Is Macy’s Taking the Right Steps To Reawaken Growth?

Macy’s Inc. reported that the “First 50” Macy’s traditional locations that have been revamped under its Bold New Chapter strategy achieved comparable sales gains of 3.4% in the first quarter, besting the 0.4% decline across Macy’s locations.

Net Promoter Scores (NPS) improved by approximately 500 basis points year over year at the 50 locations and were over 250 basis points above all other Macy’s stores. Traffic was also healthier, with AUR (average unit retail) up 4% on improved conversion.

On the retailer’s recent Q1 2024 analyst call, Tony Spring, Macy’s chairman and CEO, said the “First 50,” as part of the program introduced at the start of the year, are serving as pilots to test new ideas based on customer feedback. He said, “Results are encouraging, as they are an early indicator for the go-forward Macy’s fleet and, ultimately, the entire Macy’s Inc. go-forward business’s ability to return to growth.”

Asked to sum up the initiatives helping drive the early improved results, Spring discussed the following:

• Optimized staffing: Store staffing has been shifted to key departments such as women’s shoes and ready-to-wear, including more assistance for busier dressing rooms. More labor is also being allocated to big-ticket and fine jewelry departments as well as select checkout counters. Spring said optimized staffing was particularly responsible for lifting NPS. He said, “It’s having the right people in place at the right time. It sounds easy, but using technology and the data we have on traffic and conversion by day, by hour, making sure that we have people.”
• Product newness: Fashion newness is being injected into both women’s and men’s assortments where Macy’s has been experiencing softness. Customers are responding well to Donna Karan, a new brand for Macy’s that’s seeing no price resistance. Free People, French Connection, Karl Lagerfeld, and Hugo Boss are among the brands expanding distribution. Spring stated, “We need more variety, we need less redundancy, we need more interest within the assortment. And I think that’s making a difference in the customers’ reception to the stores.”
• Enhanced presentation: Visual merchandising touches are helping elevate merchandise displays. Spring said, “We look crisp, we look compelling. That’s the partnership with the brands to make sure that the impact is in each of the categories.”
• Elevated experience: Macy’s also brought retail’s “theater to life” by piloting new marketing and animation. Activations including personal styling sessions, fashion shows, and beauty services such as fragrance bottle engraving and craft stations have been added to the 50 locations. According to Spring, “Our customers were engaged, and these events serve as strong traffic and sales drivers.”

The 50 test stores represented about 20% of the Macy’s nameplate go-forward sales last year. At the close of the year, there were 502 Macy’s locations, including 15 small-format stores and a few freestanding Macy’s Backstage locations.

Spring expressed excitement around the “early innings” of the First 50 locations, with more experimentation planned. He added that it’s too soon to estimate how quickly promising updates can be rolled out across the chain. Spring said, “I think that we will have green shoots this first and second quarter. It will allow us to do some things later in the year, and I hope we’re in a position to talk to you about more stores in 2025.”

Other parts of the “A Bold New Chapter” three-year strategy include closing 150 full-line Macy’s locations, selling assets, opening smaller versions of its namesake chain, and adding Bloomingdale’s and Bluemercury locations.