In a fourth quarter conference call discussing a period when the retailer’s earnings beat Wall Street expectations, Jeffrey Gennette, Macy’s chairman and CEO, outlined how the company is executing its North Star growth strategy.
Gennette touched on five points, asserting:
- Macy’s brand. The reengineering of Macy’s marketing is off to a good start, as the company strengthened its brand position through a greater emphasis on fashion, reduced complexity in the promotional calendar and pricing simplification. The company also launched a new loyalty program, Star Rewards, that met with what Gennette characterized as an enthusiastic response. In 2018, the company will continue to strengthen the brand by launching the next phase of its loyalty program.
- Product leadership. In 2017, Macy’s improved its merchandise assortment, focusing closer on fashion and merchandise quality, which helped the company achieve an average unit retail gain of 3%. The company plans to continue improving the merchandise assortment, employing more product exclusivity and drive a beauty reinvention that will move Macy’s from a brand-centric to a customer-centric model.
- Customer experience. Macy’s has developed new service and delivery models, expanded buy online pickup in store, enhanced its mobile function and used artificial intelligence to improve customer service. The company plans to further scale a number of functions in 2018, including rolling out mobile checkout.
- Innovation. Macy’s has been analyzing the potential for brand innovation in new categories and channels, launching new programs including B8ta, the Samsung Experience and the new [email protected]’s, all with the intention of creating in-store experiences that grow customer traffic. This winter, The Market @ Macy’s, a pop-up retail boutique placed within the company’s department stores, launched in 10 locations.
- Cost management. Macy’s finished 2017 ahead of plan on its cost reduction efforts.
Gennette also noted that it has expanded the Backstage format to 45 stores. The company enjoyed performance gains with the off-price concept and plans to add Backstage operations to another 100 stores.
Also in 2018, Gennette said, Macy’s will drive an initiative called the Growth 50. In 50 stores across a range of sizes and geographies, Macy’s will review ideas tested last year and accelerate the rollout of what worked best. The company will look at revenue-generating actions such as proven merchandising strategies, including the expansion of Backstage and the reaction to more fashion and localized product. He noted that Macy’s wants to emerge this year with 50 stores on an accelerated growth track as it creates models to scale across the store portfolio in 2019.