Department store chain Macy’s Inc. has plenty of things going for it, said Jeff Gennette, the department store chain’s CEO on Sunday at the Shoptalk conference in Las Vegas. Half of all U.S. consumers shop at Macy’s at least once a year, and 60% live within 10 miles of a Macy’s store. And its e-commerce site attracts roughly 1.5 billion visits a year. It also offers same-day delivery in 40 major markets and fulfills 1 million orders per day during its peak season.
“We have healthy margins and good cash flow,” Gennette said. “We have a lot going for us. But our history isn’t enough to guarantee success. Our customer has one foot in the future, and we need to catch up.”
2015 and 2016 brought tough times for Macy’s, the department store chain that is No. 6 in the Internet Retailer Top 1000 ranking of North America’s leading online retailers.
The entire department store industry was suffering, including Macy’s, Gennette said. “We were losing market share and the customers we did have were spending less.”
To set its course straight, Macy’s took a hard look at its customer base with focus groups and other research and uncovered what the Macy’s shopper loved about the store—and what she didn’t. And it developed what is calls its North Star Strategy.
“We identified what was working and what wasn’t,” Gennette said. “And we are now focusing on dialing up the things she loves and getting rid of the things she doesn’t. “
One thing it discovered is that the Macy’s shopper doesn’t look at Macys.com and her local store as different worlds, and that she wants inspiration—which often starts online, often with her smartphone.
“The phone is often the shopper’s first window to Macy’s,” Gennette said. “Consumers want inspiration and more often, that hunt is beginning before the store,” he said. Macy’s plans to redesign Macys.com and its mobile experience this year, Gennette said. “Consumers seek the same inspiration online as they do at a flagship store on State Street in Chicago,” Gennette said.
The Macy’s shopper wants a “compelling experience just for her,” and she gives the retail chain all the information it needs to curate a personalized experience. So, the retailer is investing in personalization. For example, Macy’s beauty advisers are interacting with shoppers on social media to help them create outfits from the department store’s spring collections.
To create a better experience in its app it also is offering in-store navigation and will be expanding an app service program called Scan. Pay. Go. to all its stores by the end of 2018. That program enables shoppers to walk into a store and select the items they want to buy, scan the bar code on the item with the app, pay in the app, then approach a special counter where a sales associate removes the security tag and walk out.
Another program Macy’s is testing is virtual reality in its stores. It’s testing this with furniture where a shopper can wear a headset and see furniture for sale at Macy’s in the room in her home she is trying to furnish. She can see the products virtually in her own room and adjust the products and layout until she discovers what works best for her. This helps the retailer save floor space in stores, Gennette said. It plans to offer the feature in 60 stores by the summer.
“We love furniture. It has high margins,” Gennette said. He said the feature has significantly increased transaction size in the stores where it is available.
While Macy’s e-commerce business has posted double-digit growth for the past eight years, stores have been lagging in sales growth, Gennette said. Another main goal is to get store revenue growing again. In an attempt to accomplish this, Macy’s is investing significantly in a group of 50 stores. These stores will offer the VR program and Scan. Save. Go., have new fixtures, employ top talent and house the discount Backstage stores.
“We will take what works best in these stores into 2019 and beyond,” Gennette said.
Macy’s also is zeroing in on merchandising by editing its selection to “reduce the sea of sameness” and by offering exclusive products only sold at Macy’s. It intends to raise its selection of exclusive merchandise from 29% to 40% in the next few years. It also plans to double the assortment on Macys.com.
It’s also aiming to provide clearer value to shoppers by simplifying its loyalty and discounts programs to reduce the amount of “Macy’s math gymnastics” shoppers need to do to figure out how to use discounts and promotions to get the most value, he said. In the fourth quarter, Macy’s relaunched its loyalty program.
On the value front, Macy’s also is opening more branches of its discount Macy’s Backstage stores, inside its traditional store locations. It’s putting Backstage stores in some premium malls and expanding the store concept to the West Coast, Gennette said.
Another step Macy’s is taking to spur growth and improve reaction time to market changes is a gradual shift to the agile development philosophy in which a project is broken up into small phases and the overall goal evolves as staffers complete each phase.
He added that Macy’s also has brought in new talent and “massively simplified” its organizational structure.
Macy’s in December named Jill Ramsey, an e-commerce veteran who most recently worked at eBay Inc., to fill the newly created position of chief product and digital revenue officer. She reports to Hal Lawton, who left eBay in September to become president of Macy’s.
“We are in the early innings (of these improvements) but we are headed into 2018 with momentum. We realize you can’t starve one to feed the other,” Gennette said of stores and digital.
Favorite