{"id":15367,"date":"2016-11-16T23:57:30","date_gmt":"2016-11-17T04:57:30","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/macys-in-the-digital-age\/"},"modified":"2016-11-17T00:03:01","modified_gmt":"2016-11-17T05:03:01","slug":"macys-in-the-digital-age","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/macys-in-the-digital-age\/","title":{"rendered":"Macy\u2019s in the Digital Age"},"content":{"rendered":"

\"macys2\"<\/a><\/p>\n

Macy\u2019s predicament<\/u><\/strong><\/p>\n

In August, Macy\u2019s announced that it would close 100 of its stores after recording six quarters of declining sales.1<\/sup> There are many reasons why Macy\u2019s is struggling, some that are unique to its business and others that plague brick-and-mortar more broadly. On the latter point, retail analysts agree that millennials prefer the convenience of shopping online. Mallory Schlossberg, contributor at Business Insider<\/em>, explains, \u201cIf people can shop online, why bother going into the store? If it\u2019s an unpleasant experience \u2013 and shopping at Macy\u2019s can be \u2013 why even try to sort through the mess?\u201d2<\/sup> However, Macy\u2019s is not giving up on its stores that easily. Instead, it is digitizing them to create a more seamless, exciting shopping experience for its customers.<\/p>\n

Macy\u2019s business and operating models<\/u><\/strong><\/p>\n

Macy\u2019s offers customers a range of high-value and high-quality fashion and household products, served via a convenient in-store and online shopping experience.3<\/sup> To deliver on this promise, the Macy\u2019s operating model must ensure that customers can easily locate and purchase whatever merchandise they want, whenever they want it.<\/p>\n

Bringing digital to stores<\/u><\/strong><\/p>\n

RFID<\/strong><\/em><\/p>\n

One way that Macy\u2019s is digitizing stores is by adding RFID (Radio-Frequency Identification) tags to its products. The tags contain a chip and antenna, which transmit a unique signal. Reader machines interpret these signals and generate reports detailing store inventory.4<\/sup><\/p>\n

Macy\u2019s plans to roll out RFID technology to all stores by the end of 2017.5<\/sup> One of the key benefits to RFID is that it enables Macy\u2019s to build an accurate, consolidated view of inventory across its stores and warehouses. This enable Macy\u2019s to buy product more efficiently and leverage stores as nodes within its broader distribution network. For example, suppose a customer in Massachusetts orders a toaster oven from Macys.com. Instead of shipping that product from a distribution center in California, Macy\u2019s may be able to achieve a faster, cheaper delivery by shipping it from a local store. Alternatively, Macy\u2019s may ship it from a store that is holding excess inventory, lessening that store\u2019s need to eventually discount the product.6<\/sup><\/p>\n

The implementation of RFID tags also improves the customer\u2019s shopping experience. A study led by GS1 US concluded that inventory accuracy improves from 63% to 95% among retailers that implement RFID.7<\/sup> The more refined its inventory tracking capabilities, the better prepared Macy\u2019s sales associates are to serve customers. For example, if a customer is unable to find her size, her sales associate can easily survey inventory across nearby locations and request that the item be shipped to her. Additionally, RFID technology enables customers to buy online and pick up in-store, a time-saver for those who need an item ASAP.6<\/sup><\/p>\n

Overall, Macy\u2019s estimates that RFID has helped reduce its inventory position by $1B across stores, while simultaneously improving customers\u2019 ease of shopping.8<\/sup><\/p>\n

Beacons<\/strong><\/em><\/p>\n

Macy\u2019s is also innovating its in-store experience by using beacons to serve custom messaging to shoppers\u2019 smartphones. Beacons are devices that transmit Bluetooth signals to nearby smartphones.9<\/sup> Customers with the Macy\u2019s app can opt into receiving push notifications and other marketing communications as they pass by beacons throughout the store. The goal of these communications is to generate excitement and drive purchases. For example, during Black Friday last year, Macy\u2019s launched the \u201cWalk in and Win\u201d campaign, which allowed users who visited a store to play a beacon-activated mobile game offering $1M in prizes. Other applications of beacon technology include surfacing discounts, as well as product recommendations, information, and tutorials.10<\/sup><\/p>\n

Next steps<\/strong><\/span><\/p>\n

As it looks to the future, Macy\u2019s should identify new opportunities to integrate technology into its stores, taking cues from other fashion retailers that have innovated successfully along these lines:<\/p>\n