Macy's Takes the Lead in Tech-Enhanced Shopping

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Macy's Takes the Lead in Tech-Enhanced Shopping

By Nicole Giannopoulos - 05/15/2012
While many retailers are working hard to get technology out the door and on the floor, none have mastered a truly technologized shopping experience – except for Macy's, that is. With an omni-channel strategy that takes the lead, Macy's has created tech-enhanced store shopping. From expanding both its online inventory and store-to-door fulfillment capabilities; WiFi enablement of brick-and-mortar stores; working with Google on store maps and mobile-enabled payment; and use of item-level RFID to better track and manage its inventory, Macy's is using a range of technologies to make the shopping experience seamless across channels.
 
"We think the sales potential from this omni-channel approach is enormous," said Karen Hoguet, Macy's CFO on a recent call with investors. "In addition, over time, it should enable us to also improve the productivity of our inventory, as well as our store square footage. We have barely scratched the surface here, and we are very optimistic about the possibilities."
 
At a Manhattan Associates' supply chain conference in Orlando, FL last week, Brian Leinbach, Macy's senior vice president of systems development and field services said, "90% of our customers research online at least occasionally before purchasing in-store," said "Our best customers shop us online and in our stores," he continued, noting that they are also twice as likely as other online buyers to have researched a product in its stores before purchasing online.
 
Here is a more detailed look at Macy's technological advancements and future plans:
 
Expanding Online Inventory: Macy's locations are becoming a blend of physical and digital, allowing customers to touch and hold the real thing but also find an endless aisle of products online that they can rotate and look at on screen. This allows Macy's to display merchandise that it might not have been able to otherwise because of limited floor space or inventory.
 
"As we've been adding more and more categories online that are available to be fulfilled form the store when they run out, we are seeing that there's a big opportunity and increased demand," said Hoguet. "In other words, at macys.com, we may not have been buying enough inventory to satisfy the demand that was out there. So I think that's going to help significantly."
 
Store-to-Door: The retailer believes that the other half of "buy anywhere" is "fulfill anywhere," noted Leinbach. The goal is to optimize inventory for customers to shop across channels with ease. By 2013, 300 of Macy's 840 locations will be equipped to handle direct-to-consumer order fulfillment.
 
"We are also beginning to be able to satisfy online demand with store inventory when the distribution center runs out of a particular item," noted Hoguet. "It is really very exciting to watch. We now have over 80 stores equipped to fulfill orders from other stores or from online demand and by the holiday season, we'll have over 290 store fulfillment locations."
 
In addition, Macy's sales associates in select departments will be equipped with mobile POS handheld devices to create a better customer experience. The associate can help a customer find a different size of a product, or if it is out of stock, ship it directly to their house. Associates will also be able to check out customers directly from the sales floor instead of finding a register.
 
Digital Mannequins: The retailer is also researching digital mannequins to better target different types of customers at different times of day. The mannequins can be re-outfitted throughout the day to appeal to different customers' clothing styles.
 
Kiosks and Product Information: Kiosks and point-of-product information will continue to be part of the in-store experience, as well as a new visual broadcasting system. The cosmetics department will now feature a "beauty spot" touchscreen that will provide a blend of physical inventory with a virtual interactive display of product information. This will allow customers the choice of working with an on-site technician or using the iPad app. The visual broadcasting system will allow the retailer to tailor its videos by department and time of day or to highlight merchandise and promotions.
 
WiFi: By 2013 more than 800 Macy's stores will be equipped with WiFi to allow additional opportunities for the customer to engage using their own devices.
 
Google: Macy's has also partnered with Google for in-store maps that customers can download and use to navigate the stores. The partnership will also include tap-and-go mobile payments through Google Wallet.
 
Shoe Floor: Macy’s Herald Square flagship store is undergoing a monumental makeover, upgrading with the world’s largest shoe floor. It will feature 300,000 pairs of shoes in the 63,000-square-foot space. The second-floor space will feature brand-new luxury shoe shops, a designer shoe salon and curated shoe closets inspired by New York’s trendiest neighborhoods. Also included will be a coffee, champagne and chocolate bar.
 
RFID: The driver behind Macy's item-level RFID implementation is largely the need to keep inventory optimized in order to be able to efficiently fulfill store-to-door. Macy's is applying RFID chips at the source, allowing for wall-to-wall visibility in its stores that enables the retailer to get the right amount of product in the right place. The Motorola RFID readers will allow inventory audits to be conducted 20 times faster than manual methods, with a 95% accuracy rate.
 
"We used to check inventory once a year," says Leinbach. "Now we are checking 15 to 20 times a year. That's a game changer."
 
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