A few retail thought leaders have differing takes on the possibilities, or lack thereof, for the historic department store.
Overall: Mixed Expectations
“One department store that’s carrying the flame for the omnichannel customer is Macy’s. With its core target group of middle-class women between the ages of 16 and 34, Macy’s quality products at reasonable prices attract a clientele of largely busy people – either engaged at work or out enjoying the social scenes with friends.” (source)
“The reason the omnichannel approach will, in the end, prove to be more successful than the likes of the purely digital, as historically offered by the likes of Amazon, is down to the convenience and organization of purchase and pickup.” (source)
“Research has shown that about two-thirds of all shopping trips today start online with customers researching the options at their desktops or on smartphones or tablets. Then, the customers often come into the store to touch, feel and try-on the merchandise they saw. Maybe they buy in the store. Or maybe they buy the item later while sitting at home in the evening – but around 50% of this process is non-existent with the Amazon model” (source)
“Macy’s close rivals are doing a better job of driving customers to their physical stores. This might reflect the fact that Kohl’s, Marshalls and T.J. Maxx stores tend to be in strip centers, rather than enclosed malls, a format that might feel safer to many shoppers amid the pandemic. Whatever the reason, it does not bode well for Macy’s ability to retain or reclaim market share whenever the health crisis recedes.” (source)
“Macy’s is projecting its full-year digital sales will increase “low- to mid-teens” in a year when the wider U.S. e-commerce market is expected to grow 32.4%. That suggests it is struggling to benefit from the pandemic-fueled explosion of online shopping to the same extent as others in the industry.” (source)
“Macy’s has some things going for it, including a home-goods department that should hold up well amid stay-at-home living and exposure to the resilient luxury market through its Bloomingdale’s chain. But its third-quarter results did little to suggest it will bounce back quickly from the pandemic’s devastation.” (source)
“The retailer created a unique program based on the concept of “Pick to the Last Unit” (P2LU) for omnichannel fulfillment. P2LU attempts to ensure that the last unit of an item in any store is able to be easily located and made available for sale. Typically, retailers don’t expose the last item of a SKU to online sales because they don’t have enough confidence in their inventory data (...) The success of this strategy is possible due to the inventory accuracy and visibility enabled by RFID technology.” (source) Ties into retail rule #2: sell the most with the least amount of inventory.
“By offering a superior selection of products, an exciting shopping environment, and superior service, the company creates value for customers” (source)
“Macy’s developed a website virtual agent based on the Microsoft Dynamics 365 AI solution for customer service. The virtual agent answers more than one quarter of customer queries, reducing the company’s costs. The roll out of the initiatives was not difficult since it was based on an external solution. Although this initiative reduces Macy’s cost structure, it is not a competitive advantage since it has been implemented for multiple companies” (source)
“Macy’s has invested in a predictive analytics solution from SAP to better understand customer buying behavior and optimize email and website marketing campaigns (...) The initiative has increased online sales by 10% through more targeted emails to customers.” (source)
“Last quarter, stores helped fill 25% of Macy's online orders either by having shoppers come to retrieve them or using store inventory to fill them, two things that bolster profits.” (source)
“Stores act as billboards and marketing tools for Macy's and remind shoppers it exists. Mitchell said Macy's online sales per capita were around twice or three times higher in markets where it has stores. (Macy's has been tinkering with a small-store format that Gennette says could help it "backfill" markets where it doesn't have stores and mitigate that risk).” (source)
"Apparel, I believe, over time is going to continue to shrink as a percentage of our overall business" (source)
Key investors are pushing for Macy’s to split operations and create separately held e-commerce and in-person footprints. Contractual obligations would ensure a seamless experience that customers would not distinguish, but these would technically be different companies. However, this cooperation can quickly dismantle, as seen as Saks, which has been successful but possibly not seamless in this transition. (source)
Express that retailers like Macy’s are on an inevitable, but long-term, decline, and the sole purpose for restructuring is to extract value before there is none left, rather than rebuilding something for sustained success. (source)
Experts argue that separating out the online business can attract key talent for companies. (source)
Comments