Macy's: 'We know we have to disrupt ourselves'
At Shoptalk, department stores are invoked as either what not to be or what must change in retail. But the retailers themselves say they're staging a comeback.
LAS VEGAS — The American department store has spent several years in the doldrums, but favorable winds may be stirring. At Shoptalk on Sunday, several representatives from Macy's talked about how the retailer has abandoned some traditions, like siloed concessions in beauty, and embraced technology, such as a new search tool from Perch Interactive that enables discovery online and off.
How much of a difference such adjustments make remains to be seen, but change is imperative. "We know we have to disrupt ourselves," said Macy's CFO Paula Price, one in a lineup of five top female executives slated to speak at Shoptalk this week. The department store model has been buffeted by changing consumer shopping behaviors (spurred in part by swiftly updating tech that accelerates change), the rise of specialty retailers (many now starting life online, and also benefiting from tech), and the decline of the middle class. Several brands have abandoned the channel, weary of those stores' declining traffic and the margin-killing discounts slapped on tags in the desperate attempt to check that.
Macy's is the nation's largest department store chain, with some 680 locations including Bloomingdale's and its namesake stores, and nearly 190 specialty stores including off-pricers Bloomingdale's The Outlet and Macy's Backstage, plus Bluemercury and its recently acquired Story in New York City. The company has stores in 43 states, Washington, D.C., Guam and Puerto Rico. Although some analysts believe the company has more stores to close after shuttering 100 in the last couple years, its scale is one of its most important assets, according to Jill Ramsey, who joined a little over a year ago as the retailer's chief product and digital revenue officer, speaking to a Shoptalk keynote audience later on Sunday.
"Macy's is reinventing the customer experience with a newfound sense of urgency," she said, and implored customers and brands alike that the company wants them back. "We want you to reconsider Macy's as an amazing place to shop, to work and to partner with."
It's a poignant appeal in light of a Coresight Research report that would be delivered to Retail Dive just hours later that found that, "measured by number of shoppers, Amazon Fashion is the most-shopped apparel retailer in the US, up from second place in 2018." Even more alarming for Macy's is that Amazon jumped to its new place of primacy by "penetrating the heart of the Mid-market," according to Coresight.
But it's not just Amazon. At Shoptalk more than one brand invoked the notion of a "department store," either as an example of what not to be or of what could replace it. "We had to be the new department store," said Mike Groffenberger, managing director of retail at The RealReal, describing the luxury resale startup's approach to physical stores. And Ryan Babenzien, founder and CEO at upscale sneaker retailer Greats, described the digitally native brand's small New York City location as a "culture hub," an intimate, well-lit space where the "mandate is not to sell but to educate" and which is the antithesis of a department store.
The company has been here before. A department store in the traditional sense was long predicated on several merchandise categories, including cosmetics and electronics — markets that most have ceded to specialty retailers like Sephora and Best Buy. That's less true for Nordstrom which has always been essentially a footwear and apparel retailer, but it too has seen traffic slow and its beauty sales drift elsewhere. Co-president Erik Nordstrom told a keynote audience that the Seattle-based company retailer also possesses a sense of urgency.
"We don't consider ourselves a department store. We consider ourselves a fashion store," he said, but added that, while the company believes its own strategy to reinvigorate its approach is "right, we think we've been too slow."
The challenge before the likes of Macy's and Nordstrom is to bring back shoppers not only with the right brand partners, but also with ways to browse and buy that can be as readily accomplished on a smartphone as in a store. Many department store sales approaches — like leaving partner cosmetic brands to sales and customer service — interfere with customers' desire to compare and buy several at once. Nata Dvir, Macy's general business manager for beauty, told another Shoptalk gathering that Macy's "Beauty Playground," which employs brand-agnostic associates and tools to woo back beauty shoppers, has helped the "obsessed" beauty customer more easily shop online and off whether they are there to discover or replenish.
While in the past Macy's officials have insisted that the company is finished closing stores and has moved on to transform those still open, Price said that its retail and real estate strategies "go hand in hand." But what matters most in the end, she also said, "is what we do as a retailer."
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