Macy’s Inc. is ready for a revamp.
The department store chain’s management revealed Tuesday several key changes that it hopes will turn the firm’s struggling business around.
Last year, the company announced it plans to shut down 100 stores and slash thousands of jobs as it attempted to counter retail’s challenges and refocus more efforts on digital.
“We have a very strong physical store footprint,” Macy’s newly minted CEO Jeff Gennette told investors Tuesday. “We did get ahead of the industry on realizing the need to pare back our physical store footprint. And once we finished closing the 100 stores that we announced in August of 2016, we’ll have a brick-and-mortar portfolio that we feel good about.” (Gennette, also Macy’s president, since March 2014, took the reins from former Macy’s CEO Terry Lundgren in March 2017.)
Now the firm is looking to fine tune its marketing, reel in promotions and create better in-store experiencing in order to create a stronger department store that could survive in the future of retail.
Here, we round up four big changes.
Richard Lennox, Macy’s chief marketing officer, said that the firm will save money by targeting its advertising budget toward shorter 15-second ads as opposed to 30-second spots.
“TV is one of our largest media expenditures,” Lennox said. “We know that TV remains the best vehicle to reach a broad target audience at a low CPM, so highly efficiently. We also know that our 15-second spots are 86 percent as efficient as our 30-second spots, but I can buy a 15-second spot for half the price of a 30-second spot. So by altering the ratios between 15s and 30s in my media mix, I can get a higher return on investment for a lower marketing spend.”
Those seemingly ever-present Super Saturday promos and other frequent ads the have become increasingly synonymous with Macy’s will also get scaled down. Lennox said Macy’s will create a “new species of marketing event” called “standalone tentpole events.”
“Four times a year [we will] step into the marketplace and create a point of noise and excitement around the Macy’s brand,” Lennox said. “Those tentpoles will be centered around spring fashion, summer, fall fashion and the holiday season.”
Exclusive & Curated Product
Macy’s will amplify its efforts to cast itself as a fashion authority by introducing “The Edit,” which will highlight newness, exclusivity and hot “it” items.
But, even with a renewed focus on exclusive and elevated product, Gennette noted that customers can continue to expect lots of sales.
“We are going to remain a promotional department store, but we want those values to be much clearer to the customer,” the CEO said.
As far as pricing goes, Gennette noted that the firm will move toward a more simplified pricing model that would communicate value primarily and include “faster and deeper permanent markdowns.”
The department will also seek to reward its most valuable customers in a stronger way with the roll out of a new loyalty program in the fourth quarter.
Ramped Up Tech
Macy’s is on a mission to grow its digital business.
“Mobile transactions, both on the app and through our mobile web, are our fastest growing and most importantly it’s the highest customer satisfaction, so we’ve really worked through that and made a happy customer there,” Gennette said. “We got still things to do. We’re going to still improve the speed all the way through this year, browsing, transaction experience, to make it particularly how you shop in your local Macy’s.”
Gennette said the firm is building in “stronger personalization and recommendation functionality within the mobile app,” and it looking to up its efforts around the buy online, pick up in store, or BOPIS, platform.
“We like BOPIS because our customer loves it,” he said. “It’s also our most profitable transaction. It let’s her combine the best of both worlds, online and in-store. And when she gets to the store, she’s shopping and she is spending more.”
Genette said he is hoping to tap into the popularity of BOPIS among Macy’s customers and use it as a tool to boost in-store traffic as well as incremental sales.
A New Store Experience
“Our challenge is that our in-store experience is inconsistent and not always appealing, and our opportunity is to continue to improve that experience,” Gennette said.
Macy’s said it is well aware of a need to enhance its in-store presentation — and take advantage of some of its prime real estate — in order to more effectively compete with digital as well as brick-and-mortar players.
To that end, the company touted several initiatives — among them a possible revamp of its Herald Square flagship in New York. A re-imagined store could include adding restaurants to its rooftop and social space where people could “go for after work for drinks,” according to Douglas William Sesler, EVP for real estate at Macy’s.