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Macy’s Reacts to Changing Consumer Shopping Habits

The continually challenging economy has forced even the largest merchants to rethink their strategies.

The continually challenging economy has forced even the largest merchants to rethink their strategies — and, for Macy’s, that includes a new beauty concept called Impulse Beauty, as well as a new mobile shopping app and a program designed to track down out-of-stock products.

An assisted open-sell concept which coexists with traditional beauty counters, Impulse Beauty is intended to showcase smaller brands, most of whom are entering Macy’s distribution for the first time, said Muriel Gonzalez, executive vice president and general merchandise manager for cosmetics, fragrance and shoes for Macy’s Inc., speaking at the Summit. It was inspired, Gonzalez said, by a similar concept in apparel.

“On the West Coast, the word ‘impulse’ was used to describe ready-to-wear that was primarily California-based, a little bit more contemporary, and product that wasn’t carried in all the different Macy divisions,” she said. “So the team in California at the time began to say, ‘What does that customer want in beauty? She doesn’t necessarily want the traditional brands that we’re carrying at Macy’s. She might want to try something that’s a little bit more niche, she might want to try Laura Geller, she might want to try Sue Devitt, but how can we do that at Macy’s?’”

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The solution: an open-sell environment that has beauty advisers trained on multiple lines. “So if the consumer wants to try for herself, she can, and if she wants some assistance, she’s able to get somebody who knows all the different products and can really help her on the product that’s right for her,” said Gonzalez, noting the program began a testing phase in 2009, with each space roughly 1,000 square feet. “It started in three stores and the initial results looked pretty good. So the team there at the time decided to go to another nine. And when One Macy’s was started, back last February, we were so confident that this team was onto something great that we decided to keep a small team in San Francisco to work with some of the California-based vendors and to really be a center of innovation for us. So we took it to another nine stores, including Union Square.”

Next, Macy’s commissioned a retail analysis. “In those three pilot stores that we’ve been in business with for a year, they analyzed about 4,000 households that had purchased in these three stores,” she said. “What we learned was that 40 percent of those 4,000 households were Macy’s customers but had not bought anything from the beauty department in the previous 12 months. Of the 60 percent of customers who were already Macy’s customers and who had already bought beauty, they increased their purchasing in the beauty department significantly and they increased their purchasing in total Macy’s significantly.”

As a result, another nine opened up last fall and another 40 will begin rolling out this month, said Gonzalez, including in Jersey City, N.J., Staten Island and Queens, N.Y., with the retailer’s Herald Square, N.Y., flagship to get the department in October.

The retailer is also currently testing shared demonstration in 25 smaller stores. “We expect that once we learn more about how we can better staff and motivate and train the beauty advisers in the small stores, we’re going to have an idea that we can roll out to over 200 stores in 2011,” she said.

This month, Macy’s will also begin testing mobile apps in several markets with a company called Shop Kick. “When I walk into Macy’s a little signal let’s Shop Kick know that I’m in Macy’s and right away I get an e-mail saying, ‘We have some deals or promotions for you,’” she said.