Pricing and Promotions
Through Macy’s pricing science and reduced promotions, the retailer is driving stronger regular price sell-throughs and higher merchandise margins, said Gennette. Macy’s continues to update its supply chain infrastructure and network, while leveraging improved data analytics capabilities in its fulfillment strategies.
“We're seeing a payoff from the investments we've made in our pricing strategies with the enhanced use of data and analytics,” said Mitchell. “These include improving and expanding location level pricing and strategically shifting our markdown cadence.”
He noted location level pricing is exceeding the company’s performance expectations and Macy’s will be live and at scale in more than 500 departments by the end of Q2 compared to the handful of departments it was piloting in Q4.
“Our teams are embracing the advanced analytics that are powering our decisions,” he said. “Through these analytics, we have already successfully executed several meaningful improvements to our markdown algorithms this year and we have several more planned for the second quarter. We're accruing benefits from this in real time. When we make incremental improvements in the algorithms, we realize immediate sales and margin benefits.”
In the first quarter, approximately 22% of Macy's digital sales were fulfilled in its stores.
The retailer is acutely focused on improving its inventory allocation, while using data and analytics to better place inventory at stores and distribution centers, as well as across its markets. Macy’s expects to become more efficient as its allocation work continues.
A new CIO
Markdown and promotion optimization contributed meaningfully to Macy’s strong AUR and margin performance in the first quarter, Gennette noted, and to support these efforts Laura Miller was appointed Macy's new Chief Information Officer earlier this year.
“Laura brings strong experience driving technology transformation in consumer focused businesses and is bringing a customer focused lens to all of our technology investment decisions,” said Gennette. “She is continuing our pre-pandemic efforts to modernize our technology foundations, and boost our ability to react to customer and market shifts, regardless of channel.