Macy’s Has Gotten Omni-Channel Right

In Customer Engagement, Customer Experience, Featured on App, Marketing and Sales, Omnichannel, Technology, The Mobile Customer by Vaughn Highfield

Macy's Omnichannel, CEO, Apps, Consumer Experience, Customer experience, Terry Lundgren

Macy's, the US department store, posted a $1 billion revenue growth (pdf) this year while every other competitor around it has been floundering, and it seems that omni-channel is at the heart of its success.

Each year since 2010, online sales have increased 40 per cent and nearly account for around 11 per cent of total revenue ($3.1 billion annually).

Thanks to early investment in the omni-channel market, it's made sales work when store footfall hasn't improved drastically.

With a consumer base that's 80 per cent women, Macy's has aimed its omni-channel approach around their busy lives. Now a customer can find a nearby store on their phone or tablet, visit it to try on a product in-store, and then order online via a tablet or PC.

Of course, this does mean that stores become more like showrooms, and there's a risk that customers could buy clothes from cheaper stockists, but Macy's has an ace up its sleeve.

Forty-six per cent of its products sold last year were exclusive to Macy's.

Macy's core brands just can't be bought anywhere else: 20 per cent of its Ralph Lauren products remain exclusive while 100 per cent of its Tommy Hilfiger and Kenneth Cole Reaction items are available only at Macy's.

It clearly works for Macy's and it's enforced by a key localisation strategy to keep stock fresh and relevant for each store – as not every store can stock the same goods.

CEO Terry Lundgren has opted to make Macy's stores distribution centres too. It means that customers get stock faster as it could come from their local stores – regardless of if those items generally sell well in store or not.

It's interesting how it all works too as the item doesn't ship from the nearest store, but the store that is least likely to sell the item at full price – thus clearing it from their stock count.

While not efficient, Lundgren believes that it'll make up for the cost thanks to inventory movement.

Still, Nordstrom is ahead in terms of the in-store pick up as it has real-time stock updates so customers know exactly when they have time to go and grab some items before they sell out.

Either way, it looks as if Macy's really has gotten the omni-channel strategy just right.


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