May 29, 2024
iStock.com/Wolterk
Is Macy’s Taking the Right Steps To Reawaken Growth?
Macy’s Inc. reported that the “First 50” Macy’s traditional locations that have been revamped under its Bold New Chapter strategy achieved comparable sales gains of 3.4% in the first quarter, besting the 0.4% decline across Macy’s locations.
Net Promoter Scores (NPS) improved by approximately 500 basis points year over year at the 50 locations and were over 250 basis points above all other Macy’s stores. Traffic was also healthier, with AUR (average unit retail) up 4% on improved conversion.
On the retailer’s recent Q1 2024 analyst call, Tony Spring, Macy’s chairman and CEO, said the “First 50,” as part of the program introduced at the start of the year, are serving as pilots to test new ideas based on customer feedback. He said, “Results are encouraging, as they are an early indicator for the go-forward Macy’s fleet and, ultimately, the entire Macy’s Inc. go-forward business’s ability to return to growth.”
Asked to sum up the initiatives helping drive the early improved results, Spring discussed the following:
- Optimized staffing: Store staffing has been shifted to key departments such as women’s shoes and ready-to-wear, including more assistance for busier dressing rooms. More labor is also being allocated to big-ticket and fine jewelry departments as well as select checkout counters. Spring said optimized staffing was particularly responsible for lifting NPS. He said, “It’s having the right people in place at the right time. It sounds easy, but using technology and the data we have on traffic and conversion by day, by hour, making sure that we have people.”
- Product newness: Fashion newness is being injected into both women’s and men’s assortments where Macy’s has been experiencing softness. Customers are responding well to Donna Karan, a new brand for Macy’s that’s seeing no price resistance. Free People, French Connection, Karl Lagerfeld, and Hugo Boss are among the brands expanding distribution. Spring stated, “We need more variety, we need less redundancy, we need more interest within the assortment. And I think that’s making a difference in the customers’ reception to the stores.”
- Enhanced presentation: Visual merchandising touches are helping elevate merchandise displays. Spring said, “We look crisp, we look compelling. That’s the partnership with the brands to make sure that the impact is in each of the categories.”
- Elevated experience: Macy’s also brought retail’s “theater to life” by piloting new marketing and animation. Activations including personal styling sessions, fashion shows, and beauty services such as fragrance bottle engraving and craft stations have been added to the 50 locations. According to Spring, “Our customers were engaged, and these events serve as strong traffic and sales drivers.”
The 50 test stores represented about 20% of the Macy’s nameplate go-forward sales last year. At the close of the year, there were 502 Macy’s locations, including 15 small-format stores and a few freestanding Macy’s Backstage locations.
Spring expressed excitement around the “early innings” of the First 50 locations, with more experimentation planned. He added that it’s too soon to estimate how quickly promising updates can be rolled out across the chain. Spring said, “I think that we will have green shoots this first and second quarter. It will allow us to do some things later in the year, and I hope we’re in a position to talk to you about more stores in 2025.”
Other parts of the “A Bold New Chapter” three-year strategy include closing 150 full-line Macy’s locations, selling assets, opening smaller versions of its namesake chain, and adding Bloomingdale’s and Bluemercury locations.
BrainTrust
Brian Delp
CEO, New Sega Home
Allison McCabe
Director Retail Technology, enVista
Neil Saunders
Managing Director, GlobalData
Discussion Questions
Are the steps being taken to revive growth at the full-line Macy’s chain promising?
What other investments will Macy’s likely have to make?
Poll
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Macy’s is finally saying the right things and recognizing that there are issues with its business. The honesty under new CEO, Tony Spring, is refreshing and represents a great first step. There are some sensible plans in play, including cutting out the dead wood of badly performing stores and making investments in locations that have a future. Those investments include improving displays and fixtures, editing the amount of choice available, developing more private labels, and driving the opening of smaller stores. The challenge is to ensure that this investment and focus continues, because there is still a significant amount of work required to right all the problems.
While the performance of the first fifty locations is currently good, this comes with some caveats. First, the stores Macy’s is investing in are in stronger locations with generally better retail performance, so the numbers will naturally be higher than the rest of the chain. Second, given the lack of historic figures for this group of stores, it is impossible to determine to what degree the improved numbers are the result of investments versus natural trends in the market. We need to see many more quarters of performance to judge how the strategy is playing out.
Exactly. We need some additional context and perspective to fully understand the impact of the first steps.
I am meeting Tony in a couple of weeks. I will ask and report back any additional context!
All things are transient. This, too, shall pass. The metrics, data, and trend flow all indicate that Macy’s time has come and gone unless they embrace the NEW RETAIL MODEL, Unified Commerce, and start building a legitimate Ecosystem. Nothing they have said or done in the last five years indicates they get that. RIP soon.
I think they have thrown things at a wall hoping that something will stick. We have discussed this topic before and the question is “What do you want to be when you grow up?” The new format looks nice, but can you keep up standards (stocking, labor in departments) and how long can you wait to recoup your sales until you tap out? I do hope it works for them.
My sentiment exactly (or extremely similar).Ignoring the possible de novo kick, I didn’t see anything that demonstrated an understanding of the new reality. However, “old Macy’s” was horrible at service so better staffing is good (but, as you suggest, it’s probably like playing music on the Titanic). It’s an iconic brand and I really don’t want to see the Crypto Thanksgiving Parade so I hope they can right the ship but one of my other questions was, “who are you?”
Everything Mr. Springs shared sounds promising, and as Neil stated, refreshing. I would like to know where these 50 new and improved stores are located so I can visit a few.
Yesterday, I was at the Macy’s full line store at Woodfield Mall in Illinois, a top tier mall. The store was a big fail in “Optimized staffing”. There was one sales associate running the common area register and trying to help customers in the majority of the men’s department, including shoes. Too much for one person to handle. After waiting far too long for assistance, we left. How many sales did Macy’s walk that day?
Macy’s has said countless times that things will change. As a consumer – and Macy’s fan – I am still waiting for those changes to happen.
The biggest department store companies, including Macy’s, got so big because they invested a lot of time and resources in acquiring their competitors, instead of improving the customer experience. Now, post-pandemic, they’re stuck with the cost of managing millions of square feet of physical space when most of their customers have been conditioned to shop online. From 2020 through 2023, online retail sales rose to 34% of total retail purchases (source: MishTalk). The new brands are great names, but they are all available online. I’m still not sure what the hook is to lure customers back into their stores? “Retail theater” indeed!
The numbers – 10% of store count but twice that percentage of sales – tells us these were already better performers, so the relative comps aren’t particularly impressive. And yet…
Yet, what else can they really do? If you’re a macy*s shareholder you’re likely used to disappointment by now, so the response is likely momentary enthusiam and then putting it at the backstage of your consciousness. And even if you aren’t a shareholder, but just a fan of dept store shopping, they’re to a large extent the only game in town; so all of us should perhaps cheer…however timidly.
Macy’s has had solid merchandise and decent prices, as well as a serviceable website. Its challenge has been execution in the store. Let’s hope that the additional staffing addresses this issue.
The steps laid out in Macy’s announcement are what used to be known as “Retail 101.” That said, I’m glad to see positive initial results. There is still a place for the traditional department store model.
The questions, as always with Macy’s: is the momentum sustainable? And will the investment carry forward to the smaller stores?
So, last time Retailwire explored our opinions of Macy’s, I said Tony Spring who previously worked as CEO is unlike his predecessors, in that Spring appears to be better aware of some of Macy’s shortcomings. In order to update my views on Macy’s I went right to the source, and read what CEO Tony Spring said on his own LinkedIn page.
“Our First 50 Macy’s locations, which serve as test stores for merchandise, visual and staffing initiatives, showed that when we provide our customers with the right product, experience and value, we deliver sales growth. The Macy’s team is focused on newness in market brands and the reimagination of our Private Brand portfolio.”
He also pointed out that Bloomingdale’s and Bluemercury continued to foster “brand love and loyalty.” He said it is exciting to see the growth at Bloomingdale’s in advanced contemporary. “The DNA of this brand gives it the ability to compete for share of wallet across a range of categories.”
It is expected that Macy’s will do better in keeping up with change than it did before. There are a number of factors to consider, including ages, generations, trends, styles, store designs, layouts, etc. Macy’s also needs to adjust to the growing death of regional malls.
Takeovers by activist investors who want to take Macy’s private are another challenge Macy’s faces. However, that might not be a bad thing. The mindset of private companies can be longer term than just three months at a time.
Customers used to visit Macy’s and most other department stores because of what they carried and the promotions they offered. In addition, department store shopping in itself was an “experience,” as were the enclosed regional malls.
Macy’s has lost sizable market share to online shopping, but unfortunately for Macy’s, not much their own. Macy’s needs to get better at e-commerce too, and make it more shopper-friendly with the stores.
In focusing on upscale and premium, Tony Spring has the right idea; those are the consumers they can still “own.” Target does a phenomenal job with trends and styles, and mid-level brands, but department stores like Macy’s can win on the higher level. Db
I don’t think the mindset of these activists is long term. They want to sell off the real estate to make a quick buck. That will ultimately weaken Macy’s balance sheet and damage its profit. It’s the “Red Lobster effect” all over again…
All of these things sound like department store retail 101. It’s good to hear Macy’s is shifting back to what made it a destination after continuing to chase the strategies of others like Target however, it may be too late. For customers to return, they’re going to need a real reason as their trust has been broken. I am curious to see what else they will come up with.
Testing new ideas in the “First 50,” representing better-performing locations and 20 percent of the chain’s sales, is a low-risk strategy to gain some “quick” success. Macy’s CEO, Tony Spring, had no other choices. He must show material progress and do the hard work in rolling out changes to the rest of the chain while trimming the store count.
While Tony Spring’s discussion points are relevant and appropriate to revive the in-store experience, there’s no apparent mention of connecting the shopping experience beyond the physical store environment. To remain relevant in this decade and beyond, Macy’s needs to understand and address the highly nuanced and multi-faceted customer journey. This journey cannot ignore hyper-personalization, as well as digital and social.
The actions for the “First Fifty” sound right. The results are certainly more encouraging than the balance of the chain. Buit, the real question is “can they scale”.
This is a most important initiative with all eyes these fifty stores. The staff knows they are being highlighted.
This effort is to show stakeholders what can be done. I imagine Mr. Spring and the executive cohort made many visits to the stores every step of the way. I predict the “rah-rah” will be gone by store 100. I am not criticizing the effort. I am just looking at the reality.
The ability to scale is indeed the question. A success with STORY would have been telling. Instead, a failure with STORY was telling. I’d like to see a strategy that sets the standards for the “C” store of the future. Get the “C” stores right and scale up. Starting with flagships and “A” stores and scaling down tends to leave the “C” stores as boring shells. So I’m hoping the magnitude of store closures took this into account, and the remaining “C” stores are stores they can scale great content and storytelling into.
Looking for steps/programs which develop and attract merchandising talent both on the selling floors and in the merchandising offices. A true turn around needs a balance of data and instinct which needs to be cultivated within employees.
“…a new brand for Macy’s that’s seeing no price resistance.” Let’s say that again…no price resistance. Whether it’s a new brand or an old brand, Macy’s needs to be able to say those words all across the store and all across the country in order to succeed. Less racks with less sale signs. Less dependance on One Day Sales. More theater. More sales based on compelling product and storytelling. Waaaaaay better planning and buying. Less end-of-season residue inventory. Better seasonal conversion. I’m enjoying the early reports. Now let’s buckle in for a year or two.
These initiatives depress me. “Let’s make sure we staff the women’s shoe department properly!”…what a revelation, right up there with “let’s make sure we are selling new, compelling product”. It would have been more authentic if they simply said “we are going back to what made us compelling and relevant in the first place”, but that is not how these turnaround efforts are framed anymore, is it? Nope–let’s focus on what matters and give it a flashy name..yes, “Bold New Chapter” sounds good.
The marketplace will put Macy’s out of its misery, when, I do not know. Sadly, you can put a fork in this iconic brand, it is done.
For the past several years Macy’s has been a textbook example of a large retailer coasting with the inertia of its legacy operations. New leadership has brought a fresh air of focus, and is saying the right things necessary to bring about improvements. But even the best strategy and plans require solid execution, holding leaders accountable, and ongoing transformation management. This is a challenging time for department store retailers, but the best time for Macy’s to make improvements is right now. In addition what is truly needed is a strong sense of urgency to make changes faster than most retailers are used to, and acting more like a start-up versus a 150 year old company.
This is a great example of how to change the department store format, which is dying. However, this changed format which includes better staffing and better products, is an obvious change that has been missing from Macy’s for years. How long this will have a positive impact inside of a dinosaur department store format is the true question here. Unfortunately, the largesse of department store costs, real estate, and overhead, will be difficult to overcome. Only time will tell.
In the poll I selected Elevated Experience, but it’s not just about activations. Optimizing staffing means shorter wait times and better assistance. Product newness makes the experience feel fresh. Enhanced presentation provides a better visual experience. At the end of the day, it’s all about experience. If Macy’s can replicate this across their store footprint and keep innovating, it will serve them well.
I think these four initiatives are a great start with elevated experiences and optimized staffing as my top 2. As an Macy’s Inc. alum, my fingers are crossed that the green shoots blossom into flowers.
Early indications would suggest Mr. Spring’s approach may be taking root. However, there is a long road ahead across a tumultuous retail landscape. TJX’s announcement to aggressively expand their locations is a new wrinkle that Macy’s (and others) will have to thwart.
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Macy’s is finally saying the right things and recognizing that there are issues with its business. The honesty under new CEO, Tony Spring, is refreshing and represents a great first step. There are some sensible plans in play, including cutting out the dead wood of badly performing stores and making investments in locations that have a future. Those investments include improving displays and fixtures, editing the amount of choice available, developing more private labels, and driving the opening of smaller stores. The challenge is to ensure that this investment and focus continues, because there is still a significant amount of work required to right all the problems.
While the performance of the first fifty locations is currently good, this comes with some caveats. First, the stores Macy’s is investing in are in stronger locations with generally better retail performance, so the numbers will naturally be higher than the rest of the chain. Second, given the lack of historic figures for this group of stores, it is impossible to determine to what degree the improved numbers are the result of investments versus natural trends in the market. We need to see many more quarters of performance to judge how the strategy is playing out.
Exactly. We need some additional context and perspective to fully understand the impact of the first steps.
I am meeting Tony in a couple of weeks. I will ask and report back any additional context!
All things are transient. This, too, shall pass. The metrics, data, and trend flow all indicate that Macy’s time has come and gone unless they embrace the NEW RETAIL MODEL, Unified Commerce, and start building a legitimate Ecosystem. Nothing they have said or done in the last five years indicates they get that. RIP soon.
I think they have thrown things at a wall hoping that something will stick. We have discussed this topic before and the question is “What do you want to be when you grow up?” The new format looks nice, but can you keep up standards (stocking, labor in departments) and how long can you wait to recoup your sales until you tap out? I do hope it works for them.
My sentiment exactly (or extremely similar).Ignoring the possible de novo kick, I didn’t see anything that demonstrated an understanding of the new reality. However, “old Macy’s” was horrible at service so better staffing is good (but, as you suggest, it’s probably like playing music on the Titanic). It’s an iconic brand and I really don’t want to see the Crypto Thanksgiving Parade so I hope they can right the ship but one of my other questions was, “who are you?”
Everything Mr. Springs shared sounds promising, and as Neil stated, refreshing. I would like to know where these 50 new and improved stores are located so I can visit a few.
Yesterday, I was at the Macy’s full line store at Woodfield Mall in Illinois, a top tier mall. The store was a big fail in “Optimized staffing”. There was one sales associate running the common area register and trying to help customers in the majority of the men’s department, including shoes. Too much for one person to handle. After waiting far too long for assistance, we left. How many sales did Macy’s walk that day?
Macy’s has said countless times that things will change. As a consumer – and Macy’s fan – I am still waiting for those changes to happen.
The biggest department store companies, including Macy’s, got so big because they invested a lot of time and resources in acquiring their competitors, instead of improving the customer experience. Now, post-pandemic, they’re stuck with the cost of managing millions of square feet of physical space when most of their customers have been conditioned to shop online. From 2020 through 2023, online retail sales rose to 34% of total retail purchases (source: MishTalk). The new brands are great names, but they are all available online. I’m still not sure what the hook is to lure customers back into their stores? “Retail theater” indeed!
The numbers – 10% of store count but twice that percentage of sales – tells us these were already better performers, so the relative comps aren’t particularly impressive. And yet…
Yet, what else can they really do? If you’re a macy*s shareholder you’re likely used to disappointment by now, so the response is likely momentary enthusiam and then putting it at the backstage of your consciousness. And even if you aren’t a shareholder, but just a fan of dept store shopping, they’re to a large extent the only game in town; so all of us should perhaps cheer…however timidly.
Macy’s has had solid merchandise and decent prices, as well as a serviceable website. Its challenge has been execution in the store. Let’s hope that the additional staffing addresses this issue.
The steps laid out in Macy’s announcement are what used to be known as “Retail 101.” That said, I’m glad to see positive initial results. There is still a place for the traditional department store model.
The questions, as always with Macy’s: is the momentum sustainable? And will the investment carry forward to the smaller stores?
So, last time Retailwire explored our opinions of Macy’s, I said Tony Spring who previously worked as CEO is unlike his predecessors, in that Spring appears to be better aware of some of Macy’s shortcomings. In order to update my views on Macy’s I went right to the source, and read what CEO Tony Spring said on his own LinkedIn page.
“Our First 50 Macy’s locations, which serve as test stores for merchandise, visual and staffing initiatives, showed that when we provide our customers with the right product, experience and value, we deliver sales growth. The Macy’s team is focused on newness in market brands and the reimagination of our Private Brand portfolio.”
He also pointed out that Bloomingdale’s and Bluemercury continued to foster “brand love and loyalty.” He said it is exciting to see the growth at Bloomingdale’s in advanced contemporary. “The DNA of this brand gives it the ability to compete for share of wallet across a range of categories.”
It is expected that Macy’s will do better in keeping up with change than it did before. There are a number of factors to consider, including ages, generations, trends, styles, store designs, layouts, etc. Macy’s also needs to adjust to the growing death of regional malls.
Takeovers by activist investors who want to take Macy’s private are another challenge Macy’s faces. However, that might not be a bad thing. The mindset of private companies can be longer term than just three months at a time.
Customers used to visit Macy’s and most other department stores because of what they carried and the promotions they offered. In addition, department store shopping in itself was an “experience,” as were the enclosed regional malls.
Macy’s has lost sizable market share to online shopping, but unfortunately for Macy’s, not much their own. Macy’s needs to get better at e-commerce too, and make it more shopper-friendly with the stores.
In focusing on upscale and premium, Tony Spring has the right idea; those are the consumers they can still “own.” Target does a phenomenal job with trends and styles, and mid-level brands, but department stores like Macy’s can win on the higher level. Db
I don’t think the mindset of these activists is long term. They want to sell off the real estate to make a quick buck. That will ultimately weaken Macy’s balance sheet and damage its profit. It’s the “Red Lobster effect” all over again…
All of these things sound like department store retail 101. It’s good to hear Macy’s is shifting back to what made it a destination after continuing to chase the strategies of others like Target however, it may be too late. For customers to return, they’re going to need a real reason as their trust has been broken. I am curious to see what else they will come up with.
Testing new ideas in the “First 50,” representing better-performing locations and 20 percent of the chain’s sales, is a low-risk strategy to gain some “quick” success. Macy’s CEO, Tony Spring, had no other choices. He must show material progress and do the hard work in rolling out changes to the rest of the chain while trimming the store count.
While Tony Spring’s discussion points are relevant and appropriate to revive the in-store experience, there’s no apparent mention of connecting the shopping experience beyond the physical store environment. To remain relevant in this decade and beyond, Macy’s needs to understand and address the highly nuanced and multi-faceted customer journey. This journey cannot ignore hyper-personalization, as well as digital and social.
The actions for the “First Fifty” sound right. The results are certainly more encouraging than the balance of the chain. Buit, the real question is “can they scale”.
This is a most important initiative with all eyes these fifty stores. The staff knows they are being highlighted.
This effort is to show stakeholders what can be done. I imagine Mr. Spring and the executive cohort made many visits to the stores every step of the way. I predict the “rah-rah” will be gone by store 100. I am not criticizing the effort. I am just looking at the reality.
The ability to scale is indeed the question. A success with STORY would have been telling. Instead, a failure with STORY was telling. I’d like to see a strategy that sets the standards for the “C” store of the future. Get the “C” stores right and scale up. Starting with flagships and “A” stores and scaling down tends to leave the “C” stores as boring shells. So I’m hoping the magnitude of store closures took this into account, and the remaining “C” stores are stores they can scale great content and storytelling into.
Looking for steps/programs which develop and attract merchandising talent both on the selling floors and in the merchandising offices. A true turn around needs a balance of data and instinct which needs to be cultivated within employees.
“…a new brand for Macy’s that’s seeing no price resistance.” Let’s say that again…no price resistance. Whether it’s a new brand or an old brand, Macy’s needs to be able to say those words all across the store and all across the country in order to succeed. Less racks with less sale signs. Less dependance on One Day Sales. More theater. More sales based on compelling product and storytelling. Waaaaaay better planning and buying. Less end-of-season residue inventory. Better seasonal conversion. I’m enjoying the early reports. Now let’s buckle in for a year or two.
These initiatives depress me. “Let’s make sure we staff the women’s shoe department properly!”…what a revelation, right up there with “let’s make sure we are selling new, compelling product”. It would have been more authentic if they simply said “we are going back to what made us compelling and relevant in the first place”, but that is not how these turnaround efforts are framed anymore, is it? Nope–let’s focus on what matters and give it a flashy name..yes, “Bold New Chapter” sounds good.
The marketplace will put Macy’s out of its misery, when, I do not know. Sadly, you can put a fork in this iconic brand, it is done.
For the past several years Macy’s has been a textbook example of a large retailer coasting with the inertia of its legacy operations. New leadership has brought a fresh air of focus, and is saying the right things necessary to bring about improvements. But even the best strategy and plans require solid execution, holding leaders accountable, and ongoing transformation management. This is a challenging time for department store retailers, but the best time for Macy’s to make improvements is right now. In addition what is truly needed is a strong sense of urgency to make changes faster than most retailers are used to, and acting more like a start-up versus a 150 year old company.
This is a great example of how to change the department store format, which is dying. However, this changed format which includes better staffing and better products, is an obvious change that has been missing from Macy’s for years. How long this will have a positive impact inside of a dinosaur department store format is the true question here. Unfortunately, the largesse of department store costs, real estate, and overhead, will be difficult to overcome. Only time will tell.
In the poll I selected Elevated Experience, but it’s not just about activations. Optimizing staffing means shorter wait times and better assistance. Product newness makes the experience feel fresh. Enhanced presentation provides a better visual experience. At the end of the day, it’s all about experience. If Macy’s can replicate this across their store footprint and keep innovating, it will serve them well.
I think these four initiatives are a great start with elevated experiences and optimized staffing as my top 2. As an Macy’s Inc. alum, my fingers are crossed that the green shoots blossom into flowers.
Early indications would suggest Mr. Spring’s approach may be taking root. However, there is a long road ahead across a tumultuous retail landscape. TJX’s announcement to aggressively expand their locations is a new wrinkle that Macy’s (and others) will have to thwart.