Macy’s has been at the leading edge of the retail industry’s efforts to adapt to today’s digitally-savvy shopper, with offerings such as same-day delivery and iBeacon technology, which delivers coupons to smartphones.
R.B. Harrison, Macy’s chief omnichannel officer, is in charge of the department store’s efforts to create a shopping experience that allows customers to seamlessly move between in-store and online channels. He sat down with The Washington Post on Monday at the National Retail Federation’s Big Show, an annual industry event in New York, to talk about what’s on the horizon for Macy’s shoppers. The conversation has been edited for length and clarity.
Sarah Halzack: We’re fresh off the holiday shopping rush. What did you learn about the omnichannel customer this season?
R.B. Harrison: That she continues to evolve. The penetration and the degree to which she’s using mobile to do research: A very high percentage of the time, 60 to 70 percent of the time, she’s doing some kind of research before she buys. Now that goes both directions, because we can see cases where she’s in the store and she buys later online. But it’s that convergence of digital and store, particularly for information acquisition, such as reviews and store hours.
Halzack: Some retailers are focusing their mobile experimentation on apps, others on their mobile Web site. What is working (or not working) for Macy’s?
Harrison: We believe very strongly in both. They’re serving different customers. The app is often a very loyal customer because they took the time to download. They were willing to give something of themselves to us. So there’s a lot of [people using the] “Pay my bill” [function] in there. Mobile Web is often a customer who is not as loyal. We dramatically increased the speed of our [mobile site] because speed is of the essence. Often, that’s information-seeking, more so than someone who’s more loyal.
We have used our app to drive various in-store experiences. Black Friday — there was the ability to play some games or know where the specials are. Or the [Macy's Thanksgiving Day] Parade app had the ability to virtually put yourself on a blimp.
Halzack: What was the uptake for those things?
Harrison: They were much more widely used than previous versions. Did everybody that walked in the store download them? No. Not even close. Again you see a correlation to those who are loyal to us.
Halzack: Macy’s announced last week that it is undertaking a major restructuring of its marketing and merchandising divisions with the goal of improving the omnichannel experience. If I’m a regular Macy’s shopper, how am I going to notice this change?
Harrison: We hope you don’t see a night-and-day difference. It’s an evolution. We hope that that one single view of the inventory, we have one single view of the truth. It will enable the collective merchant teams and marketers to make better decisions, because there will not be artificial demarcations. We think, as these teams work together and have the one strategic headset, we’re going to look at that customer holistically, from what she does in a digital environment to an in-store environment.
Halzack: Stores are already very good at tracking a customer through the entire path to a digital purchase. They’re getting better at tracking shopper behavior in brick-and-mortar stores. How close are we to seeing these two things connected, in which you can follow a customer as she bounces between digital and in-store shopping?
Harrison: I think it’s going to continue to improve for the customer who wants it to improve. We’re very conscious that some customers will want to share a lot of information, and then we can provide a very tailored experience because we know you well. There are other consumers who want to remain far more anonymous, and it’s not our intention to step on that.
Halzack: That brings to mind Macy’s mobile couponing initiative, in which customers using the Shopkick app are able to receive digital coupons on their phones when they visit a store. Where are you finding consumers draw the line with their privacy?
Harrison: Those who want to share, share. Shopkick, compared to our entire file, has a very, very limited adoption factor.
You have to be a little sensitive. The industry right now is very fragmented with in-store stuff. Beacons are wonderful. They’re neat — if you have the exact specific type of phone that reacts to that specific type of beacon. And then I have to be in a position to give you good content, meaning that I know you well enough that I don’t send you an offer for hunting boots when you’re walking through the apparel section.
That’s a tiny percentage of our customers. I think it will grow, but it will always be balanced by those who just don’t want to have the privacy infringement.
Halzack: So far, Macy’s is offering only general mobile coupons, the same coupons featured in your print circular. I know the goal, though, is to get to a place where, say, a shopper who is looking at a KitchenAid mixer gets pinged with product reviews and related items. How close are you to making that a reality?
Harrison: I think you’ll see some of it begin to happen this year. But all of that is going to continue to improve as the technology improves and, frankly, as we make the investments to pull all of that together.
Halzack: You piloted same-day delivery in several major metro areas this holiday season. How did that go?
Harrison: We were very pleased with it. We were generating a lot of orders; the feedback was resoundingly satisfactory.
We’re going to, in all likelihood, expand that to more markets. You need a certain density of customer. And I think it’s something a customer has to have a demand requirement for. We had $2,000 rings being delivered to the customer, and they appeared to have a need for that item with a high sense of urgency. But most of the stuff was much more mundane — a coat, boots, all the normal stuff that we sell.
We’re excited about it. I don’t think the vast majority of customers are all of a sudden going to sign up for same-day delivery. But it’s a feature that we want to be able to provide where it makes sense.
Jim Sluzewski, Macy’s senior vice president of communications: Our ability to do same-day delivery is rooted in the infrastructure we built to do “buy online, pick up in store,” which is rooted in the infrastructure we built to do in-store fulfillment. So there’s a lot of investment that makes that fairly simple thing possible.
Harrison: Our in-store fulfillment is going to be a billion dollars this year, in less than three years.
Halzack: Meaning just online orders that were filled in stores? Or would that include, say, an in-store shopper in Virginia whose order is fulfilled in a Washington, D.C., store?
Harrison: It’s the latter. I always looked at omnichannel as the ultimate facilitator of the customer experience. It’s our ultimate ability to localize product. If there’s not enough demand for that dress in Arlington, Va., I can still get you that dress through omnichannel.
From our perspective, our fundamental advantage is our stores-digital experience. If she really wants to touch the thing, she can go to a store. If she doesn’t want to take it to UPS to return it, we can take it in the store. It’s an advantage we think we still have over our competition, certainly the Amazons of the world.
Halzack: “Buy online, pick up in store” is becoming a popular option. What exactly is the use case for that?
Harrison: We think it runs the gamut. It could be the customer who wanted to buy digitally but didn’t want to pay the delivery fee. We know there are use cases where [a shopper thinks], “I want to buy a present for my spouse. I don’t want it delivered to the house.” Or, “I’m a little uncomfortable having items sent to my front stoop because something will go away.” There are absolutely use cases where “I was going to the store anyway, and I just wanted to make sure it was [in-stock].”
If I knew which one of these were in what proportion, I could answer some questions that we debate endlessly. But in the end, it doesn’t matter. The customer is using it.
There are a couple big advantages of “buy online, pick up in store.” The most important is that we are getting that customer into the store. And that then becomes an opportunity for her to either, on her own buy something else, or in a really good situation, to use our selling skills and offer other alternatives. If a guy’s buying a dress shirt, you sell him ties. If you bought a KitchenAid mixer, how about the adapter so you can make pasta?
It gets footsteps into our stores. We experience, on average, increased sales. So, they buy $100 worth of stuff, on average, they leave with $120 to $125 worth of stuff. So it’s a very good transaction for us, and we get them to experience a Macy’s brand.
Halzack: Macy’s recently announced it is exploring an off-price business. What would the omnichannel vision for that be?
Harrison: We’re very early in our exploration of what off-price would be for Macy’s. I think we have a core competency right now in omnichannel and digital, and I’m certain the team will want to explore how to apply that competency to that model. I don’t think at this point we have a preconceived [idea] of how to do it. But we think we’re pretty good at it, and if somebody can figure it out, it’ll probably be us. Right now, we’re trying to figure out what exactly that experience could be and whether or not it make sense for the Macy’s customer.
Halzack: So it’s very early then.
Harrison: They could come back and say, “bad idea, not going to work.” But we think it’s an avenue we want to explore.
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