Online shoppers get red-star treatment

Expecting ambitious revenues of more than $1 billion in online sales next year, Macy's parent company Federated Department Stores is slated to invest $100 million in online operations targeting San Francisco.

While a good deal of the funding will be spent to support technical upgrades in San Francisco itself, most of it will cover costs for the creation of a distribution center located in Goodyear, AZ, expected to become the West Coast shipping hub for Macys.com. The distribution center will cover 600,000 square feet, equal in size to one that was recently erected in Portland, TN.

The $100 million investment piles on top of $130 million in online efforts already invested in 2006-2007.

Federated spokesman Jim Sluzewski said, "Research has certainly demonstrated that a customer who shops both online and in stores is a much larger customer." After more aggressively encouraging Macy's shoppers to pursue wares over the internet, the ROI has indeed been vast: online sales for Federated leaped to $620 million last year from $450 million in 2005. While these figures include Bloomingdales.com, the majority of sales flow in from Macys.com.