A Crawl and Walk Approach to Omnichannel for Macy’s

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With omnichannel becoming the norm these days, retailers are trying to figure out where to begin, which avenue to take first.    Macy’s is staying ahead of the omnichannel game with their initiatives to further evolve their business and adhere to the way customers shop.

Last week, at Multichannel Merchant’s Operations Summit in Louisville,  Kevin Gardiner, director of store operations and strategies for Macy’s, said that over the last decade as online shopping emerged, Macy’s has been committed to giving customers the option to shop at home or in the store today.

“It’s really about being everywhere for our customers,” said Gardiner.  “They are shopping on their tablets and mobile phones, their laptops; they are coming into the stores.”

Gardiner said the idea behind omnichannel is that if they have the merchandise in their inventory, they want to get it to the customer anytime, anywhere.

“At some point omnichannel and ecommerce will just be called retail, but right now omnichannel is still the buzzword,” said Gardiner.

Gardiner said Amazon won the race with shipping, so customers now expect fast free shipping.

“Shipping is not actually free, it takes a lot of money to build a distribution center, we have to pay our people, we have to pay for shipping,” said Gardiner.

Gardiner said stores are a great way to offset some of the shipping costs because of their proximity to the customer.

“Distribution centers are built to store, pack and ship merchandise certainly very efficient,” said Gardiner. “Picking and packing merchandise in a store is much less efficient, but the benefit is the proximity to your customers can reduce your shipping costs.”

Gardiner said at Macy’s they are fulfilling from about 800 stores, it’s still not 100% of their store locations.

“If we can utilize those stores, it is a win for our company, and a win for our customers,” said Gardiner.  “We have some stores with excess capacity so we’re looking into expanding fulfillment in those stores strategically based on geography.”

Gardiner said it is their hope that if they can grow store fulfillment, they will be able to limit the amount of distribution centers they have to invest in.

When it comes to fulfilling out of store locations it is important to take a crawl, walk approach.  Gardiner said at Macy’s they tested fulfillment in their stores in a small market and expanded further.

Geography quickly played a big part in their fulfillment logic,  he said Macy’s quickly realized their initial logic was to help protect margins, the company wasn’t thinking about geography or speed to the customer.

“It was really about where is merchandise not selling very well – and can we fulfill out of there before we fulfilled out of a distribution center so we can protect our margins,” said Gardiner.

Gardiner said it is important to identify champions in the stores at the senior and associate levels.  If you don’t have champions in the store, in-store fulfillment will not work out.

“The associates are the ones running your stores,  they’re the ones talking to customers, executing the processes, if they are not brought in, it is not going to work,” said Gardiner.

Gardiner said inventory accuracy is critical with buy online and pick up in-store.  The last thing retailers want to do is break a promise to a customer, especially when they are driving to pick up merchandise.

 

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