REINVENTING RETAIL

MACY'S

/CASE STUDIES

REDESIGNING MACY’S STRATEGIC VISION

What started as an opportunity to redesign Macy’s dot-com (online) strategy, developed into a complete digital transformation of the strategic vision and retail experience. The resulting design was patented by Amazon one year later.

OVERVIEW

Key Points

This case study is about the reinvention of Macy’s retail experience model in 2015.

  • Working as a Chief of Staff to the VP of Customer Experience, we conceived of and seeded the digital transformation of Macy’s corporate strategy into the wider organization.

Talk at DEFCON 25 with Cameron Craig where we spoke about how to change corporate culture using Macy’s as a case study. (Talk on Youtube)

I gave a talk with my main collaborator at DEFCON 25 (the largest hacker conference in the world), in the Social Engineering Village.

  • We outlined the whole process from conceiving the vision, to seeding it back into the wider org, and finally changing the corporate culture.

  • Amazon patented our design one year after we presented it to the  C-Suite.

Amazon patent US 9,623,578 for on-demand clothing manufacturing (patent link).
Image of sketchbook and patches.
When the CEO messaged out work on the earnings call, the stock rose $10/share equating to a $3B in market cap increase.
  • The CEO mentioned part of our vision on the 2016 earnings call, and the stock jumped $10 or $3B in market cap.

  • Even though Macy’s didn’t implement our plan in full, what we proposed has been leveraged by countless other retailers.

Challenge

Retail culture is ancient, potentially up to 10,000 years old. To say this industry doesn't want to change or adapt to new technology is an understatement.

  • Like any big monolith, Macy’s had a handful of company-wide dilemmas that no one wanted to address, for fear of punishment (see below).

  • The challenge was communicating that our brand was graded on how the whole aggregate experience worked, not separately for digital and in store.

Image of three resonant waves.
A broken mannequin lying on the floor waiting to be cleaned up.
  • If something was busted anywhere, the brand was broken everywhere - and the reviews online and in the app store reflected that.

  • This required a complete mindset change in order to fundamentally address the root level causes.

In order to rebuild the omnichannel for Macy’s, a few key hurdles existed:

  • First, in-store and dot-com were siloed, so there was no UX role responsible for the in store experience.

  • Second, the merchandisers and marketers were afraid of data and AI taking their jobs, so they controlled it instead of learning how it could enhance what they did.

  • To complicate matters even more, the C-Level Management team was in transition - which meant middle management was even more wary to make any changes for fear of punishment.

  • Last, even though I knew how to read financial statements - I was acting as a management consultant without a formal MBA, so I had to move laterally in order to traverse the management chain.

Hypothesis

I follow geopolitics and macroeconomic cycles pretty closely, so I knew 2020 was going to be a massive inflection point.

  • This was where the exponential age would accelerate, meaning that the rate of change (due to technological advancement) would begin to snowball, and people would have trouble keeping up.

Image of three resonant waves.
Graph illustrating the exponential growth of technology (Source: Ray Kurzweil via Extremetech.com)

My hypothesis was that supply chains were about to break down, and time was of the essence in order to get ahead of the tsunami.

  • This was in 2015, five full years before supply chains became totally unhinged in 2020.

  • Five years would have provided more than enough time to implement systemic changes within the organization and revamp our supply chain.

  • With a global demographic bust on the horizon, labor arbitrage doesn’t work anymore to keep your COGS down - also fast fashion is terrible for the environment.

Image of sketchbook and patches.
Container rates ship Evergiven running a ground in the Suez Canal (Source: Planet Labs via AP).

Debt was also relatively cheap - meaning money was free to borrow at near zero percent interest rates, that could be backed by a quality real estate asset portfolio.

  • This would provide adequate capital to redesign a disintegrated multichannel experience.

  • A true single view of the customer would generate new revenue models that had not previously existed, thus providing a way to pay back the capital that was borrowed against corporate real estate.

This therefore was a phenomenal opportunity to reboot the brand, and rebuild our foundations.

  • One that was adaptable enough to provide sustainable competitive advantage in dynamic environments (impending exponential waves of change).

Role

Although I operated as a management consultant with a focus on change management, I started as UX Architect, and grew into an unofficial Chief of Staff to the VP of Customer Experience.

  • I started by redesigning the dot-com vision, and because I was looking at all touchpoints and facets of the business, that opportunity grew into the complete redesign of corporate vision.

  • I presented to the CEO, various C-suite members, and high level management teams on several occasions.

  • The presentations I designed even got repurposed from management teams through the entire organizational chain, as they pulled slides from my deck, and used them in their own presentations (see examples).

Image of sketchbook and patches.
Slide from one of my decks illustrating how all our resources could be leveraged as flexible nodes to yield network effects.
Image of sketchbook and patches.
Slide 9 from Macy’s Q4 / FY2019 Earnings Report (February 25, 2020 | Deck)
  • Echoes of my slide designs are even seen in some of Macy’s latest 10K’s.

Outcome

Even though what I designed wasn’t implemented in its entirety, there were many significant wins for the company.

  • As noted earlier, Amazon patented what I co-designed, one year after we pitched it.

  • COVID 19 proved most of my hypothesis correct. Had we moved more quickly, we could not only have been inoculated from the event, but thrived through that wave of change (see Post Covid Prophecies Section).

  • Advocated against considerable inertia to get a CTO hired in retail (we were a retail company, not a tech company).

  • This paved the way to replace the COO and CTO roles with a CIO position instead.

Jeff Genette (Macy’s CEO) explaining how Macy’s is miles ahead of where they used to be with data, analytics, and personalization engines (CNBC via YouTube).
  • Macy’s today is finally catching up with its data, analytics, and personalization engines.