Drew Angerer / Getty Images
- Macy’s CEO Jeff Gennette joined the National Retail Federation’s “Retail’s Big Show” event this month.
- Macy’s continues to shift strategy based on consumer habits and cost effective decisions, he said.
- Retail leaders can predict consumer trends with pricing science and credit card data.
Since the start of 2020, the business model at Macy’s has shifted. As one of the oldest and largest department stores in the country, it’s had to reconstruct its strategy to stay attune to consumer habits and the future of retail, Macy’s Chairman and CEO, Jeff Gennette, explained at the National Retail Federation’s “Retail’s Big Show.”
The brand launched a large-scale “Polaris Strategy” in 2020 intended to stabilize profitability, which includes a focus on accelerating digital growth and consolidating its footprint to save cash by closing additional store this month. But even with a successful peak-holiday shopping period in 2022, net sales from the fourth quarter will likely be on the lower end, according to the brand’s official fourth quarter update.
“Black Friday/Cyber Monday sales were in line with our expectations,” said Gennette in the update. “However, the lulls of the non-peak holiday weeks were deeper than anticipated.”
With the brand’s future in mind, Gennette spoke with Bloomberg TV’s Caroline Hyde about new opportunities, a shift in digital and supply chain strategy, and the importance of DEI at Macy’s.
Jeff Gennette spoke about the future of Macy’s at the National Retail Federation’s “Retail’s Big Show” event/
Astrid Stawiarz / Stringer / Getty Images
Consumer spending trends indicate when to “pounce”
Retail has transformed over the last few years as ecommerce boomed, social media became a major marketplace, and consumers looked for immersive experiences when entering stores post-pandemic lockdowns.
With recent news of a potential recession, consumer spending has fluctuated once again as many become more hesitant to open their wallets.
“We certainly saw how customers were shopping for gifts,” Gennette said of the holiday season, but that volume dropped during non-peak shopping periods, he added.
The constant shifts in consumer behavior have Gennette on his toes: “It’s a point to say, be cautious,” he said on the NRF panel. “But be ready to pounce when opportunities and signals present themselves.”
One way the store is predicting consumer trends is with digital strategy, allocation science, and pricing science. Credit card data and other macro-influences of the current economic environment can also support that business research, according to NRF.
A shift in supply chain procedures
The supply chain has been a pain point for many businesses over the last three years. Prices of goods and materials skyrocketed, and shipping costs raised prices even higher.
In recent years, Macy’s has “totally redone” its supply chain, said Gennette, adding that it’s reducing its dependence on China and shifting to more duty-free countries.
What’s more, Macy’s also joined forces with UPS and created 35 regional warehouses in unusable store space to combat those extra costs.
“We’ve put a lot of technology and a lot of capital to get this as efficient as possible, while dealing with this kind of international crisis,” he said on the panel.
DEI remains a crucial component of company success
Diversity, equity, and inclusion measures are important across company structures, including hiring and team building, development opportunities, and generating customers.
For instance, Macy’s has extended its opening wage to $15 in all stores, with an average well over $20, according to NRF.
And Macy’s is continuing to tap into voids in DEI like mentorship opportunities, sponsorship, and training, Gennette said.
The department store started working with diverse entrepreneurs and suppliers, like creating a dress collection for the “Divine Nine” Black sorority organizations, which has become a $10 million division of the business, Gennette said.
“We’re always looking at opportunities to improve,” he added.