Macy’s Remarkable Comeback: A Data-Driven Retail Success Story

Macy’s, initially known as R. H. Macy & Co., was founded in 1858 by Rowland Hussey Macy and has since become a renowned American chain of luxury department stores. In 1994, it joined the Cincinnati-based Federated Department Stores, and through this affiliation, it connected with Bloomingdale’s department store chain. By 2015, Macy’s had become the largest U.S. department store company in terms of retail sales. Their iconic flagship store is located at Herald Square in Manhattan, New York City

The Challenge: Macy’s, like many other traditional brick-and-mortar retailers, faced a significant downturn in sales and foot traffic as customers shifted to online shopping and e-commerce giants like Amazon gained dominance. To counter this trend, Macy’s needed to find innovative ways to better understand their customers, improve the in-store experience, and enhance their digital presence.

In Feb 2020, Macy’s announced its Polaris Strategy, an ambitious plan to redefine the company’s future. The strategy focuses on expanding its digital presence, enhancing the customer experience, and improving profitability.

Macy’s three-year Polaris strategy aims to adapt to the changing retail landscape by focusing on customer relationships, assortment expansion, digital growth acceleration, store portfolio optimization, and cost reduction. The expanded Star Rewards Loyalty program, launched in 2018, has improved customer engagement, as evidenced by the third quarter of fiscal 2022. Star Rewards program members accounted for about 70% of total Macy’s brand-owned-plus-licensed sales on a trailing twelve-month basis, marking a 5 percentage point increase compared to the previous year.

The Data-Driven Approach: Macy’s recognized the value of data analytics to gain insights into customer preferences and shopping behaviors. They began collecting and analyzing customer data from various sources, such as loyalty programs, purchase history, and social media interactions. By employing advanced analytics techniques, Macy’s was able to

  • Personalize marketing campaigns and promotions based on customer preferences and shopping habits, driving customer engagement and loyalty.
  • Optimize inventory management by analyzing sales data and trends to stock the right products in the right quantities at the right time, reducing costs and improving customer satisfaction.
  • Implement dynamic pricing strategies, adjusting prices based on demand, competition, and inventory levels, boosting sales and profit margins.

Digital Transformation: Data analytics and advanced Analytics played a significant role in Macy’s digital transformation. They invested in their online presence, using data-driven insights to optimize their website and mobile app, offering personalized product recommendations and a seamless shopping experience. Macy’s also embraced omnichannel retailing, integrating their online and in-store operations to provide customers with a consistent, unified experience across all touchpoints

The results: The company saw a 2% increase in active customers shopping for the Macy’s brand, 9% for Bloomingdale’s, and 15% for Bluemercury. They launched innovative collaborations like partnering with Klarna, a Swedish buy now, pay later group, and DoorDash for expedited delivery services.

Macy’s also redesigned their mobile app and introduced live shopping functionality, Apple Pay, Klarna Express Checkout, PayPal, and Venmo. The launch of a digital marketplace, allowed third-party sellers to sell products on and

Their Market by Macy’s initiative played a crucial role in Macy’s omnichannel ecosystem, and expanded offerings like curbside, store pickup, and same-day delivery won over customers. During the third quarter of fiscal 2022, digital sales made up 30% of net sales, with 65% coming from mobile devices. Active Macy’s app customers increased by 11% year over year.

With data-driven strategies and digital transformation, Macy’s projected net sales for fiscal 2022 to be between $24,340-$24,580 million. The company’s remarkable comeback serves as an inspiring example of how embracing innovation can breathe new life into a traditional retail business. Macy’s Updates Polaris Strategy 2021: Retailer To Expand Backstage in 2021 and Grow Digital to $10 Billion by 2023

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