Macy’s Inc. is having a moment.
Like many retailers capitalizing on the current financial health of consumers and their eagerness to shop, Macy’s sales volumes this year are exceeding 2020 and 2019 levels.
Strategies to diversify the offering, experiment with smaller formats, and to capture market share in younger segments where the retailer has long fallen short seem to be kicking in, and despite continuing store closings, COVID-19 and inventory and labor shortages, perceptions on the business are changing for the positive. Since the beginning of the year, the stock price doubled and some Wall Street analysts see it as still undervalued.
Key to sustaining the momentum and further evolving Macy’s business is Nata Dvir. The 16-year-veteran Macy’s veteran stepped up to the role of chief merchandising officer of the Macy’s brand last February, after serving as senior vice president and general business manager for beauty and center core merchandise. Earlier, she oversaw a variety of categories including men’s, fine jewelry, women’s shoes, beauty, accessories and food. Dvir now oversees all merchandise categories and private brands, and reports to Jeff Gennette, Macy’s Inc. chairman and chief executive officer.
In the following Q&A, Dvir discusses her agenda, how Macy’s assortment is changing, and she responds to certain criticisms that have long dogged Macy’s.
WWD: As Macy’s new chief merchant, are you bringing a different agenda to the business?
Nata Dvir: A big part of what I worked on, specifically in beauty, over the last four years was about how to attract a new customer, a younger, more diverse customer, and how to drive the brands we do tremendous business with and attract new brands. So coming into this role, there has already been a tremendous amount of good work built into the merchandising strategy. One of things I was charged with and focusing on is to bring this younger customer to the forefront, in all of our categories. We talk about the 40-year-old customer. I actually think of the 28- to 45-year-old customer.”
WWD: Your CEO said Macy’s attracted 5 million new customers last quarter. Who are they and where did they come from?
N.D.: Many are coming from our online business and in store, and also new categories that we’ve been focusing on — contemporary and beauty. We are also seeing a lot of new customers in home. They see the breath of the assortment we have, and are shopping across our categories. We are a department store. We carry many different categories, so it’s about getting us all focused on getting the right assortments, simplifying our pricing, being more relevant for a younger customer that increases the customers’ basket as they shop across all the different categories.
WWD: Where are the opportunities to expand the assortment?
N.D.: Macy’s has always been strong in special occasion, tailored clothing, dresses, shoes and the gifting category like fine jewelry and fragrance. Those categories will continue to be important for us. Rounding out the customer shopping experience with more casual assortment in apparel, thinking about those outfit completers, whether that’s fashion jewelry or how we grow our handbag business which has been historically a strong business for us, it’s about getting the rest of our assortments together so we can have a well-rounded shopping basket for our customer. That’s why we are so excited about toys and [merchandising efforts] around this Millennial mom, which has us focusing on toys and kids and also apparel for her. That’s why I love this partnership with Toys “R” Us. We will have more than just their exclusive brands. We will have all the toys that sit under the Toys “R” Us name, you already see that online, and everything from Mattel, Barbie, Fisher-Price. And then in 2022 will come to see that come to life in store.
WWD: What is distinctive about the Macy’s offering?
N.D.: Customers love the experiences we have, our special occasion offering, gifting and the great brands — national brands and our private brands, and there is just great quality and value with both.
WWD: With the way Jeff Gennette describes the assortment, luxury to off-price, cross-generational, it’s like Macy’s tries to be everything for everybody. Is that true?
N.D.: We are trying to be what our customer needs us for — occasion-based fashion, for casual wear, and for experiences. I don’t know if it’s everything to everybody. We know the customer we have and we are just looking to evolve with that customer. The luxury to off-price assortment, coupled with having a broad mix of categories, brands and price, [provides] an element of convenience as well. With that breadth of product we see customers shopping with us often.
WWD: Does that expansive scope make it hard to have a clear identity, to stand for something?
N.D.: What we have is a really nice focus and what I hope I brought to this role in merchandising is a focus on some categories and the role each category plays in the customer journey and how that all gets connected. One thing I always ask my team is ‘why would a customer buy this at Macy’s?’ Why Macy’s for a [specific] category. Sometimes it’s about service and experience. Sometimes it’s about broad assortments. Sometimes it’s about price, so being really definitive for each one of our categories, around the role they play in the industry and the role the category plays at Macy’s, that’s been the focus. So I stepped in to continue winning across multiple categories, and to lean in on a couple of them to really gain market share.
WWD: Is it a matter of picking your spots, so to speak?
N.D.: You can’t just pick a couple. You have to have enough so you have a customer journey. I think often about that relationship the customer has across categories. We want this Millennial mom to buy toys, to buy back-to-school. We also want her to buy beauty. And if we only get her to buy one or two of those categories, we don’t win. It’s really about getting the full journey.
WWD: Which categories for the future are you thinking about? Pets, technology, electronics?
N.D.: It’s important for us to continue to test new categories. It’s how we learned about the demand for toys. We launched toys two years ago in Backstage (the off-price format) and [later] to full price and now we’re scaling it. We will always test new categories, primarily starting online, in a Macy’s way. So when you think of pets, you will see fashion for pets. You won’t see us selling dog food today…Technology we are always looking to learn about. At this point it’s not a big growth category for us. What you are really starting to see is a focus on categories we’re good at and expanding them. I always think about textiles. One of our fast-growing (proprietary) brands is Hotel. We have such great credibility with that brand. So many people know it. We launched a new brand called Oake. That builds on our credibility and our excellence in private brands and textiles. So it’s not only about [adding] new categories. It’s taking the categories we are really good at and making sure we continue the dominance by expanding the assortment.
WWD: How does Oake compare to Hotel?
N.D.: It’s very different, definitely more casual, relaxed and effortless in its aesthetic. The materials are more simple and there are new textures. You can feel more of a blend in the cottons, and it’s a lower price point than Hotel. It’s really made for our contemporary shopper.
WWD: Any progress building Macy’s contemporary fashion business?
N.D.: I am excited about what the team has done in contemporary apparel. It’s where we always had a lot of assortment, but we are pulling it together in new ways for our customer and adding more breadth, brands and assortment. Earlier this year, we launched a contemporary sitelet under the “Now Trending” part of our website. It actually took a lot of the assortment we had and pulled it together in a way our customer likes to shop. [Product detail pages] are more enhanced. The imagery is much more inspirational. Bringing it all together starts to create this place for all things contemporary. Also, in 160 stores we are pulling together these brands, not only in apparel, but you will see it in footwear, beauty, across all of our categories. It’s not just about having one category to [pursue] this customer. It has to be all of our categories. The flows and adjacencies have changed and pulled together so it’s easier for our customers to find.
WWD: How are you managing inventories?
N.D.: We have been spending a lot of time this past year improving our inventory productivity, with healthier sell throughs. As we buy less, we promote less which makes it easier for customers to find what they’re looking for. If anything, you are going to see a cleaner, simplified experience for customers.
WWD: Was inventory reduction forced because of supply chain issues?
N.D.: A little bit was forced, but some of it was very intentional. As an industry, this was something that needed to happen and this just gave us the kick to do it, the learnings of healthier sell-throughs and the benefit of that you see it in our earnings.
WWD: Where do you get your fashion inspiration?
N.D.: I get inspiration from my team and our [vendor] partners. I am a city girl. I grew up in Manhattan. I get my inspiration from just walking around. I am often caught looking at Instagram and multitasking during meetings. I am a very curious person and I love to be inspired by my surroundings whether through our team or externally. Fashion Week is another piece I value, being a student of it. But we have an incredible fashion office team that sends us reports constantly. Even in a virtual environment, we feel like we stayed connected. The fashion shows have been quick to digitize and help us see them virtually. Speed must continue because customers are looking for trends faster and faster every day.