Macy's chief addresses power of e-commerce


It took a while for the idea of online shopping to click with Macy's Chief Executive Officer Terry Lundgren, he said Tuesday at a retail conference in Las Vegas.

Lundgren knew from his quarter-century in the retail industry that customers like to touch and handle a product before they buy it. Especially with apparel and shoes -- they want to try them on for size, see how they look and feel.

In his keynote address at Shop.org, a division of the National Retail Federation, Lundgren spoke about the power and effectiveness of "multichannel integration," or coordinating the offering of stores and online shopping sites.

"I, for one, made zero money before 2000 on the Internet," Lundgren told about 2,000 people in attendance at Mandalay Bay Convention Center. "I truly did not get it. There wasn't a business model out there that made sense to me, but there was so much interest, it got my attention."

Macys.com generated $30,000 in sales the first year it was launched in 1996. Online sales now bring in about $1 billion in annual revenue for Macy's, Lundgren said. Through August, online sales increased 13 percent from a year ago.

Every dollar spent online influences $5.77 spent in the store over the next 10 days, he said.

"The power of e-commerce extends far beyond the keyboard and onto the sales floor," the former chief executive officer of Nieman Marcus and Federated Merchandising Group said. In the last three years, Macy's has invested more than $300 million in online infrastructure, he said.

The department store's Web site encourages customers to share information in product reviews.

"We were worried about what customers would say on product reviews. We realized that if you start getting bad reviews on a product, get rid of that product. Stop doing business with that particular product," Lundgren said.

The Web site directs customers to one of Macy's 810 stores that may carry a certain item. If a particular size or color is not available at a local store, the sales staff can search online and have the item shipped directly to the customer's home.

It's all part of Macy's "360-degree view" of the customer, Lundgren said. He never worried about someone shopping online and not going into a store. What he did worry about was people shopping online with another company.

"It's clear to me the customer has evolved and changed the way they shop and we have to change with them. There's no going back," he said.

Lundgren said the collapse of Lehman Bros. investment firm a year ago had a "ripple effect" across America and around the world, fundamentally changing the way people think about their jobs and spending.

Whether they'll return to their historical shopping patterns remains to be seen, he said.

"People like the handbag they carried in the past or the clothes they wore. You can predict all you want and nobody knows what's going to happen," Lundgren said. "We're going to look back at this time and people will say in 2021, 'Boy, this was a tough year,' and you'll say, 'I remember back in 2009, that was a tough year and we lived through it.'"

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

 

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