Inside the Macy’s Store of the Future
If you want to see how Macy’s (M) plans to shake its deep and lengthy sales funk, look no further than the retailer’s newly renovated store at a Columbus, Ohio mall.
The Macy’s department store is wrapping up a major renovation, including new areas where it will give master classes to demonstrate beauty products, larger spaces to allow mannequins to display the latest trends, and an overhauled area for selling athletic wear and wellness products. The store, whose work will be done by June 25th, is serving as a prototype for how a lot of Macy’s stores will look in the future.
“It’s really about letting the customer experience the products,” Kathi Newton, vice-president and the store manager, told Fortune to explain the philosophy behind the changes.
But it’s also about giving Macy’s, the largest department store chain, a new lease on life at a time customers are radically shifting how they shop, buying more and more frequently online at Amazon.com (AMZN) and at discount fashion retailers like TJX Cos’ (TJX) T.J. Maxx.
Macy’s, which also owns Bloomingdale’s, last month reported that first-quarter comparable sales fell a much worse-than-expected 5.6%, the fifth straight such decline. The latest slump prompted Macy’s to lower its 2016 sales and profit forecast because of what it called “the uncertain direction of consumer spending.”
What’s more, Macy’s is under enormous pressure from activist shareholders to fix its business, with shares down more than half off a 52-week high.
Macy’s executives have acknowledged that stores have to be more exciting and inviting to give shoppers a reason to come in rather than go online. The company has decided to focus on its 150 best stores, which includes the Easton, Ohio, store in its 800-location fleet for enhancements, an approach it calls its “Top Door” strategy.
For instance, the cosmetics department at Easton is getting a complete makeover with new fixtures and counters and the addition of a Bluemercury shop, the cool beauty retailer Macy’s bought last year that also offers salon services like microdermabrasion, brow tinting, facials and waxing. And working with vendors like Chanel and Estée Lauder Cos’ (EL) Clinique, Macy’s is making the counters more interactive so customer and seller can sit together rather with more access to product rather than be separated by a physical barrier. Macy’s installed an event space prominently at the front of the store to hold daily “master classes” by one of the brands. “That’s so floor space isn’t just about selling,” says Newton.
Elsewhere, Macy’s has set up a row of 30 mannequins lined up to showcase the latest fashions. It has set up a Connect @Macy’s kiosk to one-on-one service to customers as soon as they walk into the store and a more convenient spot to pick up orders they placed online rather than have to queue up at customer service. Macy’s is also pushing its wedding business and heavily promoting its already existing My Stylist @Macy’s personal shopping service.
Other efforts include bringing together fitness items like men’s and women’s activewear, yoga gear, snacks and cookbooks together in a wellness area called “The Restore, Nourish and Strengthen” department. That will include the Finish Line brand (Macy’s already operates stores-within-a-store for that brand) and various brands like Gaiam Yoga merchandise and Fitbit (FIT) watches.
If some of these initiatives sound familiar, it’s became many of Macy’s rivals are making the same moves. So how much this all will move the needle if deployed to other stores is an open question.
Kohl’s for instance has revamped its beauty section and is creating express lanes for in-store pickup of online orders. J.C. Penney continues to open new Sephora beauty boutiques within its stores and upgrading its InStyle beauty salons. And Target (TGT) has added beauty consultants on the sales floor and improved its health and wellness.
Still, for Macy’s, these moves give it a chance to make better use of its large emporia and vast assortment.
“Department stores are big, so you can see how everything in different areas works together,” Newton said.