Macy's Embraces Omnichannel Commerce
In today's online retail environment where next-day and same-day shipping is quickly becoming the norm rather than the exception, retailers are being forced to come up with innovative solutions to meet the needs of want-it-now customers. For Macy's, leveraging its national infrastructure of 800 brick-and-mortar stores to serve as fulfillment centers was its solution. The company piloted its ship-from-store program three years ago in 30 stores in select markets. Following a successful pilot, Macy's rolled out the program to nearly all of its 800 store locations.
In a session at the Internet Retailer Conference & Exhibition in Chicago yesterday, Kevin Gardiner, Macy's director of retail services, discussed the company's ship-from-store program, including its challenges, how success is measured, why data is integral to the program as well as future innovation opportunities for the retailer.
While fulfilling online orders in-store has proven to be a success for Macy's, the program hasn't been without its challenges. Chief among those challenges has been associates finding inventory in-store. Merchandise frequently gets moved by consumers shopping in-store, leaving associates hunting down certain products for an hour or more. This isn't an optimal use of associates' time, Gardiner said.
Other challenges have included incongruent product returns — Macy.com customers returning products in-store that aren't sold in that location — and getting store associates on board with this new job function. To help address the latter challenge, Macy's has begun attributing online sales fulfilled in-store to store associates. Customers don't care who gets credit for the sale, Gardiner said, they just want their order.
Macy's ship-from-store program is metrics driven, Gardiner said. The goal of the program is to get merchandise to customers more quickly. Doing so leads to not only happier customers, but benefits Macy's bottom line as well. By fulfilling online orders from the right places — e.g., from a store that has overstock of a certain product — it prevents Macy's from having to mark down the price of that item to get it out the door. Ship from store helps to protect margins when there are overstocks, Gardiner noted.
Making Data Actionable, Opportunities for Innovation
Macy's is a data-driven company, Gardiner said. Decisions about what programs get funded are based on data. For example, Macy's has partnered with StellaService, a company that evaluates and rates businesses based on the overall quality of the online customer experience, to see how the company measures up against its competitors. Analyzing customer feedback data used to take Gardiner and his team days; working with StellaService and its data, that task can now be accomplished in hours. Macy's then takes action on that data. For example, while merchandisers are still king at Macy's, data is becoming a bigger part of the equation around what products the company sells, Gardiner said.
Going forward, Gardiner believes Macy's will continue to maintain and improve upon its ship-from-store program — all with an eye on fending off Amazon.com. Our stores can be a competitive advantage, Gardiner said. Anther customer-friendly initiative that may be coming down the pike from Macy's is same-day delivery in select markets. While there are no firm plans for same-day delivery at this time, the retailer is evaluating its options, including partnering with a third-party service (e.g., Google, eBay) or developing in-house.
Gardiner forecasts that within two years 25 percent of all Macys.com orders will be fulfilled in-store. With that rate of adoption, it's imperative that the entire company, from store associates to call-center agents to merchandisers, work together to give consumers a seamless shopping experience across all channels. For example, customer service representatives in Macy's eight call centers must be alerted when a customer's online order has been split shipped — i.e., part of the order was fulfilled in a distribution center and part of the order was fulfilled in-store — often resulting in orders not arriving on the same day. We need to get associates to be proactive in alerting customers to situations like that, Gardiner said.
A company built upon the success of its brick-and-mortar stores is leveraging those physical structures to thrive in an era of omnichannel commerce. For Macy's, the choice was to innovate or be left behind. It's clearly made the right choice.
