Macy's reportedly steps up self-service shoe approach

Dive Brief:

Macy’s is expanding an “open sell” approach for its shoe departments from smaller stores to medium-sized ones, Fortune reports.
Rather than having store employees measure customers’ feet and fetch shoe styles and sizes, shoes in the approach are displayed on racks similar to those found in the self-service style favored by off-price retailers like T.J. Maxx and Nordstrom Rack.
The move is an effort to streamline store operations and cut costs, according to the report.

Dive Insight:

Macy’s is already known for having a steady stream of promotions that help it compete with off-price retailers, something that has hit its margins and wreaked havoc on its brand. Off-price stores like T.J. Maxx and Nordstrom Rack, with discounted prices and a treasure hunt atmosphere, have steadily taken market share from the department store in recent years.

Moving to a self-service approach — something that Fortune says could also be a blueprint for its beauty counters and other departments — cuts into the notion of department stores as full-service retailers.

It’s a tack notably eschewed by Nordstrom, which prizes its reputation for excellent customer service. “Good service is not talked about much these days — I believe service is important — and that gives Nordstrom a big advantage,” Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates Inc., told Retail Dive.

Macy’s turn toward self-service comes at a time when its performance is continuing to be dragged down by faltering Midwestern department store locations it acquired in the early years of the 21st Century. Last month the company reported Q4 sales of $8.515 billion, down 4% from the year-ago period. On an owned basis, Q4 same-store sales fell 2.7%, while Q4 same-store sales on an owned plus licensed basis fell 2.1%. For the fiscal 2016 year, sales were $25.77 billion, down 4.8% from the same period last year. On an owned basis, fiscal 2016 same-store sales were down 3.5% and on an owned plus licensed basis they fell 2.9%.

Macy's closed 66 stores in fiscal 2016, and said it’s on track to close another 34 stores in coming years. All told, its real estate activity generated some $675 million in cash. In the last year, Macy's also opened 27 stores, notably including 24 of the company’s freestanding Bluemercury beauty retail stores.

The department store retailer's decline does not seem to be a temporary blip. Macy's expects sales to continue to decline in fiscal 2017, saying that same-store sales for this fiscal year on an owned basis will likely fall 2.2% to 3.3%, with same-store sales on an owned plus licensed basis to slide 2.0% to 3.0%. Total sales will likely fall 3.2 % to 4.3% overall, reflecting last year’s store closures.