While numerous retailers are anticipating lackluster consumer spending estimates due to an excess of products during the holiday season, Macy’s appears to be an exception. Leveraging AI implementation, the retailer is poised to tailor its product offerings according to holiday demand.
During Macy’s CEO Jeffrey Gennette’s recent quarterly earnings briefing on Thursday, November 16, he emphasized the importance of understanding customer preferences for competitive pricing. Consequently, the company has streamlined its deals, anticipating positive feedback from customers regarding the strategic adjustments made.
As the sales penetration within this demographic is projected to surge significantly in the fourth quarter, Macy’s foresees an over-indexing in the beauty segment. This surge is expected to be fueled by new partnerships such as JLo Beauty, exclusive collections from luxury brands like Chanel, Dior, and La Mer, and unique offerings like personalized gift stations.
Customers can look forward to meticulously curated product selections from renowned brands and engaging shopping experiences throughout the season. Noteworthy collaborations, including a whimsical collection inspired by Wonka featuring exclusive products from David Yurman, Armani, Reese, and more, are on the horizon. Additionally, Macy’s sister company, Bloomingdale’s, has unveiled its “Best Holiday Ever” campaign, embracing the concept of retail as an immersive theatrical experience.
Furthermore, Macy’s disclosed that Blue Mercury will introduce new brands in its beauty, body care, and fragrance categories, offering in-store spa services, personalized gift consultations, and special perks for loyalty members. Looking beyond the holiday season, Macy’s aims to solidify its reputation as a preferred destination for customers and business associates alike. Emphasizing the importance of maintaining a well-balanced portfolio of brands, leveraging social customer insights, and upholding the unique identity of each brand, Macy’s is committed to enhancing decision-making processes, particularly in inventory management, through the utilization of data science tools such as AI and machine learning.
The revamping of exclusive brands, exemplified by Macy’s new private label On 34th, stands out as a key growth strategy. The success of smaller-format stores, which continue to deliver positive sales and a convenient shopping experience, underscores the company’s retail prowess. Moreover, Macy’s online marketplace is expanding rapidly, boasting over 1,500 brands and a 22% surge in total merchandise value across three consecutive quarters.
Lastly, the leisure segment emerges as a promising avenue for multi-branded premium offerings, notably through Bloomingdale’s. With plans for expansion until 2024, personalized promotions and communications—identified as the second growth driver—are being refined and tested to enhance customer engagement.
Macy’s Performance Overview
In the second quarter of the fiscal year, Macy’s witnessed a decline in earnings per share and online sales compared to the same period in 2019 and 2022. Both brick-and-mortar and online sales experienced a downturn, with owned and owned-plus-licensed sales registering similar declines. While Macy’s and Bloomingdale’s faced challenges in various product categories, Blue Mercury saw a rise in proximity sales. Other revenue streams decreased, constituting 3.7% of online revenue. The impact of the Star Rewards program on profitability and the company’s active user base were highlighted. Noteworthy improvements in net margin and product margin were achieved through disciplined inventory management. While selling, general, and operational expenses decreased, delivery costs escalated as a percentage of online sales.
