital prowess, and here's a shocker: Macy's has beat out pace-setting digital darling Net-a-Porter.

Macy's comes in second on this list, topped only by Nordstrom, while Net-a-Porter is way down the ladder at seventh. Saks, UK-based Marks & Spencer, Neiman Marcus, and Bloomingdale's also rank ahead of of the luxury e-tailer. So, er, how is that possible?

The top 10 department stores based on digital performance, via L2

Well, first of all, department stores aren't doing so hot.

"They've been hit from below by discount retailers that offer better value [Target, Walmart], from above by specialty retails that offer a superior experience and proprietary product [J.Crew, Michael Kors], and, most recently, sideways by e-commerce players [Amazon, Zappos] that offer a mix," the report reads.

That's a lot of competition, and many department stores are losing. In 2008 there were 138 independent department stores. By 2009 there were only 57, and, in as L2 puts it rather dramatically, "the death rattle from icons JCP and Sears is audible."

But the department stores still maintain a scale and heritage that can work to their advantage. "The advantage department stores have—particularly those in major shopping cities—is plum real estate. Using your digital properties to drive consumers into your store...is an enormous opportunity, especially for retailers constrained by location," Maureen Mullen, L2 director of research and advisory, told WWD.

The leading department stores "are leveraging their scale, logistics, and organization," she says. "Winning online doesn't just mean making robust e-commerce investments, but making investments online that drive traffic to the brick-and-mortar business."

Given that criteria for success in the digital space, we question whether an online-only retailer like Net-a-Porter should even be compared to brick-and-mortar stores for this list. But the juxtaposition does bring up a good point—namely that, if this analysis is anything to go by, the future of retail is less about online-only powerhouses and more about marrying the convenience of e-commerce with the best of the in-store shopping experience.
· Digital Index Department Stores 2013 [L2]
· Macy's Ranked #1 Online Retailer of 2012 [Racked]