How do you maintain a local feel in a central organization of 810 department stores in 45 states?
Speaking at The Premier Business Leadership Series in Las Vegas, Steve Nevill, Executive Vice President of Inventory Management and Support for Macy’s.shared how the retailer (which had $23.5 billion in sales in 2009) turned localization into a science, achieving increased profitability, stock value and customer satisfaction.
In 2008, the company transformed itself from multiple divisions operating as largely independent companies to one company operating under the common Macy’s name with one buying, planning, and marketing group.
What they didn’t want to lose was the local flavor of each store – in fact, Macy’s wanted to go far beyond what it saw any of its competitors doing in terms of localization.
The answer was district merchants and planners who each had about ten stores that they personally guided, overseeing merchandising down to vendors and product placement, location sales plans, staff training on products – in short, every aspect of merchandising in their ten stores.
“If you’re truly localized, it means this specific jacket belongs in specific stores at specific times in specific quantities,” said Steve. “Door by door by door. If we make clusters, we’re assuming those stores are the same, and they’re not. We want to take localization down to the level of individual customers.”
Of course, if it were easy, everyone would do it. I’m not going to give away Macy’s secret sauce, but I can tell you that they rely heavily on analytics to drive localization. Key enablers are:
- Attributes – Macy’s developed attributes for stores, products and customers and looks for relationships at door level to how these things sell. “For example, explained Steve, If I bring in a new product, I can tag it with attributes and determine from our data which store to put it in.”
- Sizing – Macy’s creates size profiles by door by product type. For example, said Steve, “We know what optimized sizing is for Inc. black turtleneck sweaters at Macy’s in Las Vegas. That’s the level we’re optimizing sizing. It’s been astounding. Size match rate has steadily climbed and we’ve been able to quantify increases in sales.”
Final tips from Steven:
- Early planning. Macy’s begins planning merchandise many months sooner than in the past so that they can incorporate store manager and district planner input.
- Make localization a priority. Think about your own practices,” closed Steven. “Whatever you can do to drive localization will drive results.”