On December 4, 2018, Jeff Gennette, chairman and CEO, Macy’s Inc., shared his strategies for transforming Macy’s, the 160-year-old retailer, into a customer-centric destination, with a new prestige beauty model at its core.
Gennette, who addressed the audience at Cosmetic Executive Women’s recent Speaker Series presentation, is truly the man of the moment; and his mission is no less extraordinary than the time-honored brand itself, which operates more than 870 department stores under its nameplates, Macy’s, Bloomingdale’s, Bluemercury, Bloomingdale’s The Outlet, Macy’s Backstage, and STORY, its recent acquisition, as well as macys.com.
Macy’s Department Store is one of this country’s premier retailers, and, according to CEW president, Carlotta Jacobson, “It is making such exciting moves to reimagine itself under Jeff Gennette’s leadership. We can’t wait to hear his vision for the prestige beauty model as Macy’s continues to transform.” Jacobson welcomed attendees to The Union League Club in New York City for the presentation, and provided background on the newly elected chief executive officer of Macy’s, who assumed his role as chairman in February 2018. Previously, he was president of Macy’s, Inc., since 2014, and prior to that, chief merchandising officer, since 2009. He has spent his 35-year career in retail with Macy’s, starting as an executive trainee at Macy’s West in San Francisco in 1983, and advancing through positions of increasing responsibility.
Jacobson thanked the sponsors of the event, including lead sponsor, Cosmopolitan, which has collaborated on an interactive shopping initiative with Macy’s; and Arcade Beauty, Shiseido, Coty, Estée Lauder, L’Oréal, Puig, WSL Strategic retail, Rosenthal & Rosenthal, Beauty Inc, WWD, Moblty, Suite K, Fabler, and Kaplow Communications.
Donna Kalajian Lagani, SVP, publications director and chief revenue officer, Cosmopolitan; and Jessica Pels, editor in chief, Cosmopolitan, described their partnership with Macy’s, which enables one click purchasing of fragrances and cosmetics that customers see in the pages of the magazine. The initiative allows women to try on looks directly from the magazine, click the QR code, and then buy the look directly from Macy’s; a response to the reported 72% of women who want to try makeup on before they buy it.
The Strategies Unfold
Moderator, Jill Scalamandre, CEW chairwoman, and president, Global Makeup Center of Excellence, Shiseido, began the discussion with Gennette, by addressing the diverse points of view of today’s customer. Gennette said, “Customers have more choice than ever, and we have looked closely at the years 2015-2016, to recognize the fundamental changes of customers and how they shop. We have determined where customers could play fruitfully,” he said, adding, “You’d better be strong in digital. That’s a big part of the customer journey.”
Gennette explained that is key to meet the customer’s needs, find the friction in the customer’s shopping process, and then determine what to do for engagement. “We honed down into that fashionable spender that is very motivated. Shoes and beauty are passion categories for us; and we also recognize our partners as opportunities to coalesce with us. In addition, we looked at talent. It started about two and a half years ago, in 2016; and we’ve been whittling down based on the eco-system of where our customer shops. The brick and mortar and the digital businesses have amplified inter-penetration,” explained Gennette, noting that you have to have DNA-appropriate retail representation in each of your stores.
“Different customers are drawn to each of our stores—for example, neighborhood stores may provide items like Bali bras; or magnet stores, which offer beauty and fashion apparel have a different customer base. Then we have our eleven flagship stores, offering the best in retail. Each type of store is different. Neighborhood stores offer curated essentials, and are more open sell in nature; and each type of store has the goods and services that their customers seek; while the magnet stores will have the branded experiences,” said Gennette.
A video called, Find the Remarkable You, was shown to illustrate the lives of real women, not models, who are being addressed in Macy’s newest ad campaign. “We are reaching real, fashionable women in an authentic and cross-branded way,” he said, noting that the women in the ad campaign were athletes and teachers, conveying authenticity and relatability. Scalamandre’s query about whether the ad was intended for viewers to take another look at Macy’s was key, said Gennette. “When we were ready, and getting our house in order, we started launching these campaigns,” he said, demonstrating his message with another video, offering an emotional and personal look at the fragrance category.
Animating Brands at Retail
Gennette described a diverse customer base that was seeking a combination of specific brands, as well as color options and skin care choices, when they shopped. “The idea of being able to animate a library of brands, for example, through the acquisition of Bluemercury, has given added strength to the beauty and cosmetics areas of Macy’s,” he said, adding, “The calling card of Bluemercury is really about what the customer is seeking; and their knowledge of products is second to none.”
“You’ve got to have a platform where you can teach colleagues about the products and content, and they can then share with customers,” Gennette said, describing how they created The Beauty Playground, which shows what is important in color and what is important in skin care. “I think our beauty advisors can be trained to be knowledgeable about cross-branding, from the perspective of what customers are looking for,” he said. He cited the Impulse spaces within the stores that offer the best of skin care and color in a “flexible, gondola style of presentation,” and noted how indie and smaller brands are also coming to the fore at Macy’s. “Our customer wants it,” said Gennette.
“We needed a delivery system with open sell that would give us that flexibility, and our gondola style presentation does that,” he said, noting, in answer to a query from Scalamandre, that the Clinique brand also is offered that way as well. He explained, that if you’re pulling products together in open sell, they need to mesh.
Gennette also emphasized a growing loyalty program at Macy’s. “This is a consideration for a fashionable spender, and it is key in the breadth of the Macy’s eco-system. Our opportunity to reach into a consumer’s loyalty is important for Macy’s. The loyal Macy’s customer is getting incentives and benefits,” he said. Their Star Rewards program is tiered and has contributed to adding three million customers to Macy’s customer roster, noted Gennette.
Technology and Concept Shopping
Turning to technology, Scalamandre queried how Macy’s would use it to disrupt. Gennette replied, “Wherever Macy’s is going with technology and augmented reality, it’s got to solve a customer need or point. It is not technology for technology’s sake. It is intended to both build online business and in-store access.” Macy’s recent acquisition of STORY, which originated as a concept and gallery shop in Chelsea, is being scaled at Macy’s to offer customers new brand experiences within the store. The platform, which will change regularly, will offer a variety of stories and brand experiences within Macy’s. Founder of STORY, Rachel Shechtman, has been hired as Macy’s brand experience officer, with more details to come in the spring.
Gennette also acknowledged a new brand collaboration, with another announcement also planned for the spring. Re-inventing retail with stories and animation promises to be the wave of the future at Macy’s, with Gennette noting, “We’re going to hit about 1 billion in mobile retail, and we are investing in our stories like never before. Beauty will be one of the biggest areas of investment,” he said. He noted that such initiatives as Macy’s vendor direct, loyalty program, and Growth 50, are among the ways Macy’s will win in beauty. “We’re ready to make that investment in beauty. Fragrance is one of the areas we’re investing in as well, which is one of the reasons we’re winning in fragrance,” he said.
He described the value of the Bluemercury acquisition in terms of an evolved customer-centric model. “With Bluemercury, we looked for a customer-centric model, their ethos; and we found we could scale that. The more we put into it, the more we can get. When we acquired Bluemercury, there were two in the city, now there are 16 Bluemercury stores. We’re bullish on Bluemercury,” he said.
In concluding, Gennette said, “We have a fashionable customer who is ready for us. We’re shaking off the stodgy and dusty image we may have acquired. Try us out. We’ve got new customer formats, new fragrance formats, and new opportunities for skin care and millennials. We’ve invested in products, presentation, staffing, services, special events, hyper-curating, and we’ve added more fashion. The combination of these pieces, which we have done in fifty magnet stores, has brought more animation to Macy’s,” said Gennette.
Photo: (L-R): Carlotta Jacobson, president, Cosmetic Executive Women; Jeff Gennette, chairman and CEO, Macy’s, Inc.; Jill Scalamandre, chairwoman, CEW, and president, Global Makeup Center of Excellence, Shiseido.