Macy’s Strategy for Omnichannel Success

Think about this – is there actually such a thing as an online customer? Or an offline customer? Or even a mobile customer? Definitely not. Consumers like to skip sales channels and fulfill their goals in the best way possible. Your customer can research for products online, ask friends for references on social media, test them in the brick and mortar shop and finally purchase in the web store. So it makes no sense treating customers as stuck in a sales channel. The Omnichannel experience, where every consumer can use given sales outlets as she sees fit, is now pretty close to utopia for many retailers.

macysBut others are dedicated to making omnichannel a reality for their customers.

Meet Macy’s.

“Our goal remains to help our customers shop whenever, wherever and however they prefer, and to use the entire inventory of the company to satisfy demand,” Terry Lundgren, Macy’s CEO

As other retailers are facing declining sales and decrease in customer loyalty, Macy’s seems to be thriving. The company has seen recent increase in sales overall and a sharp increase in online sales (48% in 2013).

How did they do it?

Improve customer experience with technology

Macy’s has lots of experience in customer service but the digital revolution took most retailers by surprise. Macy’s has dedicated a large portion of its yearly budget to improving customer experience through technology.

Macy's Flagship store in New York
Macy’s Flagship store in New York

The company’s cost of sales rose to $139 million in 2014 second quarter. This increase was caused by “omnichannel business and the resultant impact of free shipping” which means Macy’s is betting big on its customers’ experience.

The results are great. Just short after Apple Pay was announced, Macy’s announced it will implement the technology in all stores. The company already allowed customers to store their coupons on the Mobile Wallet, that could be accessed anywhere – online, on mobile devices or in store.

Macy's mobile wallet
Macy’s mobile wallet
Using shopBeacon in-store
Using shopBeacon in-store

Macy’s also partnered with Shopkick to increase brick and mortar traffic in its New York and San Francisco stores and now the company is rolling out the shopBeacon technology. The beacons give retailers the ability to push information directly to the consumer’s mobile device. It can welcome shoppers as they walk inside Macy’s stores, send out specific deals and recommendations and can be used as a way to redeem loyalty rewards.

Macy's Beauty Spot kiosk
Macy’s Beauty Spot kiosk

Interactive kiosks were used to improve customer experience throughout brick and mortar stores. The kiosks vary in size and complexity, ranging from simple browse and order applications to more complex features. The “Beauty spot” kiosk, for example, improves Macy’s cosmetics section with an electronic make-up consultant. The system advises potential buyers on makeup and skin products that are best fitted for their needs.

Even store associates are empowered when answering customer needs. The company is now testing mobile and tablet POS that can connect to real-time inventory and offer quick responses to customer needs.

And if we’re talking about real-time inventory, you should know that Macy’s has been working hard at improving cross-channel operations:

Improve fulfillment and inventory management

In 2010 Macy’s piloted a store-fulfillment program in 10 stores. The idea was that if the company can connect inventory from individual stores, it can manage inventory better. As merchandise was sold sold online, stores would be able to ship orders directly, depending on their inventory levels or allow for in-store pick-up.

The program was a success and the company increased the number of stores that could ship orders. 13 more stores were added to the program in 2011. In 2012, 292 stores were shipping orders. In 2013 – roughly 500. The process will be finally completed in 2014 when all 800 stores will be able to fulfill customer orders.

In-store fulfillment increased rapidly since 2012.
In-store fulfillment increased rapidly since 2012.

As these stores began fulfilling orders two things happened. First – orders could be shipped faster, with the ultimate goal of same day delivery, thus improving customer experience. The second big change in Macy’s fulfillment was that using stores meant inventory turnover greatly improved.

With store associates empowered with real-time inventory data, orders began to increase. The store associates could locate items in other stores, and ship that item from that point, directly to the consumer’s requested address.

Macy’s discovered that the nearest store may not always be the best choice to ship the product. Sometimes a product sold in point A could have a really slow turnover so it should be shipped whenever possible. On the other hand, the same product could be in high demand at point B, closer to the customer.

The company didn’t stop here. With stores able to fulfill orders, the Order Online / Pick Up in Store program began in 2013. It was first tested in 10 stores during fall 2013 and began rolling out to all stores in 2014.

It’s not just the stores that improved their fulfillment functions. Macy’s is now expanding its direct-to-consumer fulfillment center in Goodyear to a mega-facility of 960 000 square feet which will be soon followed by an even bigger fulfillment center in Tulsa, in 2015.

So Macy’s is quick to implement omnichannel policies but is it worth it?

Macy’s is winning the retail game

It’s worth it, all right. As you can see in the chart below, Macy’s revenue has been steadily rising, as opposed to some of its main competitors. It seems that 2010 was a real turning point for the company. And what year is that? Right, the year the company began to implementing omnichannel retail.

Macy's growth versus JC Penney and Sears. Source.
Macy’s growth versus JC Penney and Sears. Source.

 

 

 

 

Using Customer Journey Maps in Omnichannel Retail

A customer journey map can be a real useful instrument for retailers. It helps better understand how customers interact with the company’s touch points. It makes complex numbers easy to understand in the form of a diagram.

The customer journey can be simple and easy or complicated and frustrating. Usually it’s somewhere in the middle for most companies. Few, such as Apple or Amazon, stand out when it comes to A-class customer experience .

The omnichannel journey to relevance

Nordstrom uses omnichannel to better serve customers
Nordstrom uses omnichannel to better serve customers

What most companies don’t really have yet figured out is how customers use the omnichannel retail touch points. What exactly do they want and how they use the multiple channels the company has set-up. Are customers buying online? Probably. But what do they do afterwards? Or before that? How is the offline shop integrated in the customer journey? Is the customer satisfied with the current sales process?

All these questions and more can be answered with a few carefully crafted studies and journey maps.

To do so, omnichannel retailers need to build customer journey maps for separate customer types. These maps have to take into account the customer profile, different purchase scenarios and possible bottlenecks.

When customer journey maps are developed, several key issues need to be taken into account:

  1. View the company from the customer perspective
  2. Research customer satisfaction
  3. Build separate customer profiles for different market segments
  4. Look for bottlenecks
  5. Try to understand customer feelings

Once you’ve done the research, integrate the customer feedback on separate customer journey maps, focusing on different paths customer take.

Here are some examples:

Omnichannel customer journey examples

Bellow you’ll find two of the most popular examples of customer journeys in the omnichannel world. Such maps outline the integration of four channels: the offline store, online operations, mobile apps and devices, the call center and social media. Of course, brands can choose to expand their omnichannel operations to include other channels such as interactive kiosks, smart home appliances or technologies not yet discovered. But the five mentioned above will do just fine right now.

Customer journey no.1

Example no.1: The customer travels across four channels to finish the order and at the end shares his experience with his peers on social media.

Customer journey no.2

Example no.2: The customer discovers the product in the offline store, researches the product on the smartphone (showrooming), pays the product on the web store and the product is shipped home. After the purchase, the customer contacts the call center to activate the purchased product.

Of course, such customer journey differ from retailer to retailer. If you need to outline your company’s specific customer journey map, you can use the example below and ad specific customer journeys to it. Click the photo below to open the diagram in a new window and download the full resolution image.

Click to download the customer journey map template. Opens in new window.
Click to download the customer journey map template. Opens in new window.

The Customer is not a Robot. She is Your Wife. 3 Tips on Improving Customer Experience.

David Ogilvy famously said “The customer is not an idiot. She is your wife.” back when advertising was less about media budgets and more about customer understanding and providing ads that use the type of message your customer actually wants to hear.

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Ogilvy was also famous for his approach on advertising. When all others were ignoring research he took an almost religious approach in discovering customer insights so that his ads can deliver information rather than boring or obnoxious advertising.

Years later the world has changed. 2012 meant an increase of 21.1% in global ecommerce. The total ecommerce sales have reached $1 trillion for the first time in history and are still going strong, according to eMarketer.

World's biggest in terms of ecommerce spending.
World’s biggest in terms of ecommerce spending.

The revolution is here and both retailers and customers have started looking more careful into online shopping. Yet again we find customers are still not being treated as they should be. In the world of bits and code lines we started expecting users to act like robots. Click here! If this than that! Choose now! Rather mechanic, don’t you think? That can improve and below you will find 3 tips on how to improve your customers’ experience.

1. Be relevant

Customers still like  offline stores better than online stores. Why? Basically they are more accustomed with this type of shopping experience. They’ve done this all their life and feel better about shopping offline. But we, as marketers and retailers, know that “classic retail” is just as artificial as online retail. Of course there are people around doing the same thing, you have the store associate there to help when in need but most of all you have relevant merchandise and relevant stores.

How often had you walked in a supermarket only to buy groceries and had one of the sales people jump in front of you yelling they have a 70 percent discount on a certain brand of TVs? Well you hadn’t – that would be creepy but it does happen all the time in online stores, especially those dealing with a certain not so smart selection of merchandise.

We once had a customer that dealt in fashion. They had huge success online and thought about expanding to other areas. First accessories. We thought – well a nice dress is nothing without a pair of earrings to match it. Then came travel. Mmmm… fashionable people need to … travel? Next came electronics, household appliances which was weird enough for fashion retail but the “piece de resistance” hit the fan when we noticed, standing graciously underneath a beautiful pair of shoes: a jar of pickles. On discount.

Needless to say that is NOT the best way to stay relevant to your customers. It’s hard enough to build a brand on a single industry and unless you can magically profile users like Amazon or Facebook do, you will not be able to jump wagon to another industry.

2. Be more than Online, Offline and Mobile. Be Connected Across Channels.

In a recent study by Accenture focusing on customers’ habits of shopping seamless research showed that users feel they need to be treated the same online, in store and on mobile interfaces.

Integration of  the Big Three (Product, Promotion, and Price) across channels.
Integration of the Big Three (Product, Promotion, and Price) across channels.

That is, of course, pretty intuitive. We believe that we have the right to be treated the same no matter where are we shopping. As customers we feel that we should be earning loyalty points for both online and offline.

As retailers and marketers though we find that connecting online and offline operations (usually treated as two separate divisions or even companies – as was the case with Walmart and Walmart.com) is a bit of a hassle. It’s not really easy integrating informational systems to serve the customers as they would like to be served. That shouldn’t stop us as 49% of customers expect seamless treatment across platform when it comes to promotions.  Moreover 43% have a unified account when it comes to their favorite brand and expect to use this account to shop faster across channels.

“Webrooming” (the practice of getting information on products online and than purchasing offline) has been growing steadily, with 83% of customers reporting they purchased a product in store after previously researching it online. That’s just a little part of the changes multichannel shopping brings aboard.

3. Make it Simple

How many products does Amazon sell? Probably millions. Chances are you will be seeing a tiny fraction of those whenever you feel like shopping there. Even more – those are the products you are actually interested in. How does the company do that? It keeps tracks of your purchases, visits, ratings, and a couple of other indicators you can read about here. It then matches these options with other’s to return a sorted product list that you are most likely to enjoy and buy. Presto! Simplicity.

The thing is customers are not robots. They have a very short attention span compared to what most online retailers expect them to. They need a simple way of getting to their desired products. A couple of things you can do to improve on these are:

  • track users behavior and predict their purchase intentions
  • improve search according to semantic searches (human talk – ex. “looking for a blue, casual shirt” might return all shirts that are blue, and casual)
  • hide any products that are not in user’s interest area.

As a conclusion – treat your customers as human beings. They are not purchasing machines. Facts and figures are great tools but make sure you treat your customers as you would want to be treated. Our technology has evolved a lot but our minds have not.