Amid the rise of online shopping and the waning popularity of sprawling suburban malls, a traditional department store may seem an unlikely forerunner for retail invention.
And yet, Macy’s, the 156-year-old mega chain, is launching a fleet of new technology-based initiatives, such as location-based digital coupons, in one of the largest efforts yet by a retailer to use innovations that have been much-hyped as the future of industry.
Over the next several weeks, Macy’s will add 4,000 iBeacon devices to its 786 stores across the country. These gadgets use a low-energy Bluetooth signal to send special offers to nearby smartphones that are equipped with the Shopkick app, a popular deals platform that Macy’s has partnered with to deliver its coupons.
“The customer who gets more engaged in more of the channels that Macy’s has to offer gives us more wallet share,” Kent Anderson, president of Macys.com, said in an interview.
While iBeacon technology has been trumpeted as an innovation on the cusp of transforming brick-and-mortar shopping, few retailers have fully embraced it. Companies such as Lord & Taylor, American Eagle and Duane Reade have tested it in a limited number of shops, but Macy’s appears to be the largest retailer to be integrating the technology into all its stores.
Macy’s made this investment as part of a broader strategy to attract more millennial-generation shoppers, who have become crucial to boosting the retailer’s business as spending at department stores has dipped well below its 2001 peak.
The initial rollout of the beacon technology will be fairly straightforward: App users will receive storewide coupons on their phones when they enter the store. But Macy’s ambitions for the technology are much bigger than that.
“You’re in the housewares department standing next to our display of KitchenAid mixers,” Anderson explained. “The ability to transmit to you information — a video about the quality of this product, the accessories that we have as part of our assortment that you may not see there — rich content that may, and should, help us close the sale, is where we potentially see the beacon technology going in our stores.” Macy’s expects to add this more personalized content next spring.
The department store says it will be learning as it goes in determining the ideal cadence for delivering offers and other information to customers’ phones. Anderson says he expects that process will be similar to the early days of e-mail promotions. “There is the opportunity to overload them,” he said, “and I think that the balance has to be found.”
The company has also been thinking carefully about the privacy concerns that could arise with a marketing tactic that relies on users offering up their data. Anderson said he believes that customers who are willing to turn over location information will also expect something of a quid pro quo: The app has to deliver valuable enough content that they’ll find it worthwhile to share personal data.
Along with the location-based coupons, Macy’s has also announced an Image Search app, which allows customers to snap a photo with their phone of an outfit or clothing item and then be pointed to similar items on sale at Macy’s. The app was built in Macy’s San Francisco-based Ideas Lab in collaboration with engineers from Cortexica, an image-recognition technology start-up.
The Image Search app is still something of a work in progress. This reporter had a mix of hits and misses in using it: It was successful, for example, in giving me a slew of suggestions for blue, knee-length dresses after I uploaded a photo of myself in a blue, cap-sleeve sheath dress. However, it was less successful in trying to find items similar to my tan, leather ankle boots. Among the items it recommended were a pair of gray, fur-trimmed snow boots and black motorcycle boots.
There are other experiments in the works, too: The company has added “smart” dressing rooms — where the customer can use a wall-mounted tablet to view other colors and sizes or see customer reviews of an item — in five its stores. And, like several of its competitors, Macy’s is testing same-day delivery in eight large metropolitan areas, including Washington.
“Macy’s has really been, at least among the department stores, close to the forefront in embracing e-commerce,” said Stacie Rabinowitz, a retail analyst with Consumer Edge Research.
Anderson said that the upcoming holiday shopping season will provide crucial insights into whether any of the efforts is gaining traction with customers and helping the retailer’s bottom line. “The holiday is the acid test,” Anderson said.
Macy’s challenges this holiday season will be the same ones faced by its rivals: In a heavily promotional environment, many retailers expect to offer deep discounts on merchandise, which will likely hurt their profit margins. And even as the economy has shown signs of improvement, consumers continue to spend only cautiously.