Retail Revolution   /   April 11, 2019

How Macy’s is making its stores more experiential

The opening of Story boutiques in 36 Macy’s stores is meant to usher in a new in-store experience for the department store, driven by product curation and discovery. For Macy’s internal teams, Story is a learning tool as the company works to move faster.

Macy’s acquired concept store Story last spring as part of its efforts to rethink its store experience. At Story’s 2,000 square-foot Chelsea store, it revamped itself every few months to reflect a new theme and carry products from small and up-and-coming brands that fit that theme. Now, Macy’s has incorporated Story’s format into its own stores. The first Story theme at Macy’s is “color” and includes brands like Crayola, Mac and Levi’s Kids, which are also sponsors, meaning they paid to participate. Smaller brands don’t pay to be sold in the Story program, but there is a commission for sales. Macy’s will change the theme on a regular basis, meaning there will be a down period while they swap out the installations.

Rachel Shechtman, Story’s founder and CEO, became Macy’s first brand experience officer following the acquisition; Shechtman then built a brand experience team around her. Story at Macy’s has a 15-person staff that is separate from Macy’s departments. Shechtman said that nothing about the product curation has changed, it’s just “Story on steroids,” but that keeping the teams separate was necessary to move at the speed she wanted to move.

“What I realized is, [we could] use this as a learning opportunity for the company overall,” said Shectman. “I built a fully integrated team, and that team works across all of Macy’s to create and collaborate on new processes.”

The idea is that Macy’s can then learn lessons from its new scrappier, in-house startup. In keeping the teams separate, Macy’s let Story stay agile within a larger machine while still rolling out the Story retail format at scale, something Shechtman said was otherwise going to be a struggle if Story had tried to do it alone. At the same time, Macy’s merchandising and store teams are positioned to look to Story at Macy’s to enact new projects at a faster pace, and any Macy’s employee, in-store or at corporate, can apply to work on Story-related programs or participate in related training sessions.

“Changes at Macy’s need to be implemented faster and better,” said Macy’s chief digital officer Jill Ramsey. “Our goal right now is to look at new areas of the business like Story to improve and overhaul the metabolism of the company.”

For Macy’s, Story is among the first in-store representations of the company’s ongoing evolution. CEO Jeff Gannette joined two years ago and laid out a “North Star” overhaul strategy that would tackle improving mobile, e-commerce and in-store experiences. To revamp inventory and experience, Macy’s, along with the Story acquisition, has also invested in b8ta, a retail tech platform that’s powered Market @ Macy’s, a pop-in strategy to bring new brands into Macy’s stores, which Shechtman also now leads.

It’s an inventory play that’s become table stakes for department stores that are facing falling foot traffic. Nordstrom, Bloomingdale’s and Barneys have all partnered with online brands and used stores-within-stores to incorporate new inventory. Macy’s, which has taken a year to implement the Story acquisition into its stores, has seen sales stall, and in 2018 saw sales climb by 2%; in the fourth quarter over the holidays, they were up 0.7%.

“All department stores are competing on today inventory and curation. A company like Macy’s is now dealing with the fact that people no longer need to shop there. They have to want to,” said Michelle Grant, head of retailing at Euromonitor. “This is Macy’s stab at that.”

Macy’s hasn’t said how many stores Story will eventually be in, but the company will be closely watching its performance to see what else it can learn from the way the Story at Macy’s team functions, across areas like product curation, merchandising and agility. At the same time, Story is given room to operate within Macy’s, according to Shechtman.

“Me and my team went department to department to understand the Macy’s system,” said Shechtman. “We developed processes that could plug into Macy’s. It accommodates our needs while using their tools.”

Danny Parisi contributed reporting to this story.

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