When Jeffrey Gennette steps into the spotlight as chief executive officer of Macy’s Inc. next week, he’s doing so with his eyes wide open.
Gennette — president of the company until March 23, when he will take the reins from Terry J. Lundgren, who will become executive chairman — braved a blizzard to reassure Wall Street investors that he understands the challenges facing the department store and has a game plan for the future.
“It’s no surprise that it’s been a tough time for Macy’s over the past couple of years and that we need a new playbook if we’re going to win again,” Gennette said at a Bank of America retail conference in New York. “We certainly don’t have our head in the sand and we’re looking outward as much as we’re looking inward to where the opportunities might be.”
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Gennette acknowledged that change in the market is for real this time.
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“In the past where we may have done things over again and hope that it was a cyclical change, we certainly now know that all these changes are secular,” he said. “The headline here is that department stores have got to get better if we’re going to take market share back.…The idea of the department stores is as relevant today as it ever has been in the past.”
Macy’s knows more about its customers than it did even a couple of years ago and Gennette’s looking to use this “deep knowledge” of the customer to guide the company’s transformation.
The department store has 43 million customers that shop with it each year, with the top 10 percent of that base making up about 50 percent of the business. And the company is growing the business with those dedicated customers and focusing on building with the other customers.
“You can look at Millennials and you can say that they have — their spending habits have changed,” Gennette said. “They’re spending more on their data plans, they’re spending more on experiences, they’re spending a lot [at] our price. So, we’re focused on what we need to do with that customer and customers that behave like that. What we are really looking at is how we make our stores more potent because our web site is fantastic.”
Key to the effort is foot traffic.
“What do we need to do to get more customers into the building? Once they’re in the building, how do we get them to stay longer? What do we do with our goods and services? And how is that such a great experience that they want to come back?” he said.
Like the rest of retail, Macy’s has been on an omnichannel kick for some time, and that’s not really changing with the incoming ceo seeing strength in connecting with shoppers online and in store.
“The biggest opportunity that Macy’s has is really we have strength from digital,” he said. “We have a lot of great stores. It’s really the combination of really the mash-up between technology and the human touch. And so, that’s where you’re going to be seeing us really focus our efforts.”
Asked about brands that are testing their assortments with Amazon and selling at off-price, Gennette took the diplomatic route.
“We’re focused on win-win partnerships. I mean, I built my career on creating win-win partnerships for our vendors,” he said. “When you think about most of our vendors that we do business with, Macy’s is still the biggest purveyor of their goods. If Macy’s hasn’t been winning and growing share in the last couple of years, that puts pressure on our vendors. And so, they got to look at, OK, where am I growing, where am I going to grow and what can Macy’s do for us? So, we’re deep in those conversations and where they are deciding to expand distribution we are, in many cases, wholly supportive of their needs to grow and what do we need to do to make our experience and our offering unique for Macy’s. That’s how we’re focused.
“We had one of our major brands make a decision about another distribution channel just this week,” Gennette said. “And so, what are we doing internally and we’ve been working on that about a way for us to be able to make that brand live, not only in our stores, but figure new ways to expand it in the buildings or in channels that they’re not today. So, that’s how we play with each of our vendors.”
Those conversations along should keep the incoming ceo plenty busy.