“Retail is a dynamic business that requires continuous reinvention” – Terry Lundgren, CEO of Macy’s
Macy’s, the 15th largest retailer in the United States with just under 800 stores nationwide, is being forced to rethink about the ways customers shop. Open for more than 150 years, Macy’s is under intense pressure from a growing number of internet retailers such as Amazon, and is facing declining financial performance and lower inventory turnover . The ease of the online shopping experience, speedier and low-cost/free shipping alternatives, and free return offerings have shoppers gravitating away from the in-store shopping experience . To combat these headwinds, Macy’s is reinventing itself by exploring alternatives to the traditional retail experience and introducing new technology and innovation in their brick-and-mortar stores.
THE MANHATTAN BEACH PILOT
Macy’s Manhattan Beach pilot is marked by its new omni-channel business model, which aims to offer the customer a convenient shopping experience based on the seamless and integrated use of multiple channels. This pilot has prompted Macy’s to partner with Hointer, a technology consultancy, to test the introduction of digital technology to Macy’s stores. Together, the companies are enhancing the shopping experience by integrating technology into stores thereby “connecting with customers in a new way” .
The pilot, launched in 2015 at Macy’s Manhattan Beach, California store, turns the Macy’s salesfloor into a showroom. First, the customer uses her mobile device to scan the items she wishes to try on. After she enters the fitting room, her items are released to her fitting room stall via a chute within 30 seconds. She can use a tablet mounted to the fitting room wall or her Macy’s app to request additional sizes or items. In addition, customers receive personalized recommendations based on data from the items they have scanned.
Not only does this pilot provide for a unique, individualized experience, but this operating model allows the customer to try on 30-50 items in a few minutes, minimizes staff costs, and mitigates the risk of returns . Clothing stores typically allot 20% of their square footage towards fitting rooms, and 80% towards displaying merchandise but this pilot requires less floor space to display products . There is one of every item on display, rather than every size and color . In effect, products are easily visible, and the often time-consuming and frustrating hunt for certain variations of a product is eliminated. In addition, this allows store associates to focus on serving the customer instead of re-folding or re-hanging items on displays. This new technology also offers the customer a more enjoyable shopping experience by eliminating the hassle of transporting items to the fitting room and the need to exit the fitting room to find another size (an act that often leads to abandoned purchases) .
THE ROAD AHEAD
Macy’s has started testing this pilot with swimwear, but has proposed expanding this technology to more stores and categories in the future, earmarking $200 for each fitting room. Given that 67% of customers who try clothing on in fitting rooms end up making a purchase, it’s hardly surprising that Macy’s is expending time and energy in this area of the shopping experience . While Macy’s has not disclosed the financial performance of this test, the rationale behind the model is that the ease of trying items on would correlate with increasing sales. Macy’s can increase customer basket size by suggesting complementary items or items that fit with the customer’s fashion preferences through personalized suggestions to customers in its fitting rooms. Retailer Rebecca Minkoff launched similar fitting room pilots in 2015 and sold triple the amount of apparel in stores implementing the new model .
Macy’s must differentiate its shopping experience by investing in new technologies to have a “long-lasting effect on developing greater customer loyalty and distinguishing the store from its competition” . However, Macy’s should not focus exclusively on digital transformation within its store fitting rooms because the company needs to appeal to the differing shopping behaviors of all demographics. For example, men tend to buy items without trying them on in a store, so are less prone to use fitting rooms . In addition, the trend of millennials performing online research before buying should prompt Macy’s to consider the importance of website and mobile enhancements. Though the in-store fitting room experience is important, Macy’s could consider offering digital fitting rooms. Other companies have succeeded with this concept – Zeekit, a virtual fitting room tool, allows users to wrap clothing items around 2-D images of themselves . Adapting to the new digital and online shopping landscape is vital for Macy’s success, and the Manhattan Beach pilot is a step in the right direction; however, if Macy’s is going to reverse its downward spiral, it cannot ignore the opportunities to transform other areas of the customer purchase journey (e.g. marketing, store displays, and check-out).
Word count: 794 words
 Macy’s, Inc.: Retailing – Company Profile, SWOT & Financial Analysis2016, Progressive Digital Media, Basingstoke.
 Kapner, S. 2016, Amazon Struts Its Fashion Sense, Challenging Traditional Stores; The Internet retailer is making headway against traditional sellers by attracting a crowd that had rebuffed its utilitarian approaches, New York, N.Y.
 Schrank, J. 2014, “Automated Shopping”, Design:Retail, vol. 26, no. 3, pp. 96-101.
 Soper, Spencer, Rupp, Lindsey, and Brandt, Nadja, “Macy’s Tests Chutes, Tablets in Dressing Rooms to Repel Amazon,” August 18, 2015, https://www.bloomberg.com/news/articles/2015-08-18/macy-s-tests-chutes-tablets-in-dressing-rooms-to-repel-amazon, accessed November 2016.
 Holmes, E., & Smith, R. A. (2011, Apr 06). Dressing up the fitting room — stores try to beautify spaces, ‘seduce’ shoppers to buy more with better lighting, mirrors, design. Wall Street Journal Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/860169506?accountid=11311
 Medina, M. (2014, Apr 15). Minding the millennials. WWD, 207, 8. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1636640498?accountid=11311
 Dishman, Lydia, “Inside LA’s New, Futuristic, Store- Magic Mirrors Included,” Fortune, October 8, 2015, http://fortune.com/2015/10/08/rebecca-minkoff-technology/, accessed November 2016.
 Loeb, Walter, “Macy’s Makes Rapid Advancement in Technology,” Forbes, July 22, 2016, http://www.forbes.com/sites/walterloeb/2016/07/22/macys-rapid-advances-in-technology/#ac6ec1cd2967, accessed November 2016.
 Doupnik, Elizabeth, “Zeekit Releases Next Generation of Virtual Fitting Room, New Visualization Features,” Women’s Wear Daily, September 15, 2016, http://wwd.com.ezp-prod1.hul.harvard.edu/business-news/technology/zeekit-virtual-closet-app-10546500/, accessed November 2016.