Macy’s profits are falling as the retailer’s latest omnichannel plan takes time to implement

Brave new chapter, Macy’s latest turnaround strategy, needs time to get going as the retail icon’s first-quarter profit fell 60% year-over-year to $62 million and revenue fell 2.7% to $4.84 billion. But there were more encouraging signs in the first 50 stores to be renovated, insists CEO Tony Spring.

In fact, spring remains optimistic for all Macy’s Inc brands:

At our largest company, Macy’s, customers respond well to our omnichannel initiatives across product, presentation and experience. When it comes to luxury, we are pleased with Bloomingdale’s advanced contemporary development and the acceleration of digital technologies. At Bluemercury, skincare remains a differentiator and differentiator. For both brands, we are evaluating new store opportunities that will strengthen our ability to accelerate omni growth. As part of our end-to-end operations, we actively develop solutions to consolidate efficiency, increase automation and reduce costs across the entire network.

On the digital version, Spring said:

Digitization is also an important part of our Bold New Chapter strategy. It serves as both a gateway to the Macy’s brand and a source of commerce and all-around engagement. Under new leadership, the team is making progress in optimizing the customer journey, including addressing the highest friction points and improving and expanding the shopping experience across platforms. We recently launched an online baby registry with over 150 new brands, which was very well received. Additionally, Marketplace provides the opportunity to better serve our customers and capture a greater share of their wallet. For example, this year we are offering an attractive selection of electronic equipment for Father’s Day and the end of the school year.

Our digital and marketing teams work closely together to leverage Macy’s iconic events and create a modern and consistent experience. We kicked off the spring season in Herald Square with the 49th annual flower show, during which we partnered with Christian Dior perfumes to create floral installations using 16,000 individual plants representing over 50 varieties. The installation was centered around various Dior fragrances and was supported by interactive components, including an online activation on the origins of Miss Dior.

First 50

As for the first 50 stores, Spring said they now have net promoter scores more than 250 basis points higher than the rest of the stores in the fleet. He commented:

We’re excited about the beginnings of First 50. It’s a combination of the things we’ve been talking about in terms of people, product, presentation and experience. People, it’s about having the right people in the place at the right time. It sounds easy, but using the technology and the data that we have on traffic and conversions throughout the day and hour, making sure that we have people in the shoe department, people in the fitting rooms, people in the large ticketing area and fine jewelry. But the team pulled it off and I think they did a great job of taking advantage of opportunities to improve the experience in our stores. Therefore, we saw a 500 basis point improvement in Net Promoter Score across the first 50 stores.

He added:

The level of promotion in these stores did not differ from the rest of the fleet. So no changes there. The difference was traffic, a higher conversion rate and a comparable increase in average unit retail sales. Customers respond, as we said, to the right recipe. I use the analogy of a recipe because a recipe means that all the ingredients have to be right. Sometimes in our industry, retailers are only willing to do their part if stores will do their part too. And stores only want to do their part if the digital team does their part. At First 50, we all do our part and get recognized for improving products. We get credit for the visual animation. We receive credit for the experiences we add. We gain recognition for our service experience.

My application

Overall, we continue to view fiscal 2024 as a transition and investment year for Macy’s, Inc. Although it is in the early stages, we are proud of the progress we are making with our Bold New Chapter strategy.

Slow but steady is the message we’ll likely hear throughout the year from Macy’s as it once again tries to get its omnichannel house in order. If Wall Street can give it the long advantage it needs to achieve that goal, so much the better. While activist investors appear to be held back for now, their presence is still emerging and they will want to see stronger signs of the Bold New Chapter to come. I’m still not convinced the plan is bold enough, but…