Macy’s drills down on digital, but the in-store basics are still broken

SUMMARY:

Macy’s has digital religion, but it could be too late. Meanwhile the in-store customer experience sucks.

In the bag

The all-important Holidays season is kicking in in retail as any visit to a shopping mall will testify. In the US, retailers like Macy’s are getting their houses in order for what will be in many cases a crucial fourth quarter.

For Macy’s, recent quarters have seen the retailer flounder, resorting to real estate sell-offs of stores that are worth more for the ground they stand on than as viable outlets in their own rights. Such has been the fall from grace, that many commentators have questioned the brand’s future.

It’s interesting then that for a store chain that’s widely regarded as having missed the boat on online, Macy’s has seen 33 consecutive quarters of double-digit growth from digital platforms. That’s something that CEO Jeff Gennette expects to see continuing as the store moves into Holiday mode:

We anticipate a sales lift in the fourth quarter in digital of approximately 100 to 150 basis points from the increase in penetration of digital sales. In addition, to fuel this growth, we’ve significantly improved our search engine optimization. We’ve shifted more of our media spend to digital. We’ve enhanced our delivery options, whether it’s expanded same day delivery services or buy online, pickup in store. We will continue to improve both functionality and user experience of the Macy’s app because we expect mobile shopping on Macy’s to be very big this Holiday season.

Gennette is also looking to Macy’s relaunched Star Rewards loyalty program, which kicked in last month, as a critical driver in boosting customer engagement in time for Thanksgiving and Christmas:

We wanted to strengthen our relationships with our best customers, and that’s about 10% of our customer base that currently accounts for about half of our sales. Second, within our existing customer base, we wanted to migrate customers up to higher spending levels. And third, we wanted to use the loyalty program to attract new customers to Macy’s and encourage those infrequent Macy’s shoppers to come to us more often.

Introducing more fulfilllment options is another priority, he adds, citing again Buy Online, Pick-up In Store as a “more potent” part of the business model going forward:

When customers are coming in, you’re obviously getting a bunch of those customers that are buying other things. That radiates sales…What you find is that not every customer converts on the radiated sales. The customers that do, have a bigger up-spend. But the average is for all Buy Online, Pick-up In Store sales, we get a 25% lift in overall sales.

All eyes on Hal

On the front line of making sure that this digital optimism delivers is Hal Lawton, who was brought in from eBay as President in September to look at “the intersection of retail and technology” for Macy’s. Gennette argues that Lawton has a lot to build on already:

When you look at technology, Macy’s has got a very robust technology agenda. That includes working with great partners that we have today and that we’re open to new ones. So some of the things that we’re focused on with respect to technology, is really making sure that our ongoing site optimization is just really strong, and we learn every day. We do a good job here, but we have lots of opportunities to improve on this.

We’re looking at mobile and tablet app responsiveness and making sure that we get the conversion rates there where we want them. We’re looking at vendor direct and fulfillment opportunities that we see and the opportunity to do more with extended aisle and more direct ship from vendors. So we see a big opportunity there. Expect us to lead there. We see lots of opportunities with machine learning. And that could be regarding fit or attribution, image recognition, certainly where it all will lead in terms of personalization.

The personalization agenda is part of wider thinking around the on-boarding of new customers, the Gen Z customer demographic and the use of user-generated content, being in the social space, using Macy’s teams in a more relevant way to market in “a more authentic way”. This is all part of what’s in the technology playbook, says Gennette:

This is where we think Hal is going to have a big impact. This is clearly in his wheelhouse. And in the first eight weeks [since his arrival], we’re already thinking about exactly what that means in terms of what we layer in as foundational, for where we’ve got progress already in place and what we layer on in 2018. Expect us to focus on all of that.

My take

I was in Macy’s in San Franciso last week. I walked every floor. I left with nothing. The in-store experience is appalling. I’m the last person in the world to appreciate the over-zealous store assistant who appears at your shoulder as soon as you enter the shop and haunts your every movement. But there’s a halfway point between that the near total absence of anyone to help in Macy’s last week. The one purchase I nearly made was aborted after standing around for five minutes looking for anyone who could help with a question.

In addition, the merchandise is strewn about with little eye to order or an appealing display to catch the eye. The store was also, I noticed, remarkably devoid of customers, despite the presence of thousands of extra potential buyers in town for Dreamforce. It’s good that Macy’s is doubling down on the tech and digital aspects of its business model. But there are some traditional retail basics that need a lot of urgent attention as well.

Image credit - Macy's

    1. Marshall Field’s was ALL about EXPERIENCE. Macy’s dismantled that. Meanwhile, Selfridges, arguably the most successful department store in the world today, does great because they offer a beloved customer experience that just happens to be historically connected to what was the Marshall Field’s experience. Wouldn’t take an expert to point out that what Selfridges is doing would be great to re-implement at the former Marshall Field’s State Street location. But Macy’s won’t hear of it or even test it.

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