From a business perspective, if there was one positive for Macy’s during the pandemic, it was inventory control. In early 2020, with stores closed, revenue suddenly stalled and no clear end in sight, there were a lot of unknowns.
But one thing was certain: Cash was king. Cash preservation had to be paramount, leading to the difficult decision to furlough 90 percent of colleagues. There was also movement from a markdown allowance model toward a net cost model, shifting the culture by putting merchant and supply chain partners and others on enterprise metrics. And that was just the start.
“Charting its own course: Macy’s, Inc. Chairman and CEO Jeff Gennette on leading through transformation and purpose” provided insight on a variety of initiatives and elements that have been key to the company’s ongoing success. Gennette sat down with Bloomberg TV anchor Caroline Hyde for the talk at NRF 2023: Retail’s Big Show, touching on pricing science, talent, DE&I, empowering entrepreneurs and more.
The conversation began with talk of the recent good holiday season, but also a note of caution.
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“We certainly saw how customers were shopping for gifts,” Gennette said. “It was a very important holiday for people to come together, and I think we showed up, as Americans, taking care of our loved ones.”
The gift-giving periods were strong during the November/December timeframe, he said. On the other hand, the “lull” period — the first few weeks of November and second and third weeks of December when consumers typically buy for themselves — were “more pronounced this year than in years past.” The self-purchase data provides insight into how consumers are entering 2023. So does credit card data (consumers are building balances and delinquencies are building up, for example), and the macro-influences of the current economic environment.
“It’s a point to say, be cautious,” he said. “But be ready to pounce when opportunities and signals present themselves.”
In terms of opportunities, Gennette said the company had become much better with data science, allocation science and pricing science, all of which is enabled by digital strategy.
In recent years, he said, Macy’s has “totally redone” its supply chain, reducing its dependence on China and shifting to more duty-free countries. It has worked with suppliers on how they convey their freight, collaborated with partner UPS in terms of speed and the last mile, and created 35 regional warehouses in roughly 1 million square feet of unusable store space.
"Be ready to pounce when opportunities and signals present themselves."Jeff Gennette, Macy’s Inc.
“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. But looking forward, there are other, perhaps more pronounced issues at hand, such as labor. Macy’s has extended its opening wage to $15 in all stores, with an average well over $20, and offers development opportunities ranging from data science accreditation to English as a second language.
Gennette spoke about the company’s DE&I strategy, aiming to provide whatever is needed for people to contribute at their fullness, whether that be mentorship, sponsorship, encouragement or training. He also touched on working with diverse entrepreneurs and diverse suppliers: One dress buyer for Macy’s had an idea about better serving the sororities of the “Divine Nine” Black Greek lettered organizations. She went to the manufacturing partners, and the collection has since become a $10 million business, he said.
Telling those stories is really important, Genette said. “We’re always looking at opportunities to improve.”