Macy’s restructures as overly promotional mobile strategy takes its toll
Macy’s announcement of a merchandising and marketing restructuring suggests that mobile was not as strong of a performer during the recent holiday shopping period as it could have been thanks to the retailer’s lack of a clear lifestyle approach and overly promotional stance on mobile.
Mass market retailers and department stores continue to invest heavily in building mobile experiences for their shoppers but the recent 2014 holidays reveals that some are doing a better job of cashing in on these efforts than others. While Macy’s called out mobile’s strong contribution during the holidays in results announced last week, the retailer’s strategy fell short in a number of ways.
“While a wide range of issues may have contributed to the issues that led to Macy’s restructure, we think the main cause could be Macy’s inability to keep up with how consumers shop across all retailer touch points predominately fueled by mobile,” said Derrick Lin.
“Macy’s is widely considered a pioneer of mobile marketing and has rolled out omnichannel initiatives such as store availability and buy-online-pick-up-in-store, however, the company has not demonstrated the unique value and benefits of each of its channels,” he said. “The same content and offers are blasted on every channel without prioritization.
“Macy’s is also lagging behind its competition in leveraging engaging and inspirational content in an integrated way, especially on mobile. The result is promotion-heavy marketing efforts and weak associations with products in terms of trends, styles, and lifestyle that many retailers like Nordstrom emphasize.”
Omnichannel product assortments
Last week, Macy’s said its comparable store sales rose 2.7 percent during November and December.
The retailer said driving factors for the increase includes its localization and omnichannel strategies, with digital playing an increasingly important role.
In particular, Macy’s and Bloomingdale’s Web sites, apps and fulfillment systems performed well, with initial positive results from a pilot program providing same-day delivery in eight markets.
At the same time, the retailer said it is restructuring its merchandising and marketing operations to provide a single omnichannel view for all product categories.
Previously, store and online assortments were bought and marketed by separate organizations.
One of the goals is to provide an enhanced shopping experience online and via mobile, as well as in stores as the retailer will be better able to move quickly to select merchandise and serve customer demand no matter how, when or where the customer shops.
Expected savings from the new strategy will be reinvested in technology, talent and business development.
The investments will include further developing the technology, speed and customer experience of macys.com and bloomingdales.com and hiring more than 150 people at the retailer’s San Francisco-based digital technology organization.
Macy’s will also increase its direct-to-consumer fulfillment capacity at all of its full-line stores and at its five fulfillment centers. Also, a new fulfillment center will open this spring in Tulsa County, OK.
“Macy’s has also not always had the best user experience and design,” Mr. Lin said. “On mobile more than many touch points, easy navigation, clean design, and optimized interaction are a must.
“Mobile is often not as intuitive as other platforms so design must be especially well thought through to have the desired impact,” he said.
Macy’s has been quickly innovating on the mobile front in a number of ways, which is why Mobile Commerce Daily named it 2014 Mobile Retailer of the Year (see story).
The retailer’s latest point to the fact that mobile marketing is still a relatively young practice and that best practices are still to be determined.
The news also reinforces that Macy’s is taking mobile seriously, with plans to continue to invest in building mobile experiences.
“At the end of the day, the move to omnichannel is quite complex, and optimizing mobile is just one step in a long journey,” Mr. Lin said.
“Significant marketing and merchandising restructuring might also need to happen to meet the changing needs of customers,” he said.
Chantal Tode is senior editor on Mobile Commerce Daily, New York