{"id":20370,"date":"2016-11-18T17:59:10","date_gmt":"2016-11-18T22:59:10","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/macys-the-beacon-of-light\/"},"modified":"2016-11-18T17:59:10","modified_gmt":"2016-11-18T22:59:10","slug":"macys-a-beacon-of-technology","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/macys-a-beacon-of-technology\/","title":{"rendered":"Macy\u2019s: A Beacon of Technology"},"content":{"rendered":"

I can\u2019t speak for everyone, but department stores terrify me. I\u2019m not sure if it\u2019s the size, the variety, or shopping in general, but there\u2019s not much about the experience that I genuinely enjoy. However, the in-store experience is ever-changing and Macy\u2019s is on the cutting edge of re-shaping the way we do department stores.<\/p>\n

\"Macy's
Macy’s in-store experience (image from Sarasota Herald-Tribune)<\/figcaption><\/figure>\n

The experience<\/strong><\/p>\n

Macy\u2019s has long been the center of the department store experience. For more than a century, it has been America\u2019s one-stop-shop for clothes, shoes, cosmetics, jewelry, appliances, and food. However, with so many options under one roof, the department store experience can be a bit overwhelming\u2014as customers are often forced to explore multiple floors, sections, and racks for the merchandise they are looking for. Because of this, many consumers have moved much of their purchasing online, where they likely have an easier time finding what they are looking for at a cost they are willing to pay.<\/p>\n

To combat this attrition, Macy\u2019s was one of the first retailers to leverage the iBeacon technology in an effort to enhance the customer\u2019s experience. This technology is a geo-mapping system that\u2014through a smartphone\u2019s Bluetooth technology\u2014is able to provide real-time information on how customers are interacting with Macy\u2019s at the department level (1). Based on a customer\u2019s in-store and online purchasing and browsing histories and their current location in the store, Macy\u2019s can push marketing collateral and offer promotions on products in nearby departments to the Shopkick app on their phone (2).<\/p>\n

\"Example
Example of beacon technology (image from SMB Retail Technology News)<\/figcaption><\/figure>\n

Former macys.com President Kent Anderson explained:<\/p>\n

Say you\u2019re in the housewares department standing next to our display of KitchenAid mixers, the ability to transmit to you information \u2014 a video about the quality of this product, the accessories that we have as part of our assortment that you may not see there \u2014 rich content that may, and should, help us close the sale, is where we potentially see the beacon technology going in our stores.” (3)<\/p><\/blockquote>\n

 <\/p>\n

While the concept may sound somewhat invasive, Macy\u2019s was pleased enough with the results of its pilots to roll out the program to nearly all 800 of its stores. For Macy\u2019s, this technology offered new insights into which merchandise was of interest to which customers as well as how they should place products and potentially design stores to extract the most value from customer movement patterns throughout the store (4). And for shoppers, the value came through an enhanced shopping experience and additional savings.<\/p>\n

 <\/p>\n

The future<\/strong><\/p>\n

Beacon technology has the potential to change the entire in-store shopping experience. In an industry that is struggling to keep up with the convenience of going online, Macy\u2019s and others are using digital technology to pull customers back into the stores. By shifting from an operating model that previously relied on shoppers spending a lot of time in the store, moving from department to department, and interacting with sales reps, to a model that relies on beacons to pull shoppers from department to department while an app informs them of product benefits electronically, Macy\u2019s is on their way to reducing labor costs and making the Macy\u2019s shopping experience more fun and financially beneficial again.<\/p>\n

Through the data they are collecting via the beacon systems, their value proposition could one day shift to a leaner, more-personalized experience that allows the shopper to spend less time in the store through leveraging data on their prior behavior. I picture a future state that is more interactive and pulls customers through the store by offering promotions that expire within minutes if they are not added to the cart quickly enough, while also allowing them to pay through mobile and removing the need for POS systems.<\/p>\n

While the initial beacon rollouts did not do as well as they were expected to, the future remains quite bright. Many experts believe that hardware development typically lags software development, and in this case, beacon adoption was stunted by unpredictable hardware issues (5). However, as smartphone adoption continues to increase, I\u2019m willing to bet the beacon\u2019s place in retail will too.<\/p>\n

(671 words)<\/p>\n

 <\/p>\n

    \n
  1. Umbel Corp, \u201ciBeacons, Retail and Information Overload: How Macy’s is Kickstarting Retail’s Data Warehousing Needs,\u201d https:\/\/www.umbel.com\/blog\/brands-agencies\/macys-ibeacons\/<\/a>, accessed November 2016.<\/li>\n
  2. Time Magazine, \u201cThe Creepy New Way Macy\u2019s Tempts You to Make Impulse Purchases,\u201d http:\/\/time.com\/money\/3432693\/macys-shopkick-ibeacon\/<\/a>, accessed November 2016.<\/li>\n
  3. Ibid.<\/li>\n
  4. Ibid.<\/li>\n
  5. CloudTweaks, \u201cBeacons Flopped, but They\u2019re About to Flourish in the Future,\u201d http:\/\/cloudtweaks.com\/2016\/11\/beacons-flopped-theyre-flourish\/<\/a>, accessed November 2016.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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