The chief way in which Macy\u2019s has executed its omnichannel strategy is through leveraging its expansive store network \u2013 868 total stores at the beginning of 2016 \u2013 to serve as online order distribution centers [1]. By building out \u201cship from store\u201d capabilities, Macy\u2019s is simultaneously maximizing both its inventory management and its customer experience. Rather than housing additional inventory exclusively for ecommerce orders in warehouses, the retailer can ship an online order from a store anticipated to have excess inventory of the items requested, thus minimizing its total inventory costs and reducing potential markdowns. Additionally, the customer benefits from the quicker delivery of items from local stores rather than national distribution centers.<\/p>\n
Buy Online, Pick Up In-Store<\/em><\/p>\n Macy\u2019s \u201cbuy online, pick up in-store\u201d program also utilizes its store network to bridge the physical and digital divide. The customer benefits from ease and convenience, while Macy\u2019s benefits from the incremental sales driven by these customers \u2013 those who came in to pick up their online order, but discovered additional items while in the store. The program also allows Macy\u2019s to compete more effectively with the ecommerce behemoth that is Amazon and its free two-day delivery Prime membership program.<\/p>\n RFID (Radio Frequency Identification)<\/em><\/p>\n Adopting RFID technology is another way in which Macy\u2019s executes on its mission to become \u201cAmerica\u2019s Omnichannel Store.\u201d RFID allows the company to precisely track the location of a product within a store or within its supply chain, which is critical to the fulfillment of its \u201cship from store\u201d and \u201cbuy online, pick up in-store\u201d programs. It serves as an example of a digital technology that has changed both the business and operating models of Macy\u2019s. According to the company\u2019s Chief Omnichannel Officer, RB Harrison, \u201cThere\u2019s an omnichannel component to RFID. We\u2019ve always said RFID would help us maintain more accurate inventory, and with more accurate inventory we would buy the right stuff, have it in the store and in turn take care of the customer more efficiently\u201d [2]. RFID allows Macy\u2019s to improve product assortment and service (its core business model) while leveraging its existing inventory to fulfill customer demand (its core operating model). The inventory management changes produced by RFID enabled Macy\u2019s to reduce $1 billion of inventory from its stores [3].<\/p>\n Success<\/em><\/p>\n Since launching their digital transformation strategy, Macy\u2019s profit margin grew by 257% in 2014 (versus 3% for Walmart and -14% for Target) [4].<\/p>\n The company has achieved this success by recognizing that its core customer (women ages 25-54) \u201cshops online, offline and everywhere, so Macy’s has adapted its inventory, marketing and internal team structure to let her research, buy and collect her purchases where and when she wants\u201d [5].<\/p>\n While Macy\u2019s has proven itself to be a retailer that is ahead of the curve in embracing digital technology, it needs to continue to innovate in order to stay competitive in the industry. Macy\u2019s has begun testing same-day delivery of online orders and image search, but this continues to prioritize the online shopper. The company needs to make similar investments in elevating the in-store experience using digital technology. As stores face increasing staffing cuts, the service levels in-store may diminish, and Macy\u2019s must be proactive in addressing this, as its core customer still values in-store service. While it is testing \u201csmart\u201d fitting rooms and beacons to send personalized offers via mobile, it should also invest in educating store associates on how to best leverage these technologies to improve both the quality and efficiency of their customer service.<\/p>\n Although store closures and reduced physical footprints are inevitable in the current retail environment, the lion\u2019s share of shopping still happens in physical stores, and Macy\u2019s must be careful not to disregard this in-store experience in favor of its online presence.<\/p>\n <\/p>\n (800 words)<\/p>\n <\/p>\n [1] Macy\u2019s, Inc, \u201c2016 Store Count and Square Footage,\u201d https:\/\/www.macysinc.com\/for-investors\/store-information\/store-count\/2016\/default.aspx<\/a>, accessed November 2016.<\/p>\n [2] Phil Wahba, \u201cMacy’s aims to become retail tech powerhouse with latest moves,\u201d Fortune<\/em>, September 24, 2014, http:\/\/fortune.com\/2014\/09\/24\/macys-tech\/<\/a>, accessed November 2016.<\/p>\n [3] \u201cMacy’s Leverages the Power of RFID to Fuel Successful Omni-Channel Fulfillment Strategy,\u201d Tyco Retail Solutions press release (Neuhausen, Switzerland, January 16, 2016), http:\/\/www.tycoretailsolutions.com\/Pages\/ArticleDetail.aspx?ItemId=697<\/a>.<\/p>\n [4] Centric Digital, \u201cHow Macy\u2019s Implemented a Successful Omnichannel Approach,\u201d March 30, 2016, https:\/\/centricdigital.com\/blog\/digital-trends\/how-macys-implemented-a-successful-omnichannel-approach\/<\/a>, accessed November 2016.<\/p>\n![\"screen-shot-2016-11-18-at-1-09-11-pm\"](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Screen-Shot-2016-11-18-at-1.09.11-PM.png\")
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