By and  on September 25, 2013

Macy’s Inc.’s order-online, pick-up-in-store program is testing the limits of its technical prowess.

Speaking to the Telsey Advisory Group Fall Consumer Conference in New York Wednesday, Karen Hoguet, chief financial officer of the department store giant, told attendees the transition to in-store pickup is more challenging than simply shipping an item to a customer. “We had the technology to tell us we had that item in the system and we could ship it to you,” she said. “But now it’s got to be in a central location in X hours in order for you to be able to do that. So far, the technology is working.”

In-store pickup is being rolled out to Bloomgingdale’s 36 department stores, although at the moment, a customer in the New York area might be directed to the White Plains unit. “Pretty soon, it’ll say 59th Street,” she said, referring to the retailer’s Manhattan flagship, which is just being incorporated into the program.

Similarly, the company has in some cases, like the Washington market, begun testing individual stores’ ability to fulfill orders placed online by trying it first in a few categories. “We’re not marketing it yet because…we’re just trying to test to make sure we can do it right and there’s a need. But what was very encouraging is that early indications are the customers are buying a lot more when they come to the store. And that’s frankly the holy grail here. If you can do a buy-online, pick-up-in-store and they pick up those items and then, while they’re in the store, they buy other things, that’s a big deal for us,” the cfo said.

Although Macy’s has never broken out the size of its e-commerce business, a strategic priority for the firm, it is estimated to have accounted for more than $1.7 billion of the company’s 2012 sales of $27.69 billion. Macy’s said in its 2012 annual report that its Internet business increased 41 percent last year and was responsible for 2.2 points of the overall comparable-sales increase of 3.7 percent. Investments in technology allowed Macy’s to ship merchandise ordered online or at another store to 292 stores last year, a number budgeted to hit 500 by the end of the current fiscal year.

Also at the Telsey conference, E. Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden Inc., touched on the overarching effects of omnichannel retailing during his presentation.

He said, “The distinction between prestige and masses is becoming almost irrelevant.…It’s blurring between the digital platforms, the specialty retail and the consolidation of that department store channel.”

Arden has its eyes on another channel as well — spas. The company is looking to its spa heritage to fuel future growth of its flagship Elizabeth Arden brand. Nearly one year ago, the company began introducing a leaner, revamped Elizabeth Arden range to key retail doors. Kathy Widmer, Arden’s executive vice president and chief marketing officer, said that the company’s link with Red Door Spas sets it apart from competing department store beauty brands. “It is the single biggest component of the brand equity,” Widmer told attendees.

She noted that the company has a 30 percent interest in the Red Door Spas business, which is owned by North Castle Partners, a private equity firm based in Greenwich, Conn.

She said the two firms are partnering “on a greater level” and working on a salon and spa concept that is slated to open in Manhattan’s Union Square within the next month. The concept could then be exported to markets where the brand has a relatively small business, such as China.

“We’d like to have the ability to roll this out as the way of presenting the brand in the unique and different way within the category in emerging markets as well,” said Widmer, who said Arden also is pursuing an initiative tailored for the dermatology channel, which is slated to launch in March at the American Academy of Dermatology convention.

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