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Macy’s Stops Reporting Online Stats, Blames Too Much Channel Blur

February 27th, 2013

One problem, for example, is the balancing of shipping cost versus markdown delay. If the goal is to ship to an online shopper in Baltimore and the desired product is in a store in Washington, D.C., as well as a store in Portland, Oregon, which one does the shipping? Even though it’s a lot less expensive to ship from Baltimore, the system must consider how much inventory each store has on hand, how old it is and, therefore, how much will be lost when those items go on markdown. How much will it likely be marked down? Is it more than the increased shipping costs from Portland?

“It’s a matter of setting the right clearance price strategy at every location. Those rules don’t apply everywhere,” said Jim Sluzewski, Macy’s senior VP for corporate communications. “At what point do you decide to clear an item because it clearly isn’t selling well? The initial perception was that if we studied it, we could figure it out pretty quickly. We found that mapping the process wasn’t as simple as we thought.”

The CFO said Macy’s has been trialing with a handful of physical stores and giving far too little inventory, forcing the store to depend on online order fulfillment. “We’ve done a lot of experimenting this year with goods that are in the stores for which we don’t have (in-store) inventory backing it up. A lot of those initiatives have done very well,” Hoguet said. “We’ve also experimented with putting merchandise online that we don’t have inventory in the online warehouse, as the inventory is only in stores. In the fourth quarter, we had about 700 items that we tested this with very successfully.”

During the analyst call, Hoguet also reported:

  • More Item-Level RFID
    Macy’s has pushed RFID for years, but the chain said it will ramp up sharply this year. “By the fall, we’re hoping to have roughly half of our replenishment business utilizing RFID. Our stores will all be enabled by early in the fall, and we’re just waiting as the vendors come up and begin to tag the goods. So replenishment is roughly 30 percent of our business. This could be very important as we go forward,” she said.

    And in a different RFID use case, Macy’s will be auditing shoes on display. “We’ve rolled it out now to all of women’s shoes across the company. And next up will be luggage and men’s shoes, which will be up this summer.”

  • Mobile Doesn’t Convert As Often
    Macy’s is experiencing lower conversions on mobile devices than laptops/desktops. That theory has been widely discussed, but Macy’s is the first to report those results definitively. “We are benefiting from very large increases in traffic on the Web site but also in conversion. The increase in conversion is particularly encouraging given the growth in mobile traffic, where conversion does tend to be lower than on desktops,” Hoguet said.
  • We Don’t Need No Stinkin’ Specialists
    In discussing staffing strategy, Hoguet said the chain initially wanted to use specialist staffers to fulfill orders, on the rationale that they would be faster. That turned out to be untrue. “One of the early learnings was that we had thought we would have special-purpose people doing the fulfillment activity. And we discovered that we were better off using the support associates we had, because they better understood the merchandise, and people who were putting merchandise on the floor are going to find it much quicker if they understand it. So we did change the staffing model some.”

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    2 Comments | Read Macy’s Stops Reporting Online Stats, Blames Too Much Channel Blur

    1. Benjamin Says:

      Most companies that started as strictly brick-and-mortar retailers have not thought of themselves as e-retailers yet, because planning habits and systems have been developed mainly to support strictly retail locations for so long. Then ecommerce forced the brick-and-mortar model to evolve to include ecommerce systems, but it never forced a total redesign of the brick-and-mortar concept to support the ecommerce concept. Macy’s is now supporting its ecommerce model via the brick-and-mortar locations it already has available. Smart move.

    2. David P Himes Says:

      I find this mildly annoying. Because the sales transaction can clearly be categorized based upon the transaction-engine — retail store, web site, mobile device, phone center.

      All sales are influenced by multiple channels of messaging.

      So, I interpret Macy’s decision as a desire to not be comparable to other merchants, except at the top line. It may even be a way of avoiding their own internal debate about channel conflict.

      Whatever their rationale, it’s affect is to cease providing useful information to their external stakeholders, investors, analysts.


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