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Macy's CEO Says "I'm Open to Acquisitions"

July 11, 2018 00:00 AM UTC
- Updated September 02, 2020 11:45 AM UTC

Macy's new boss is shaking things up at the 159-year old retailer.

[MUSIC PLAYING] Jeff, in the one year since you became CEO, Macy's sales and profits are going up. The stock is moving higher. And even Macy's and Bloomingdale's stores are looking a lot better. So what other changes do you need to make to complete your turnaround? We are winning right now, but we've got a long way to go. So for us, the ultimate measure of this is going to be do we have engaged customers who are spending more with our brand? And is our brand attractive that is getting new customers into it? In this process, you've closed 100 Macy's stores. Yes. Are you happy where you are, or are there more store closings to come? We're pretty happy. We believe that, again, to be strong at retail, you've got to have a healthy brick and mortar. And for us as a national brand to be in all the metropolitan areas, that's going to be important. So when we made the decision back in August of 2016 to close 100 stores, that was getting to the right floor, the right footprint for us nationwide. And we're pretty satisfied with that. So how do you want people to describe Macy's? Upscale retailer, discounter? We have this core customer that just loves Macy's, but also she's a big shopper in off price. 2/3 of our core customer shops in off price. So when we developed the backstage strategy, it was recognizing that we've got a customer that wants both. So where does backstage fit into this turnaround strategy? And does it bring down the classier side of Macy's? What we're finding is that it's additive. And we have now made the decision that we are taking backstage into virtually all of Macy's buildings. We're going to be at near 200 of them by the end of 2018. And what we're finding is it's bringing us new customers. And the customers that we have are shopping in backstage and not changing their behavior in the balance of the store. But it's a plus experience. And so those stores are growing about 7 points more than the balance of the stores that don't have that setup. I want to talk to you a little bit about your take on Amazon. It's now come out with this try before you buy. It's a wardrobe service for Prime members. You have seven days to test out a whole bunch of outfits before you pay for them. And the more you buy, the bigger the discount. So how do you compete against something like that? Amazon is a fierce competitor. There are many others that are competitors. We're all fighting for this consumer that is looking for a place that they can call their own. And I do believe that the retailer of tomorrow has got to have a very strong brick and mortar business, got to be very competent digitally, and also got a mobile platform that is very developed. So we have a lot of customers that are buying online. But you don't have them just online. They're in our stores. They're returning. They're buying online. They're picking up in-store. You've got to be able to have the entire ecosystem figured out. You've got to be able to deal with all that friction that sometimes she experiences. And you've got to be able to knock that out as well and make this as seamless for her as possible. So I like our chances based on the elements that we have to play with. The other thing about Amazon, just to stick on that theme, is that they're also expanding. They're a private label clothing brands. And they've got a lot of them. They do. I've heard of Lark & Ro, Good Threads. There's many others. How important is it, do you think, for Macy's to update its private labels to stay competitive? So this has been a real strength of ours. And I continue-- well, I will continue to leverage it as a strength. The INC brand is an absolute gold standard. The hotel brand is a gold standard. So we're very much investing in those. We're working on our supply chain. We've got growth plan for each of those. It's going to grow as a percent of our sales. I think having unique products as part of your brand is an essential element of winning. And I like Macy's chances on that score. I hear that you do a lot of testing. You test on everything, new concepts and new ideas. I mean, what are some of the new ideas that you're going to be rolling out that will help Macy's stay above the competition? So one of the things that we're very excited about is both augmented reality and virtual reality and where that intersects in a practical way to move business. And we've done this now with furniture. We've tested it in three stores, and you're going to see this rolled out to 60 more stores by the end of summer. And you can put a headset on a customer with a layout of their room, and they can try out all the furniture in real time in that space. And it's changing the way that a customer responds. They're basically upping up their actual-- their average unit retail of that. It's changing the return rate. It's down to a 1% return rate. You've got incredibly happy customers. And it's giving us the opportunity to take big ticket into a lot more of our Macy's stores. So you've been making some small acquisitions, B8ta and Story. And how did these small entrepreneurial companies bring in business for Macy's? So B8ta is like an Airbnb for content that we don't currently have on either our website and or our stores. So we have technology product. And what these technology providers do is they rent space. So what B8ta does, it's the technology platform that books that space. Story is basically all about brand experience. And it's a roving caravan of content. It's thematic. So you're going to see Story in a lot more stores in the future. And it gives us the opportunity to bring in fresh content that we don't already have in the building that doesn't cannibalize anything else, that brings a richer experience for the customer. Are you interested in making more acquisitions? What else do you want to buy? I'm open. I'm open to acquisitions. But I want to make sure that it fits into the strategy. Are you open to selling? I mean, would you consider selling Bloomingdale's? Not at this point. I think it's critical to the Macy's Inc brand, but I'm open. I'm always going to be looking at opportunities. So I'm not hard set in concrete about the way that I'm going to approach it in the future. But right now, I really see the purpose of Bloomingdale's at Macy's Inc.