Macy's Doubles Down on Its 'Omnichannel' E-Commerce Future

Macy's E-Commerce Plans
Macy's E-Commerce Plans

Macy's (M) is bullish on e-commerce.

Online sales for the department store chain grew more than 30% in 2010, and Macy's is heavily investing in infrastructure upgrades, such as e-commerce product fulfillment centers, to support an acceleration of that advance.

The retailer is also determined to attract top talent as it doubles the number of employees at and, the online arm of its upscale sister chain, over the next three years, Macy's executives said during Goldman Sachs' (GS) dotCommerce Day conference in New York on Tuesday.

Today, e-commerce accounts for about only about 6.5% of Macy's $25 billion in sales, according to Goldman Sachs' estimates.

But the company is quickly moving from being a multichannel retailer to an "omnichannel" company, said Peter Sachse, chief marketing officer of Macy's, and chairman and CEO of com, during the conference.

Vying for Talent with Facebook and Groupon

Being a truly omnichannel retailer means "the consumer can choose whatever channel she wants to interact with you on, any device that she'd like to do that with, and [still] get a very consistent [shopping] experience," Sachse said. "It also means that you have to figure out a way to leverage inventory across all those channels."

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To that end, Macy's is building a new 1.4 million square foot warehouse near Martinsburg, W.Va., that will be devoted to its online business and will open in June 2012. It's also expanding an existing fulfillment center near Portland, Tenn.

"While all this is happening, there is a war for talent. This industry is one hot industry," Sachse said. "We want to attract the best and the brightest."

But to do so, Macy's has to compete with the hot shots of the technology world.

Facebook, for one, has been buying companies over the past few years "not for the businesses they run but the people they have," while Groupon has more than doubled its staff, Sachse said.

"So this is an acute problem we need to be aware of," he said. In turn, "We have to work on very interesting technologies to get folks to work for us."

However, the fact that Macy's digital team is in San Francisco "in the heart of Silicon Valley" shows it means business when it comes to its e-commerce ambitions. And so far, the company has been successful in wooing some technology stars, he said.

Big Plans Ahead

Sachse also outlined a few key online initiatives in the works:

  • In the third quarter, the retailer will begin testing "site to store to door." This means that if an online shopper finds that has run out of a certain item, for example, the retailer is equipped to fulfill the order not simply by finding a store close to that shopper that carries the item, but a nearby store that has too many of that item -- which will help reduce price markdowns, Sachse said.

  • The retailer is also working to create "dynamic customer experiences," be it on the home pages of and or via targeted email blasts. "The home page will change based on everything we know about you," Sachse said.

  • Macy's is also focused on targeted email offers based on consumers' shopping history. "There are times we'll send out 18 million unique emails ... down to the point of [emailing a shopper with a message like] 'We just saw you last night on the women's shoes part of the website,'" and then send that shopper a targeted shoe promotion, Sachse said.

  • International shipping launched last month in Canada, the U.K. and Australia "to enormous success," he said. And Macy's is now gearing up to roll out shipping to 91 other countries.

  • Several new mobile apps are also coming down the pike for the iPhone and Android from the retailer.

  • What's more, Macy's online sites have given the retailer an opportunity to return to pockets of business it had abdicated in its brick-and-mortar stores, such as lamps, that it no longer wanted to devote precious store space to, said Karen Hoguet, chief financial officer, during the conference. "It's allowing us to get back into businesses," she said.

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