Omni-Channel at Macy’s: It’s About Inventory Too
Much thoughtful discussion about omni-channel retailing rightly addresses modes of interaction — how modern shoppers blend online, in-store, mobile, catalog and call center solutions.
While many retailers focus on making each of these touch points as convenient and consistent as possible, there are also crucial operational considerations in play.
Omni-channel is very much about "inventory optimization through technology," said Terry Lundgren, chairman, president and CEO of Macy’s Inc., in a talk delivered last week in Tucson. Inventory visibility across all stores and channels is the key enabler, he added.
Mr. Lundgren made his remarks at the Global Retailing Conference, an extraordinary annual gathering of more than 300 retailing executives and academics produced by the Terry J. Lundgren Center for Retailing, a unit of the University of Arizona.
He set the tone for the event with a frank discussion about omni-channel challenges at Macy’s.
"I have dreamed about improving our inventory turnover for 10 years," he said, "but we have not been successful yet." A critical element now nearly at hand is the ability to know where every unit of merchandise is located across the chain’s 840 stores and distribution centers.
"By the end of this year, 500 stores will be ready to pick online orders, and 90 percent of our inventory will be visible to our associates on hand held devices," Mr. Lundgren said.
This advance in inventory visibility promises multiple benefits for shoppers as well as for Macy’s:
- It allows store associates to rapidly check system-wide availability, locate an item and make it available for delivery or next day pickup by the shopper.
- It can reduce markdown costs and inventory write-offs by enabling some mis-located items to be sold, either online or in alternate stores.
- It can enable store inventory items to be available to fulfill online orders on Macys.com, even when fulfillment center inventories are depleted.
Mr. Lundgren explained that new inventory data systems are revealing that the best source of an ordered item may not always be from the nearest store. An item that is selling slowly in a remote location may be a markdown candidate, while the same item in a store across town may be in high demand.
"Avoiding a markdown is almost always a better choice. It’s well worth the shipping cost," he said.
Even if an item is sold out in the warehouse, there may be idle items scattered in store inventories across the country that are available for sale. This permits the online store to keep the items visible on the web site, and fosters greater sell-through.
He related a recent example of orphaned Fiesta ware dishes. Macy’s had 1,600 place settings remaining in many stores in ones and twos, but they commonly sell in sets of eight or 12. The goods were effectively unsalable where they were located, but the online inventory and store-level picking permitted online sales to continue until they were sold through at full markup.
"Those sales were all profit," Mr. Lundgren said with evident satisfaction.
- Global Retailing Conference
- Will Stores Become Warehouses in the Omnichannel Future? – RetailWire
- Global Retail Conference Local News Coverage: Retailers’ social-media tips: Stress local, heed feedback – Arizona Daily Star
Are omni-channel retailers turning the corner when it comes to inventory visibility? What benefit of enhanced inventory visibility (e.g., reducing the number of markdowns) is most important?