Macy’s Lundgren: We Haven’t Used Beacons To Their Fullest — Yet
In a conversation with Amex CEO Kenneth Chenault, the department store head argued for the relevance of bricks in a world obsessed with clicks.
There is a collective 200 years of business accrued by Macy’s and American Express, but the message from a conversation at NRF’s Big Show from the heads of both brands was that they’re operating as if they’re in perpetual startup mode.
The main argument in favor of the two brands’ relevance was not how fast they were adopting new technologies such as mobile payment and beacons, though they often stressed their speed in those individual areas during the hour-plus talk. Rather, Terry Lundgren and Ken Chennault, the respective CEO and Chairman of Macy’s and Amex, said that their companies remain rooted in and identified with idea of providing “quality service” across all channels and platforms.
Beacons’ Potential, Omnichannel’s Relevance
Meanwhile, the process of refining that level of service as mobile becomes more important to consumers is in a constant state of evolution.
Lundgren, speaking with GeoMarketing following his and Chenault’s chat, discussed how Macy’s early embrace of beacons — the company worked with proximity platform Shopkick on a fall of 2014 installation of 4,000 beacons across all 850 U.S. stores — was gaining traction and meeting its customers’ needs. But even a year-plus out, the brand is still exploring the Bluetooth-powered devices’ potential as an online/offline shopping tool.
“Beacons are very important right now, though I don’t think we’ve maximized its capability at this point,” Lundgren said. “Customers have to opt-in to use it and they can demonstrate clear interest. Nevertheless, it’s still in the very early stages.”
And as the term omnichannel appears to wear out its welcome, at least among the retail cognoscenti, Lundgren dismissed the view that it’s nothing more than an industry buzzword.
“Omnichannel simply describes how the consumer is shopping,” he said. “To me, it’s a word that is still relevant.”
Self-Cannibalization Is The Only Good Kind
In discussing their mutual approaches and challenges with mobile and omnichannel platforms, Chenault talked about facing mobile pay and whether the plastic charge card still makes sense to younger consumers.
“What motivates and influences customers on the purchase path has become the Holy Grail of payments and commerce in a fundamental way,” Chenault said. “So what is absolutely critical is that we — people in commerce and payments — have to create an interplay between this convergence of online/offline. That disruption is going to be intense, and will lead to the introduction of new players, but this is not an ‘either/or’ situation.”
Both executives said they took some measure of inspiration for their balance of digital and physical commerce from Steve Jobs, who Chenault said helped redefine the offline retail experience because of his appreciation of the impact of mobile and online.
All organizations need to get “their people” to be far more flexible and open to develop a sustainable model in today’s retail space.
Doing so recently in this weaker retail environment and disappointing holiday sales has come with difficult decisions. Earlier this month, Macy’s said it would cut roughly 4,500 sales associate positions — roughly 3 percent of its total employees across Macy’s and its sibling Bloomingdale’s stores. About 40 Macy’s store locations would also be closed, though some staffers would be placed at other outlets.
At the same time, Macy’s said it would continue to invest in omnichannel and plan for future responses to technology and changes in the way consumers shop.
“If I were to say, ‘Terry, plastic is here and I’m going to fight like heck to make sure it remains, here are all the things I’m going to do,’ that would be a mistake,” Chenault said on the subject of mobile payments’ rise. “That would be like you saying, ‘I’m only going to focus on brick-and-mortar.’ You have been a leader of omnichannel, making Macy’s a leader in online. That’s the attitude.
“I want American Express to be a leader in mobile payments, but I also want American Express to be a leader in services,” Chenault continued. “I want us to have a platform mentality, the way we’re using our integrated payments model to be successful online and offline to leverage this convergence.”
Lundgren then recalled being on the NRF Big Show stage 10 years ago and having people in the audience say, “How can you be investing so much in Macys.com? Aren’t you going to cannibalize your own business?”
“I said, ‘No, not at all — in fact, if I don’t somebody else is going to cannibalize my business,’” Lundgren said.
Macy’s balance between online and offline shopping tracks the wider retail industry, which comes down to roughly 10 percent of buying happens online and the rest occurs in its stores.
“Maybe next year brick-and-mortar will represent 86 percent if e-commerce grows aggressively,” Lundgren said. “The point is that stores still matter. Real consumers want to touch the clothes, try on the shoes. And even those that buy online, they love the convenience of doing a return and exchange for a product in-store.”