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Macy's stays 'MOM' as sales rise

The US retailer and Bloomingdale's owner Macy's saw like-for-like sales increase 1.4% in the final quarter of 2013, compared to the same period one year before, with CEO Terry Lundgren hailing the success of the company's dedicated omnichannel strategy.

Launched in 2009, the My Macy's localisation, omnichannel integration and magic selling (MOM) initiative aims to boost the retailer's customer engagement across all sales channels – and Lundgren said last week that it is a strategy that has "set Macy's apart" from its competition.

"As has been the case since we began implementing these strategies in the 2008/2009 period, our competitive advantage is in the unique combination of localisation, omnichannel and enhanced customer engagement," he explained.

"Customers are able to shop for and buy the products that they want and prefer in our stores, via mobile devices and on computers in a shopping environment that delivers outstanding value and is supported with great service."

Lundgren called the company's organisational structure "unique" and said the MOM strategy is unlikely to be copied by competitors "because of the financial resources and talent required". But what do the industry analysts think, and is MOM actually that much different from the plethora of other retailer omnichannel strategies in existence?

Rahul Sharma, retail analyst and owner of Neev Capital, told Essential Retail: "Apparel retailers [in the US] have been hurt on three main fronts – lack of specific fashion trends to boost sales, consumer focus on doing up their home and third, a consumer much more focused on web for choice and value.

"Macy's has been moving to make its assortment more attractive and improve its web offering for a while, and both of these will continue to help it."

However, Sharma argued that despite its "fancy" label, much of MOM's content has been around for a long time in retail. He added that making the web central to future strategy is a new approach – and Macy's can be commended in this area of its business operations, as well as its general in-store customer service, where he said improvements have been made.

"Is Macys early? I don't think it is early at all on any of this – but it is taking it seriously unlike many others who pay lip service," the analyst noted.

"It's been taking localisation seriously for some time and the basic idea of flowing fresher, relevant fashion is helping shrink and markdowns." 

Comparable sales at Macy's for the full year 2013 grew by 1.9% year on year, and by 2.8% when combined with comparable sales from departments licensed to third parties.

Overall, it was a positive year for the retailer, although Lundgren acknowledged that unseasonably cold weather in January has impacted sales at the start of 2014. The CEO is also confident that the MOM strategy holds "significant potential" to boost the business in the coming months.

Spencer Izard, European head at analyst group IDC Retail Insights, argued that MOM is still as innovative and relevant as it was when it was launched five years ago, adding that other retailers are trying to emulate some, or all, of Macy's "ongoing achievements".

He said: "A lot of retailers focus on one or two of the three elements that comprise MOM but Macy's envisioned back in 2009, and I believe correctly so, that for a retailer to achieve all the benefits of omnichannel that the customer experience online, in regards to personalisation for example, needs to be reflected through localised merchandising in stores delivered by store staff that can engage in a similar personalised fashion."

But what about the year ahead? As consumers get used to buying products online and through various devices, their expectations on service and fulfilment are starting to change significantly.

"Whilst Macy's has a strong eCommerce foundation, a challenge in 2014 will be around managing customer expectation online with the localised physical store experience in regards to assortment scale and overlap – as customers today expect that what they can get online should be in-store and vice versa," Izard explained.

"However, between the My Macy's and 'Magic' strategies I believe that they are well placed to offer hyper-personalised marketing to customers on mobile devices whilst in-store, once the infrastructure is in place."

 

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