In Depth

Macy’s Relentless Omnichannel Machine

Macy’s has been incrementally building its merged channel capabilities for years. The chain has repeated the same process again and again: Start with a small-scale test of an in-store feature, such as Macy’s “Store to Door” program, in which if one store is out of an item a customer wants, the product can be shipped to the customer’s home from another store. Then expand the test to more stores. Then add in online (in the “Store to Door” case, fulfilling online orders from store inventory). Then bolt on another feature, and repeat the process.

The result: Without any large-scale omnichannel rollout, Macy’s has become one of the most active large omnichannel retailers, with the chain now getting about 10 percent of its sales from online orders, according to Fortune.

With the high-profile rollout of the new Apple Pay mobile payment system in Macy’s and Bloomingdale’s stores in October, it’s easy to lose track of how far (and how quietly) the relentless Macy’s omnichannel machine has come in several other areas:

  • Same-day delivery. The chain will begin a test of same-day delivery of online orders at Macy’s and Bloomingdale’s stores in Chicago, Los Angeles, San Francisco and San Jose, along with additional Macy’s stores in Chicago, Houston, Seattle, New Jersey and Washington, D.C. The deliveries will be made by crowdsourced delivery service Deliv, but they’ll build on the store-to-door capabilities that Macy’s started growing three years ago. (In 2012, Macy’s CFO predicted that adding same-day delivery would require only “a small amount of capital” for the chain to roll out, though the retailer was in no rush to do it at the time — and still isn’t quite ready to try it in New York.)
  • RFID. Macy’s and Bloomingdale’s started using radio-frequency identification (RFID) tags to track individual items in 2011. Combined with a unified in-store/online inventory system, the chain can track whether an item is in stock in a particular store, as well as find the item quickly on the shelves or in the stockroom — which is also crucial for efficiently and accurately filling online orders from store stock. The retailer has been piloting item-level RFID tagging for more fashion categories — social dresses, men’s sportcoats and slacks — and plans to roll it out more widely in 2015.
  • Smart fitting rooms. Bloomingdale’s is running pilot tests of smart fitting rooms in three California stores (San Francisco, Century City and Palo Alto) and two New York-area stores (Short Hills, N.J., and Garden City, N.Y.), in which fitting rooms have wall-mounted tablets that allow customers to see if an item is available in other colors or sizes, get recommendations or call for help from a sales associate. And if exactly the right color and size aren’t in stock at that store? Then the store-to-door capability can be used to find and deliver it.
  • Beacons. In one of the chain’s biggest mobile-retail rollouts to date, all Macy’s stores nationwide are getting Shopkick’s implementation of Apple’s iBeacon technology, which lets customers receive personalized discounts, rewards and recommendations on their mobile phones. Macy’s tested the beacons last year in its flagship Herald Square (New York City) and Union Square (San Francisco) stores, and is rolling it out to all U.S. stores this fall. But, true to its practice, the chain will start by getting the technology working with generic chain-wide offers, and only move on to offers tailored to specific departments in specific store in spring 2015.
  • Mobile wallets. Yes, Apple Pay is coming. But so are mobile wallets for offers from Macy’s Star Rewards and Bloomingdale’s Loyallist loyalty programs, which will make it simpler for customers to use coupons and discounts online or in-store. And while both the store-branded wallets and Apple Pay are new, the in-store mobile payments build on experience from one of the chain’s less successful experiments: Macy’s 2011 rollout of Google Wallet.

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