As recently as 2015, Macy’s was considered the harbinger of the future of retail. Gartner’s Scott Galloway predicted that far from being outmaneuvered by Amazon, Macy’s would successfully lead the retail industry by innovating its way to an omnichannel experience.[1]
The post rightly credited Macy’s with farsighted investments in digital marketing, last mile delivery and just in time fulfillment. However, it misread the shifting tides of consumer behavior and greatly underestimated the significant execution challenges of turning around a $25B department store. In 2019, much work still needs to be done to make Macy’s increasingly relevant to generations Millennial and beyond.
Here are four ideas:
Cultivate brand authenticity:
While Macy’s has done a commendable job of building a digital presence, it must do better with embracing it’s unique identity – that of a classic, value provider that is a staple of the American urban middle class. It must then create consistency across it’s marketing channels – Digital and Offline. Retailers such as Trader Joes and Lego are worthy of emulation.
A recent study by Ad Agency SDL provided the following insight on millennials – “Whether on the phone, in person, or online, Millennials say that dealing with a company should feel consistent—in other words, the brand has established a true identity that runs through everything they do. Millennials also report that they like hearing from a brand when the communication is not about selling a product; they want to feel like brands are building a relationship with them as an individual, not just as a consumer.[2]
Create neurological connections in-store:
The Herald Square store has the unique distinction of being the fourth most visited destination in New York City. Not fourth most visited store, fourth most visited destination.[3] This suggests an untapped potential to create a strong psychological and emotional connection with shoppers that appeals to their subconscious becoming hard for competitors to measure and match.
Early adopters of such an insight have been the half museum, half store concepts at Nike Live and Starbucks Reserve Roastery.[4] While the Market @ Macy’s and b8ta concepts are steps in the right direction, there is potential to scale them up significantly and constantly test out fluid, sensory experiences. It is imperative to treat such concepts as cross-channel investments that create long term brand equity rather than drive up comparable store sales. In fact a major competitor, Target has recently woken up to this cross-channel reality.[5]
Enhance the human touch:
While technology investments are expected to improve convenience and in-store productivity, being helped by other people continues to be a major driver of purchasing. PwC Strategy& reports that 82% of shoppers want more human interaction rather than less.[6] Millennials in particular value friendly, timely advice when making purchase decisions as evidenced by the bustling Genius Bar in Apple Stores.
Rather than aiming at cashier-less stores and automated customer service, Macy’s should invest in improving capacity utilization using technology as an enabler rather than as a solution. Training store operations will need to become an ongoing priority, with merchants, inventory managers, shopper assistants, cashiers and support staff being coached on providing customers with relevant advice.
Leverage Technology for Personalization:
Research shows that Millennials are increasingly comfortable sharing personal data once they trust the brand. While the previous three steps will help build trust, Macy’s should leverage it’s strong omnichannel presence to measure, predict and act on newly collected insights on purchasing behavior. By triangulating patterns across the shopping funnel, Macy’s can refine it’s segmenting of customer clusters, understand price elasticity and dynamically evaluate cross product sales correlations to build a product recommendation system closer to Amazon. Needless to say, this will require substantial investments in data science and ensuring the data sources speak the same language at comparable granularities.
In summary, I think Macy’s has demonstrated the strategic agility to compete in what many call the world’s toughest industry. For optimal results, Macy’s must commit to a long term identity which helps inform a set of core capabilities that reinforce each other seamlessly to create customer value. It must also be pragmatic in execution ensuring strategy is accompanied by organization wide sell-in and the requisite upskilling of employees. With the right steps, Macy’s has all the ingredients to become the Retail industry’s posterchild.
Footnotes
[1] https://www.l2inc.com/daily-insights/the-future-of-retail-looks-like-macys-not-amazon
[2] https://www.forbes.com/sites/nikkibaird/2018/08/03/brand-authenticity-is-it-really-that-complicated/
[3] https://www.bloomberg.com/news/features/2017-11-21/macy-s-plan-to-survive-the-retail-apocalypse
[4] https://www.retaildive.com/news/store-concept-of-the-year-nike-live/541703/
[5] https://www.retaildive.com/news/how-target-got-its-tar-jay-back-by-thinking-beyond-channels/547963/
[6] https://www.strategy-business.com/article/Todays-Retail-Needs-Both-Tech-and-the-Human-Touch?gko=d0e8a
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