Excitement abounds at Macy’s. Sales were great. The company reported total sales of $27.9 Billion. Comparable store sales grew by 2.8% (which includes sales from licensed departments.) Earnings were above expectations. They rose 19% to $3.86 Billion.
The stores look terrific. Renovation of the Herald Square stores is about 85% complete and is brimming with name brand vendors. From Gucci to Vuitton, Burberry to Longchamps, Michael Kors to Coach, Hermes to Tumi and Tom Ford to Bobbi Brown. The store has a new look, with updated departments such as the new shoe floor on the second floor that used to house the ladies inner wear department. One can find over 300,000 pair of shoes ranging from Kors, Gucci or Coach to more popular priced shoes.
On the earnings conference call with investors, CFO Karen Hoguet stressed the importance of stores in this age of mobile and Internet shopping. While customers shopped aggressively on the web, fulfillment at stores was an important factor for many of the transactions. Either a customer picked up the merchandise at their nearby Macy’s, or the store may have fulfilled the order and shipped it directly to the customer’s home. In either case the store was still an important cog in the wheel that serviced a specific sale. Omnichannel at Macy’s today means that orders can fulfilled in multiple ways. It also means that every associate in the company is trained to make customers feel welcome and important.
With over 800 stores throughout the United States, Macy’s is well positioned to cater to the everyday needs of their customer. Particular focus has been placed on the millennium customer – the 13-30 year old whose lifestyle is so very different from the more mature shoppper.
The assortment of athletic shoes is now in the hands of The Finish Line. This is third party operator that ensures the most desirable shoes are in stock and the staff is well trained to service a youthful customer in a Macy’s store. This is an excellent example of how Macy’s will use the talents of specialists to enhance the shopping experience of customers given the product knowledge can be greater in every classification. I suspect that in 2014 additional classifications of merchandise will be turned over to franchisees.
The millennial customer spent about $65 billion on fashion merchandise in 2012. In order to serve this customer better, Macy’s has formed teams in planning, merchandising and marketing to develop on trend fashion merchandise in two new department–Impulse for the older customer, and Mystylelab for the younger customer. During the past year, 13 new millennial brands were added and 11 brands were expanded. It is evident that Macy’s is pursuing many initiatives that appeal to the younger customer. This is critical to sustaining a vital store and vibrant business.
Macy’s localization program is an important and effective in attracting a variety of customers. As part of this program, merchandise managers analyze the customer mix in each and every store and then ships goods tailored specifically in terms of style and sizing to each store. For example, Asian customers wear smaller sizes; Hispanic customers favor flamboyant colors; and the working woman favors black and white clothing. Localized merchandise programs can make sure each customer type finds the goods they like.
For internet shoppers, stores are still important and hold appeal for young customers who often shop the stores and then order on the web. Using omnichannel fulfillment that approach has been enhanced. Customers can now order on the Internet and have the option to pick up their orders in stores. A test late last year confirmed the viability of this initiative and it is now being rolled out to most stores.
Stores are, and will remain, important for creating a fashion image in the future. They are the anchor for serving the customer well via visible, attentive and enthusiastic associates. When this is the case, it makes shopping a pleasurable experience.
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