This Technology Age and the fundamental transformation it’s driving across all industries requires its leaders to have a marathon mentality — strategic, but with sprint-speed action, tactically. It’s a marathon because the transformative dynamics are enormously complex and will require years to shape a new retail paradigm. But, for all of the moving parts that must fall into place in the building of the new model, it will also require rapid decision-making on a tactical level to avoid falling behind.
Macy’s CEO, Terry Lundgren, has been sprinting for the last 13 years of his reign driving Macy’s to stay ahead of the technology curve. At the same time, he’s kept a marathoner’s focus on the future consumer. Lungren will be passing the baton to his successor, Macy’s president, Jeff Gennette, in the first quarter of 2017 and then become executive chairman.
And based on the marketplace, Gennette will have to hit the ground sprinting. Macro headwinds abound for the retail sector, in general, and even more so for department stores. There is no end in sight for sluggish sales at best, or declining at worst. Consumers’ hunger for stuff is giving way to experiences. Store traffic continues to drop, while also shifting to online. Stores are more challenged than ever to find ways to lure consumers. Outlet stores and off-price models are accelerating as another form of discounting, which also threatens brand integrity. The importance of brands in the purchase decision is losing to individual and exclusive selectivity by more knowledgeable consumers. Finally, all retailers are in the painful and very complex process of integrating their online and brick-and-mortar models. And these are just a few of the major headwinds.
Macy’s is not exempt from any of these. And Jeff Gennette knows it.
However, having had a few conversations with Mr. Gennette, I do believe he has already been sprinting for the past 33 years in various positions within Macy’s, particularly during his tenure working alongside Lundgren. Since they have been close partners in this race, it’s no surprise he was chosen to succeed Lundgren.
Both Lundgren and Gennette (and their teams) have been, and are, laser-focused on the long-term strategic changes that must be made continually to maintain the Macy’s relevance to the changing techno-charged consumer landscape. I believe that Gennette has the potential to pick up the pace. Lundgren has made a great move at the right time.
By the way, Lundgren’s 13 years of sprinting has left Gennette with a slew of strategic initiatives begun under his reign. Gennette can continue to strengthen and perhaps even add impetus to these strategies. Read more on these initiatives in \”Amazing Macy’s\” from a past issue of The Robin Report – click here >>.
From MOM to Oh Mama!
As I’ve said before, way too many times, retailing is no longer just about product, product, product. Consumers expect great new products all the time, everywhere. Now they are demanding great shopping experiences, entertainment, restaurants, and so forth. And they expect all of it, both online and off, in the stores.
Great new products are just the price of entry. And to that point, Gennette is considered one of the best merchants in the industry. So check off that box.
But there’s another box right next to “great new products” and it would be “great new products, just for me.” You can off check that box for Mr. Gennette as well.
In one of our conversations, I asked Jeff what was on top of his priority list. Without hesitation, he answered, “data analytics.” This was echoed in an interview he had with WWD, indicating Macy’s will get deeper into customer data “to really touch our customer in more significant ways” and drive “personalization” strategies, both online and in stores.” He amplified the thought “…elevating the level of curation and specialness and bolstering its pursuit of exclusive vendor offerings, leased concepts and new brands.”
This is a big deal and Jeff Gennette gets it. As he hits the ground sprinting, this is one strategy that could propel him ahead of the pack. With the exception of Amazon’s use of data to drive personalization, which on a scale of one to ten they would rank around an eight, the rest of the retail sector ranks between one and three. Look for more on personalization in our upcoming July edition of The Robin Report.
Furthermore, a data-driven personalization strategy can be an accelerant to Lundgren’s three-pronged “MOM” strategy, initiated several years ago. The acronym stands for: “My Macy’s” localization strategy, curating products according to local consumer preferences; “Omnichannel” initiatives; and “Magic” selling, significantly improving the skills of sales associates.
With Gennette’s focus on analytics, all three of those strategies can be super-charged on steroids. Indeed, MOM can become Oh Mama!
Consumer, Consumer, Consumer
If there is one thing both Terry Lundgren and Jeff Gennette have deeply in common, it is their laser-focus on consumers and relentless pursuit to understand how their preferences are evolving. They also have a vision of what the Macy’s brand and its business model will have to look like to win each and every customer at the end of the marathon.
Gennette will continue to pursue this mutual vision strengthened by his grasp of the digital world, technology and analytics combined with his breadth of experience as a merchant, running stores and Macy’s.com. I believe Genette will add his imprint to the MOM initiatives and more importantly, he will add brilliant new strategies to the Macy’s marathon game plan.
Terry Lundgren was a great leader guiding Macy’s as it entered the “Technology Age.” As the baton gets passed, Jeff Gennette will have his opportunity to take Macy’s to a new level.
My bet is that Jeff Gennette will do so, sooner than later.