Macy’s Overhaul Includes $640 Million Robot-Centric Warehouse

Macy’s is reportedly embracing automation amid its ongoing turnaround plan.

As The Wall Street Journal (WSJ) reported Thursday (Oct. 23), this includes the opening of its biggest, and “most-automated” warehouse ever, a $640 million, 2.5 million-square-foot building in North Carolina where robots pick items for online orders and restocking of stores.

The report notes that Macy’s, under CEO Tony Spring, has been working to reverse a years-long decline in sales. That has meant overhauling some stores and shuttering ones that aren’t performing, as well as streamlining its supply chain.

The 167-year old department has closed one distribution center and two third-party logistics facilities in the last two years, while adding automation to other warehouses as it seeks to fulfill online orders faster and make sure its stores have products in stock.

Macy’s, the report added, has faced stiff competition in recent years from discounters, eCommerce sellers and fast fashion companies who have drawn consumers with low prices and fast deliveries.

Thomas Goldsby, a logistics professor at the University of Tennessee, told the WSJ that retailers have had to adapt to meet customers’ rising expectations for online-order delivery.

Consumers are “expecting limitless assortment, competitive pricing, simple, easy ordering, visibility of the order, timely delivery, and then, oh, by the way, ‘no questions asked’ returns,” Goldsby said.

According to the WSJ report, Macy’s says this new warehouse will get online orders to customers quicker and in fewer shipments.

Sean Barbour, the company’s senior vice president of supply chain, said the building completes orders in less than a day on average, while the orders would have taken a day and a half under the old system. The warehouse also holds more inventory, letting Macy’s ship multiple-items orders using fewer packages.

“Customers want to see as few tracking numbers as possible,” Barbour said in an interview. “That also matters to us, because it’s very expensive to send more than one package per order.”

The company’s most recent earnings showed a sign of a turnaround, with comparable-store sales up 0.8%, beating expectations.

As PYMNTS wrote last month, management attributed the gains in part to its “Reimagine” store modernization program, which involves more strategic merchandise selection and improved store organization. This suggests that smarter stocking, a tech-centered approach that incorporates artificial intelligence (AI), along with other features such as RFID, has led to efficient inventory curation and modernization.