Macy’s Pays to Make Mobile Best-In-Class
As Macy’s continues its digital transformation, chairman & CEO Jeff Gennette said the department store retailer is putting “a lot” of its technology spend towards making its mobile “best-in-class.”
“We had another quarter of double-digit growth in our digital business, and mobile continues to be our fastest-growing channel,” said chairman & CEO Jeff Gennette. “We are pleased with the progress we are making on our strategic initiatives as they continue to drive top-line growth, keeping us on track to reach our 2019 goals.”
Macy’s has good reason to double-down on mobile tech. The retailer crossed $1 billion in app sales in 2018.
“We are focused on our mobile-first strategy,” Gennette said in the company’s earnings call. “We know our customers use our apps to shop.”
Macy’s reported capital expenditures were $264 million for the quarter, compared to $190 million last year, noting the increase was due to the timing of spending on its strategic investments. Macy’s plans to spend approximately $1 billion in 2019.
“In the Macy's brand, it is encouraging to see that our investment strategy is paying off,” said Gennette. “As an omnichannel retailer, our competitive moat is a healthy brick-and-mortar business, a robust e-commerce business, and a great mobile experience that ties it all together. We are applying a balanced investment strategy to support all three.”
According to Gennette, Macy’s breaks up its mobile expenditures and technology expense into three buckets of mobile: My Wallet, My Stores and My Stylist. Here’s a detailed look at each of Macy’s mobile investment areas.
Macy’s My Wallet allows shoppers to access offers in their online Wallet online and pay with a stored credit card. This is important to Macy’s because buy-online-pickup-in-store and buy-online-ship-to-store is becoming a much more potent piece of Macy’s omnichannel strategy. The two services now account for over 10% of all of Macy’s digital demand, compared to a year ago, when it was about 3.5%.
With My Wallet, shoppers have the opportunity to get in and get out of the store much faster and it helps Macy’s engage shoppers with the My Rewards function that gives app-exclusive point incentives and in-store rewards.
To improve the in-store experience, Macy’s is putting some of its mobile investment towards providing store maps to help guide customers around via their mobile device. A pilot for product location finding and in-store product recommendations if coming up, as well as extension of scan-and-pay capabilities for shoppers who want to get in and get out without engaging with sales staff.
Macy’s is working on providing virtual stylist opportunities.
“We're piloting that right now in the second quarter and we're adding the ability for the customers to find and follow a stylist that they can collaborate virtually with via chat or with a style board,” Gennette explained. “It also gives them the ability to follow ‘transform influencers.’”
In addition to its mobile success, Macy’s said 10% of digital sales came from its “vendor direct” program. The retailer lets third-party brands fulfill orders and ship directly to customers, but through the program Macy’s can add and modify product selection based on what it knows about customers.
Macy’s plans to add an additional one million SKUs into vendor direct in 2019 and go to 1000 vendors versus the 700 that it had as part of the program in 2018.
“When you look at the first quarter, we added 125 vendors, we added 265,000 SKUs, to the sites we added new brands in,” said Gennette.