Macy's aims to become retail tech powerhouse with latest moves

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Phil Wahba

Macy’s  M 0.29%  has spent hundreds of millions of dollars beefing up its e-commerce firepower in recent years.

That has given Macy’s a big head start over rivals such as J.C. Penney  JCP 0.83%  and Kohl’s  KSS 0.31% , in terms of having the ability to use stores to fill online orders or orders from other stores, as well as the ability to offer customers the option of ordering online before coming in stores.

The strategy is paying off: Macy’s saw the biggest jump of any large retailer in consulting firm Interbrand’s most recent ranking, and Macy’s now gets about 10% of its sales online after a few years of high growth. But now, as competitors catch up, Macy’s is trying to keep one step ahead as it pursues its “digital/brick-and-mortar” hybrid business model.

So it is testing some ideas like same-day delivery or smart fitting rooms and implementing others that are ready for primetime, such as accepting the Apple Pay  AAPL -1.18%  digital wallet and deploying iBeacon readers so it can zap personalized ads to customers as they walk through the store.

“The customer is driving innovation,” RB Harrison, chief omnichannel (integrating stores and e-commerce) officer at Macy’s, told Fortune in a recent interview. “She or he is increasingly expecting a seamless experience between a digital and in-store environment.”

Last week the retailer, which also owns the high end Bloomingdale’s chain, announced an extensive series of initiatives aimed at making the best use of its technology to make sure customers that come to shop stay to buy, whether online or in stores.

Here’s a look at a few of them.

Same-day delivery

This fall, Macy’s and Bloomingdale’s will start testing same-day delivery of online orders, trying it out in eight key markets such as Chicago, Los Angeles and Washington, D.C., with Deliv, a same-day delivery provider whose investors include all four major mall operators, including General Growth Properties  GGP 0.32%  and Simon Property Group  SPG -0.04% . Two years ago, Macy’s and others were testing out the service with eBay Now  EBAY -0.02%  but those efforts were seen as a “very crude initial experiment.”

“We didn’t provide any of that. This is totally Macy’s,” Harrison said. The shopper simply goes to Macy’s site and if the product is available, and the order placed, the customer gets a text message or email with the projected delivery time or asking if he or she wants to change it. Harrison said he doesn’t know how popular the service will prove to be but said he expects customers to make good use of it. “It doesn’t mean that everything has to be delivered that way but it can help in an emergency.”

Macy’s is not ready to give it a try in New York just yet given how much more complex same-day delivery would be in that market, Harrison added. The move also comes as Amazon  AMZN -1.16%  accelerates its own efforts for ever faster delivery.

RFID

Macy’s and Bloomingdale’s have started rolling out Radio Frequency Identification technology in 2011 with a view to being better able to track the exact location of a given item anywhere in the supply chain or in-store, an essential condition to being able to use stores to fill e-commerce orders and for finding and packing an item ordered on the web for in-store pickup.

“There’s an omnichannel component to RFID. We’ve always said RFID would help us maintain more accurate inventory, and with more accurate inventory we would buy the right stuff, have it in the store and in turn take care of the customer more efficiently,” Harrison said. (Under failed former CEO Ron Johnson, J.C. Penney  JCP 0.83% attempted its own wide-scale RFID deployment, but ran out of money and dropped the project.) The retailer is pushing the rollout to RFID to more fashion categories next year. More retailers are following suit now.

Beacons in-store
Macy’s will expand the use of shopkick, a popular real-world shopping app, to all of its stores after a successful pilot last holiday season in its Manhattan and San Francisco stores. Shopkick’s shopBeacon technology, an enhanced mobile location-based feature built upon Apple’s iBeacon, will be placed inside certain store departments and allow Macy’s to send personalized department-level deals, discounts, recommendations and rewards to customers who want that. The installation should be done by early autumn. Penney also has some beacons deployed, but the technology is still largely absent from big box retail.

Macy’s image search
Macy’s has started to roll out its Image Search feature, which lets shoppers looking for a specific item they took a picture of and search through the assortment available on macys.com to see if the retailer has it, or a similar item.

Smart fitting rooms
Bloomingdale’s is testing smart fitting rooms at four of its stores. The rooms have a wall-mounted Apple iPad that let a shopper or customers scan an item to see whether other colors and sizes are available in the store and summon the associate to bring alternates. This is meant to prevent customers from giving up in frustration at the idea of having to get dressed again to go into the store to get more items to try on.