First 50 expansion at the heart of Macy’s ‘right side of the ledger’ strategy
After experiencing success with its First 50 store strategy, Macy's CEO told ICR Conference attendees they'll be expanding it this year.
NEW YORK — As Macy’s turns the page to the 2025 version of its Bold New Chapter, Chairman and CEO Tony Spring told investors at the ICR Conference that its First 50 initiative is off to a good start and has helped reinvigorate the brand.
As a result, the company will add 75 more stores to this model that is based on “better merchandising, better visual presentation, less density on the floor” as it works “to get more on the right side of the ledger,” he said.
Accelerating its luxury growth expansion of Bloomingdale’s and new stores for its smallest brand, Bluemercury, is also part of its good side of the ledger strategy, Spring said. “I think this is a math equation and a customer experience equation. How do we make sure we are constantly challenging ourselves to deliver a better experience for the customer?
“I think it is a simple litmus test. I don’t think we’re there in every solitary measure. I’m really proud on the progress the team is making … but there’s a lot more to do.”
Spring said while some departments, such as beauty, have performed well, the focus under the expanded First 50 model is to “make sure we have a more congruent experience, category by category.” This is aided by having more associates available or monitoring the density of merchandise on the floor.
“It’s also the story telling,” he said. “If we’re just simply an item at a price, we’re going to drive people to the marketplace, and people will go the lowest common denominator.”
Spring said he’s heard the talk about department stores being irrelevant, but his approach is to challenge his team to look at the format as a means to sell any category they want, and if the business ebbs and flows, they can go after opportunities as they occur.
“I think we’re really trying to turn the page on how we operate the business,” which includes adding new brands, introducing new ideas each season and acknowledge that in an online world people can compare price all the time. “Our value has to be clear, it has to be simple, it has to be present,” he said.
“How do we make sure that every merchandise area plays in our business strategy? We can’t just have a couple areas that are doing well and others that are resting on their laurels,” said Spring.
Adrian Mitchell, COO and CFO at Macy’s, said the investment in the First 50 stores has begun to pay off as they changed the assortment and experience. Not only have consumers responded by spending more, he said, but they’ve also seen higher net promoted scores and mall-based stores comp positive for the fiscal year.
On the macro side, Spring said the upper end consumer is quite healthy, but the lower and middle-tier customer is still concerned about day-to-day costs.
“We still have more opportunity to control our destiny. Even if the macroeconomic environment isn’t going to be rosy for Bloomingdale’s or Macy’s or Blue Mercury, it doesn’t mean we can’t do more business,” he said, adding they need to lean in on the brands they work with and develop joint business plans to improve categories. “In my mind, there are always opportunities that we missed without looking at other things to call an excuse.”
Calling 2024 a “transition and investment year,” Spring said, “We go into ’25 much more prepared to be able to return the overall enterprise to growth,” citing Bloomingdale’s and Bluemercury as being in good positions already and Macy’s better prepared to grow again.
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