Macy’s CEO discusses mobile checkouts and other planned changes
In a keynote session at Shoptalk in Las Vegas, Macy’s CEO Jeff Gennette announced some significant changes and upgrades coming in 2018 meant to build on the company’s momentum from last quarter and catch up with today’s customers.
Perhaps the most unexpected solution Macy’s plans to deploy is in furniture — an area in which Macy’s hopes to scale. The solution allows customers to lay out a virtual version of their home on-screen. The user then puts on a VR helmet and can navigate the furnished virtual room to get a feel for how the furniture will look in the real physical space. In the pilot of the solution, Macy’s found that using the VR significantly increased customer transaction size.
Further in the tech realm, Macy’s will be adding a scan/pay/go solution into its mobile app. For those using the app, the only point at which store staff will be involved in the checkout process is when they remove the security tags after payment.
Mr. Gennette also announced a 2018 redesign of Macys.com and the Macy’s mobile experience.
“Our customer’s phone is the front window to Macy’s and we consider it a flagship,” Mr. Gennette said. “It needs to have the same level of creativity and inspiration as the Macy’s window at Herald’s Square in New York.”
The chain also plans to make significant changes to its assortment, adding more exclusive Macy’s-only products and more limited-edition capsule collections.
“When we get the fashion right, our customer is willing and ready to pay higher prices,” Mr. Gennette said.
Online, the chain plans to offer a drastic increase in product selection, doubling the website’s inventory through the expansion of vendor direct.
In marketing, the company intends to continue cleaning up and simplifying the promotional calendar and getting the customer out of what Mr. Gennette called “Macy’s Math Gymnastics.” It will also revamp the chain’s loyalty program.
And finally, Macy’s is planning more than 100 new Backstage locations, including in premium malls, and will be expanding the off-price concept to the West Coast.
DISCUSSION QUESTIONS: Do the planned changes announced by Macy’s represent an opportunity for the chain to improve its competitive position? Which improvement do you expect to have the strongest impact on Macy’s future and why?
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17 Comments on "Macy’s CEO discusses mobile checkouts and other planned changes"
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President, Max Goldberg & Associates
Macy’s, to its credit, is moving forward in many directions at the same time. Some of these initiatives will prove profitable, others will not. The important thing is that the chain is not standing still. I expect increasing the viability of the Macy’s app will have the most positive impact, as Millennials prefer to use their phones to gather information and complete transactions. Now Macy’s has to figure out how to get them into the department stores they have shunned.
Principal, Retail Technology Group
…and you don’t do that with shiny technology, you do it with the right product at the right price….
Principal, Retailing In Focus LLC
Most traditional department stores (or the ones that are still standing) have been slow to adapt to changing shopper behavior, especially Gen Y and Z consumers who already represent the future of the retail business. So Macy’s is to be applauded for updating its approach to the furniture business, to the mobile interface and to the in-store checkout experience.
But my biggest critique of Macy’s over the past few years pertains to merchandise assortment. It already has a problem with too many private brands overlapping each other and without a clearcut identity. Adding more brands isn’t the solution (other than the perceived margin benefits) until Macy’s puts its existing brand matrix under a microscope. And while it’s tempting to add more products in-store to emulate the e-commerce experience, it’s tough to squeeze it all in at the same time that Backstage takes floor space from “upstairs” departments.
Consultant, Strategist, Tech Innovator, UX Evangelist
All good forward thinking steps, but none are innovative — just catch-up to where Macy’s needed to be aiming years ago.
VR for furniture is already an old concept, but more importantly, the devil is in the details where a pilot and day-to-day deployment (requiring helmets) are vastly different scenarios.
Mobile checkout again is not new (doesn’t need to be) but the make or break point will be at the mobile checkout where delays/friction will offer no advantage over traditional checkout lines.
Strange that Gennette is revamping the recently revamped loyalty program that he was personally touting at the start of the holiday season. What does that mean?
Let’s see what happens when talk meets reality….
Principal, Retail Technology Group
The changes Gennette announced are definitely in the right direction. The technology changes may or may not bring in more paying customers but the merchandising — if its right — definitely will. If the product mix is different and of perceived value, that will definitely improve Macy’s position. Customers don’t go into a store simply to get out quickly or be entertained, they go to a store to shop for what they perceive is a good deal and in addition, they want to be able to shop in an entertaining, attractive store, and be able to check out quickly once they’re done.
Strategy & Operations Transformation Leader
Although Macy’s evolution and transformation to a digital-first retailer are underway, it will take some time for the customer first culture to permeate throughout the organization. There will be a balance of consolidating/closing underperforming stores, and creating new smaller scale, experienced focused, entertainment like showrooms, that are strategically laser-focused on the customer.
Macy’s is showing very positive signs and continues to evolve with their digital, mobile first strategies, which will help to remove some of the friction shoppers face in department stores. The iconic retailer is intent on not resting on their laurels. To quote the Macy’s CEO, Jeff Gennette, “Macy’s heritage isn’t going to be enough to guarantee success. Yesterday’s playbook isn’t going to work for tomorrow.”
Mobility is critical for Macy’s as they drive their personalization strategies, and enable mobile checkout capabilities. However, the phone is only part of the equation. Integrating VR and other technologies will help drive an improved experience, but Macy’s will have to continually evolve as a company going forward.
President, Integrated Marketing Solutions
Macy’s has a critical choice: defend its heritage or invest in innovation. Every retailer today is faced with a question of relevancy for customers. This is particularly true for those with a department store heritage. Macy’s appears to be investing in innovation for the future before it’s too late. The good news is that they are trying more than one thing. The best news is that Macy’s seems to be testing and measuring things like the impact of VR. Amazon was not built in a day, but through thousands of iterations. In engaging customers, the whole is greater than the sum of the parts.
I applaud Macy’s steps toward innovation. And engaging with these technologies and provider companies will work innovation thinking into the core of Macy’s culture — a very good thing. As there is with anything new, there’s risk. I’m with Chris on this one, how the organization adjusts, supports and iterates through what works will be key.
Managing Director, GlobalData
These are steps in the right direction, but are they enough?
The AI furniture idea is good, but it’s not new. IKEA implemented this a while ago, Ashley furniture has been a longstanding user of this technology. So Macy’s is just playing catch-up!
And while the furniture and home proposition has improved in most Macy’s stores, it remains sub-par compared to competitors.
Having more private label is sensible, but Macy’s has been talking about this for years. So it’s a case of I’ll believe it when I see it!
As usual with Macy’s, it’s not a lack of ideas that’s the problem — it’s a lack of execution and change on the shop floor.
Chief Amazement Officer, Shepard Presentations, LLC
Macy’s is figuring out that they must keep up with their customers’ changing shopping habits. The innovation of scan and go with a mobile phone is going to hit a tipping point soon. Good that Macy’s recognizes this and is investing in this area. Macy’s has always been known for a big selection, and bolstering this, especially online, could help them sustain success. They must be careful to manage inventory without overbuying or misunderstanding a fashion trend. And, they are revamping their loyalty program. I’m not sure what’s going into it, but using the mobile phone as part of it will be an important consideration.
Retail Transformation Thought Leader, Advisor, & Strategist
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Macy’s in-store and online customer experience has required time and effort to shop. Q4 2017 saw leaner, more relevant and easier to shop inventories and customers responded by buying. Stores had a freshness to them, even in the darkness of winter.
The new directive of doubling online inventories and the creation of more exclusive “Macy’s Only” products will require a strong Macy’s design and merchandising leadership, not groupthink. Otherwise, lots of markdowns reminiscent of the past.
Macy’s is not an Amazon Go shopping experience. The scan/pay/go solution “the only point which store staff will be involved” is an easy way for staff to deflect customers, a step back. A smarter tech move would be in-store and online tech solutions to help customers find products they want in these vast new inventories.
All these new programs and strategies are exciting if executed to enhance the true bottom line, Macy’s in-store and online individual customer experience.
Vice President, Brand Development - IGA, Inc.
Macy’s is really pushing to be a leader in the technology-enhanced retail space. Bravo! The recognition that the mobile phone is the “front window to Macy’s and we consider it a flagship” is significant and should serve them well. The VR may help with big ticket items, but the throughput and usage of that solution will pale in comparison to mobile in general.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
The mobile app checkout has the greatest short-term potential. There are two universal truths that govern all shoppers: 1) The longer you can keep them in store the more they buy, 2) The quicker you get them out the quicker they will return. The Macy’s mobile checkout is not as seamless as the Amazon Go salesperson-free checkout. The Macy’s mobile still requires a stop at a special mobile checkout counter for verification, security tag removal, and bagging. However, if implemented properly, with the potential for a speedier checkout, Macy’s and its shoppers both win.
I’m rooting for a miracle on 40.750275 | -73.988146 (34th Street) as well!
I think young people who finally have some cash and don’t want to spend it on a car, and get tech naturally, will appreciate the risk mitigation achieved through VR — nailing the price and reducing the risk will get folks off their phones and into the store. Once there, they might appreciate another category.
I was also moved by the comment made by the CEO regarding the mobile phone being the “front window to Macy’s and we consider it a flagship.” That’s a great organizing principle and Macy’s has the roots and access to design talent to do something interesting.
CEO, FutureProof Retail
Macy’s is miles ahead of its competitors in digital and it may be the only department store to really survive this retail transition. Offering scan pay go is a major step forward and will help make their store attractive to the people who prefer shopping online because of the convenience. It’s especially interesting that Macy’s chose to build this capability in-house, rather than working with a company like ours. I hope they will see a lot of success with their solution and that maintaining a competitive mobile experience won’t turn out to be a drain on their resources. Other retailers who are looking to compete with Macy’s on mobile will find it’s expensive — a quick search of LinkedIn shows more than 50 employees at Macy’s with “mobile” in their title.
Managing Partner Cambridge Retail Advisors
Macy’s is making a lot of smart moves to transform their business to meet new customer expectations: better assortments, interactive product selection tool (VR), mobile shopping and payment options, etc. Many of these changes are focused on giving customers more choices or options in their shopping journey. All of these initiatives will enhance the shopping experience.
The area that isn’t addressed in these initiatives is how Macy’s plans to improve the level of service associates provide to personalize the shopping experience. While some consumers prefer to be self-sufficient during their shopping experience, others want personalized service from an associate. Department and furniture retailers that offer friendly, available and knowledgeable sales associates will differentiate their brand and earn customer loyalty.
A focus on sales floor leadership, customer engagement, zoning (sales floor coverage), performance metrics, staffing, scheduling and training are keys to success in big ticket furniture retail or really any brick and mortar operation. We have to be careful not to focus too much attention on technology and lose sight of the personal touch of retailing.