Macy’s invested $99 million in the quarter and is profiting from more efficient use of capital as a digitally-led, omnichannel retailer.
“This efficiency is allowing us to continue to keep capital spending below pre-COVID levels for the foreseeable future, with our priorities being investments in the digital channel, in data and analytics technology infrastructure, and in stores to leverage them for an efficient supply chain experience,” CFO Adrian Mitchell said on the company earnings call.
“Our investments are really heavily focused on digital, supply chain, technology initiatives, including a lot of predictive analytics across our operation from inventory allocation to demand forecasting to promotional optimization and personalization,” he also noted in the call.
Macy’s reported a profit of $103 million in Q1 2021, compared with a loss of $3.6 billion in the year-ago period. Comparable sales rose 62.5% from the year-ago period. Digital sales grew 34% over Q1 2020 and 32% over Q1 2019. Digital sales were $1.7 billion accounting for 37% of total sales, up from 24% in 2019.
“Critical to our Polaris strategy is how we enable our transformation by accelerating the pace of change through a modernized technology platform and revamped data and analytics capabilities in our performance-driven operating model,” said CEO Jeff Gennette. “While data informs everything we do, we’re putting particular emphasis on advancing our data led initiatives in such areas as merchandizing, pricing, allocation and personalization as we see these as areas of competitive differentiation.”
Here we look at how Macy’s is using data and analytics to positively impact its business.
Macy’s is working very closely with key vendors and is being “much more fluid about data sharing than ever,” and ensuring that, when looking at respective assets put against the shared customer, it asks, “how best are we spending it together to make sure that we’re reaching the right customers, with the right products — and that we have joint profitability, visibility to that,” said Gennette.
The Macy’s Media Network is one example of this. “I think that’s just a case point of how we’re working with our vendors, and really using just the power of our website to expand their brands to new customers in mutually beneficial ways,” he said.
Macy’s has been leveraging predictive analytics, whether it be inventory allocation with demand forecasting, promotional efforts or personalization efforts, said Mitchell. He noted the retailer is seeing really early signs of dressier power categories beginning to return, whether it be back to school or back to work.