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Store Operations

Macy's exec shares the do's and dont's of localization

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Before the holidays, we heard from Macy's Chairman and CEO and NRF Chairman Terry Lundgren on why customers (and Wall Street) rave about the My Macy's localization model. The roll out of Macy's new retail model across the country came in 2009, and in just two years, it's evident that the change was a positive for customer satisfaction and sales.

In anticipation of a Retail's BIG Show BIG !deas session, we're taking a look at the operational side of this revolutionary retail model. Steve Nevill, Macy's Executive Vice President, Inventory Management and Support, has been at the forefront of Macy's localization program since it's inception. Nevill shares how Macy's is handling communications, it's online presence and social media with the local customer in mind, as well as  what the company learned from launching a new retail model, including a few do's and dont's for other brands considering the same strategy.

At Retail’s BIG Show, you’ll be discussing “the science” of localized retailing and even more specifically, your work with the My Macy’s retail model. Why do you think this model been such a success for the Macy’s brand?

I believe it would be a success at any retailer. It’s a totally customer-centric model that focuses both on each individual customer and each individual store. The result is assortments, prices, and service that really resonate with the customer because they better match the customer’s needs and desires. So customers find more of the products they want, in-stock, in their size, and they buy more. It is also an incredibly responsive and dynamic approach – direct feedback from customers in their local store has a defined and direct path back to our central merchants, and they are expected to act on that feedback. So both customers and our store associates feel a real responsiveness and empowerment from the model.

Macy’s operates 810 department stores across 45 states. What do you think is the essential key to ensuring a local feel in each of your stores?

It’s really taking an individual store approach to what we do. In the past, and in many companies I used to work with as a consultant, large companies group “like” stores together to manage assortments, allocations, and pricing. But the reality is that no two stores are really the same. Until you build the infrastructure – people, systems, and processes – to really operate at the lowest level, you are not really operating locally. In the end, it always comes down to people, especially the ones in the stores. I always remind our teams that it’s the associates in the stores who really interact with the customers, not those of us in the central offices. When we respond to those local needs centrally, then they can engage the customers in a more personalized way.

What was the hardest part of implementing this model?

Well, initially it was hard as we worked to define the new model. We had to challenge a lot of what we believed had made us successful in the past. We really looked widely not at just what other successful retailers were doing, but even into other industries. That made people nervous, and there was a tendency to want to “reign in” things back to the familiar. But Terry Lundgren and the other executive leaders really were good at challenging everyone to believe in the core ideas and hold firm. However, once we really had a good initial vision, it’s been mostly about getting people to really embrace the change and live it. There was a ton of change – new systems, a new organization, new processes, new relationships, etc. It was a lot to absorb, and we’re still helping people adapt and evolve. The success we’ve had has certainly helped people believe, but old habits take time to break.

Facilitating an operational change that impacts every part of a company from top to bottom is quite an undertaking. What advice do you have for other companies that might be considering a shift in their retail model?

First, you better have a very well thought out plan. Once you are committed to making such a huge change, you can’t immediately start waffling or changing course. You need to be flexible to adjust the secondary operational things, but you must hold the core parts of the model together when you are making highly integrated changes. Second, you better have all the most senior stakeholders absolutely committed. There is no time for politics and games – everyone needs to be clear on the changes required and signed up. Last, you need to be realistic about the time needed to implement massive change. You may make the surface changes quickly, but real change can take years to totally “bake in” and become part of the culture. Constant communication and reinforcement are needed to be successful.

Regionally My Macy’s strives to create a personalized experience for each customer. What steps has the brand taken to ensure a consistent brand image nationally?

Because we consolidated from multiple regional buying offices into a central organization, we also were able to consolidate our marketing and branding functions. That now allows us to do national media buys, and have national campaigns (like our holiday “Believe” campaign) that we can merchandise and market consistently in all our stores. We now run national TV spots that reflect the Macy’s name and image. We can be consistent for the customer on returns, key advertised events, and product availability when needed. Even our training programs on customer service for store associates are developed and implemented nationally. All of these things allow the customer to have a more consistent experience when they shop and interact with Macy’s.

What are your thoughts on localizing customer communications through social media? Has the Macy’s brand attempted anything in this sphere of influence?

Social media is almost by definition local, because it’s a shared experience and communication between individual people. Macy’s is now very active on both Facebook and Twitter. In fact, we’ve reached over a million fans on Facebook alone! We have all kinds of information on our wall about fashion, style guides, upcoming products, special promotions, and more. We really do look at the individual posts and comments from people, and they influence us. We also have a section where people can directly post reviews and comments on our products, and we look for trends in that feedback. We view social media as a great way to stay connected to our customers, and to expose new people to our brand.

Are there any strategies in the works to take in-store localization online?

We continue to add features to our web site to make the shopping experience more personal. We now have a number of “finder” functions where you can specify characteristics of an item you are interested in, like a coat, and we help narrow in the selections most appropriate to you. We also are working on features that will take advantage of our knowledge of your preferences, and present more customized product selections to you first and make suggestions. We’ve recently rolled out our “MyCustomer” personalized response program, where customers can directly tell us on-line the details about their in-store experiences. We respond to these, including having our store managers make direct calls back to those customers if they would like us to. We are constantly looking at the connections between our brick and clicks to enhance the individual customer experience no matter which channel they prefer to shop.

As a veteran of Retail’s BIG Show, what are you most looking forward to at the 100th Annual Convention?

I’m always excited to connect with many of my friends who work at different retailers around the country, as well as those who work at software vendors. NRF is almost like homecoming for retail! In terms of the show, I’m interested in hearing about how other retailers are positioning for growth. We’re excited about the growth we are seeing and our strategies, but we know we don’t have all the great ideas and are always interested to learn from others.