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How Macy’s Backstage could innovate off-price retail via mobile

Macy’s new Backstage concept pairs two of the hottest trends in retail – off-price stores that sell high-profile brands at a discount and mobile marketing – a strategy that could help it reach impulse buyers with location-based marketing.

Macy’s, a leader in mobile marketing, has said mobile marketing will be a part of the new business, which will open its first four locations in the New York area this fall. While off-price retail chains such as T.J. Maxx and Nordstrom Rack are growing, the space is ripe for a mobile upgrade as competition grows from mobile-first digital competitors such as Rue La La, Gilt and Zulily.

“Mobile shopping is a large part of the growth market for the retail experience as consumers research prices and products from their mobile phone,” said Sheryl Kingstone, Toronto-based research director for Yankee Group.

“Many discount retail apps are also very success in mobile such as flash sales apps One Kings lane, Gilt and Rue La La,” she said.

“Macy’ could use mobile pretty strategically to reach impulse buyers, especially targeting location-based marketing.”

The thrify shopper
Several years after the end of the Great Recession, many bricks-and-mortar retailers continue to experience lackluster same-store sales, forcing them to close stores. However, off-price chains such as T.J. Maxx and Nordstrom Rack are growing.

With consumers’ thrifty ways looking like they are going to hang around for a while, Macy’s is clearly looking to make a name for itself in this burgeoning space.


The Macy’s app can be used in stores

Macy’s has said Backstage is one of its key growth initiatives. The stores will average about 30,000 square feet and offer a mix of apparel, accessories and housewares.

Mobile shopping
Each Backstage store will include free Wi-Fi, which will make it easy for shoppers to compare prices online while in the stores. While Wi-Fi is increasingly common in stores, it is not yet a standard feature.

Macy’s is smart to support shoppers’ penchant for comparing prices, especially in a store that is promising to offer great values of between 20 and 80 percent off original prices for merchandise. Using their smartphones, shoppers can be sure they are getting the best price around.

Other than Wi-Fi, Macy’s has not provided any specific examples of how it will leverage mobile for Backstage but has made a point of saying it will be included in the mix.

“It will be an exciting shopping experience supported with compelling marketing, both traditional and mobile,” said Peter Sachse, Macy’s chief innovation and business development officer, in a statement about the opening of Backstage’s first four stores.

Surprise and delight
There are several ways that mobile marketing would make a lot of sense for Backstage.

One of Macy’s goals for the brand is surprise and delight customers with continuously updated and fresh merchandise. Mobile is a great way for Macy’s to keep shoppers in the know about the latest available merchandise as it hits the floor. This could be accomplished via a shopping application, text messaging and social media.

If Backstage gets its own loyalty program, then mobile could also help Macy’s personalize merchandise updates so shoppers only hear about categories they are interested in.

Building customer relationships
Some sort of mobile-based customer relationship management program would make a lot of sense for Backstage since Macy’s has said the new store concept will not be driven by promotional events and Macy’s coupons will not be accepted.

As promotions are often a popular way of bringing customers back into stores, the lack of such events for Backstage means it will need another way to build an ongoing relationship with customers, something mobile is adept at.

Taking an overly promotional stance on mobile is one of the few missteps the retailer has made, as this approach has hampered its ability to build meaningful relationships with mobile users.

Macy’s clearly has the experience in leveraging mobile to engage the in-store shopper.

For example, a recent update to its app enables users to sort items by what is available at a nearby store, a move geared toward those who prefer to purchase from the app and pick up in-store. Macy’s also rolled out iBeacons to all stores this past fall, enabling it to engage with customers on a hyperlocal level.

However, in terms of driving mcommerce sales, Backstage will find itself going up against the likes of Rue La La and Gilt in trying to appeal to the mobile-savvy price-conscious shoppers. Because these retailers are digital-only, they are among the most innovative when it comes to mcommerce.

For example, earlier this year, Gilt updated its mobile app to let “insider” members enjoy free early access to shop Gilt sales, eliminating the need to redeem points. “Select” members shop five minutes before sale begins while “premier” members get a 15-minute head start and “noir” members a half-hour head start.

At Rue La La, users now can get notified when items in their carts are about to sell out so they do not miss out on that must-have score.

“Macy’s is a leader in embracing mobile,” Ms. Kingstone said. “I hope they would make it a key piece of the marketing mix.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York