Macy's 2014 Annual Report Download - page 4

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We are devoting more attention to enhancing our assortment and
sales performance by climate zone. We are getting more granular
on serving ethnic and multicultural customers. And we are focused
on flowing merchandise receipts into each door at exactly the right
moment in the shopping cycle.
There is absolutely no doubt that our customers today are
Omnichannel in how they shop and where and when they buy.
So Macy’s has to be with them at every turn.
Research has shown that about two-thirds of all shopping trips
today start online with customers researching the options at their
desktops or on smartphones or tablets. Then, the customers often
come into the store to touch, feel and try-on the merchandise they
saw. Maybe they buy in the store. Or maybe they buy the item later
while sitting at home in the evening.
We are now operating the company with a single view of our
customer, inventory and business – no matter how, when or where
the customer is shopping.
In a move to achieve a higher level of shopping convenience,
in 2014 we rolled out Buy Online Pickup in Store (BOPS) to all
Macy’s and Bloomingdale’s locations nationwide, and successfully
piloted same-day delivery to customers in eight markets during
the holiday season.
Magic Selling has been closely aligned with My Macy’s as we
helped local customers understand that the products at their Macy’s
were selected to meet their needs – whether it be by size, color,
style, fabric weight or brand.
Moving forward, Magic Selling is also a vital ingredient for
tapping the full potential of Omnichannel. We have new tools and
technology on the selling floor to engage our store customers.
Magic Selling is focusing these new customer touch points to
grow sales.
We are encouraging additional “radiated sales” as customers
come to a store to pick up BOPS orders or to return or exchange
merchandise purchased online. Mobile point-of-sale devices, kiosks
and tablets help our associates to better understand customer
needs and provide quick and effective service using technology
that our customers love.
Pursuing Profitable Sales Growth
Beginning in 2015, we see Macy’s, Inc. entering a new phase
of growth as we re-focus on increasing topline sales, and doing so
while maintaining the excellent rate of profitability achieved in 2014.
We think of our growth prospects in two parts.
First, we have plenty of opportunity ahead for organic growth
within Macy’s and Bloomingdale’s existing businesses. Toward that
end, we announced in January and in early February 2015 that
we have aligned our organization, including our senior leadership
under the direction of Macy’s, Inc. President Jeff Gennette, and
Bloomingdale’s Chairman and CEO Tony Spring, around the needs
of an omnichannel customer. As a result, we can make decisions
faster, move quicker and be more responsive to how and when our
customers choose to shop with us.
We are changing the way we buy and plan merchandise so store,
online and mobile shopping is seamless. Marketing is driving
demand across channels using traditional and digital techniques.
We are embarking upon a new and more robust approach to
rewarding loyal customers. And we are continuing to look for
opportunities to fill “white space” in our assortment with license
agreements that bring new categories back to Macy’s in partnership
with deeply experienced specialty retailers.
Our second avenue for future growth involves all-new business
ideas. This is what Peter Sachse, now Chief Innovation and Business
Development Officer, and his new team will be tackling.
For example, we are looking seriously at international expansion
for Macy’s and Bloomingdale’s. We already ship online orders into
100 countries. We have a very successful Bloomingdale’s store in
Dubai. Macy’s and Bloomingdale’s have announced new stores to
open in Abu Dhabi in 2018.
We have learned that consumers worldwide know Macy’s and
Bloomingdale’s, and they like what they see. We are continuing to
analyze various markets to determine what might be next.
We have just begun to study a Macy’s off-price business, but we
are moving fast and plan to begin a pilot in fall 2015. Note that we
currently have 13 Bloomingdale’s Outlet stores (with a 14th to
open in fall 2015), and we are excited about the growth potential
of this channel.
We now are structured to generate and pursue multiple new ideas,
all underpinned by a test-and-learn methodology that maximizes
upside opportunity while minimizing risk.
Bluemercury Acquisition
In March 2015, we completed our acquisition of Bluemercury,
Inc., widely recognized as America’s largest and fastest-growing
luxury beauty products and spa services retailer, for $210 million
in cash. Bluemercury was Macy’s, Inc.’s first acquisition in 10
years and provides us an entirely new channel for growth.
Bluemercury currently operates about 62 specialty stores in
18 states, typically in prime street-level locations and urban
lifestyle centers, as well as an online business. Macy’s, Inc.
plans to operate and significantly expand Bluemercury stand-
alone specialty stores, enhance its online capabilities and add
Bluemercury private brand products and shops to selected
Macy’s stores over time.
Bluemercury’s existing management team and organization
remain in place.
2015: An Upward Transition
Corporations sometimes use the word “transition” to mean
they need time to re-think their strategy. At Macy’s, Inc., however,
we see 2015 as a “transition” year in a different sense of the word.
Over the past decade, we have worked to mold a high-
performance culture that encourages innovation and calculated
risk-taking while reaching very high standards for profitability.
This is our foundation.
To build on this foundation in 2015 and beyond, we will be
investing to fuel faster total and comparable sales growth while
maintaining a high rate of profitability. We expect to continue to
increase sales and earnings again in 2015, even as we pilot and test
new growth ideas that have the potential to be scaled-up quickly to
serve the evolving needs and expectations of our customers.
We have assembled the best team in retail to take us forward, and
I am both excited and confident about the future. Our company is
changing – quickly, and for the better. Thanks for your support in
our upward transition.
Terry J. Lundgren
Chairman and Chief Executive Officer