Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
Brown shopping bags and brand boutiques. Home decor and hip window displays. Those may be the word associations that occur to consumers when they think of Macy’s and Bloomingdale’s. But what about their respective web sites?
Brown shopping bags and brand boutiques. Home decor and hip window displays. Those may be the word associations that occur to consumers when they think of Macy’s and Bloomingdale’s. But what about their respective web sites? If Federated Direct, the direct-to-consumer division of Federated Department Stores Inc., has its way, online consumers will think exactly the same things.
In the past 12 months, New York-based Federated Direct has rethought, revamped, redesigned and relaunched its two flagship web sites to reflect the most powerful aspects of its brands. “We spent a little over a year focusing on integration, customer service, marketing and technology,” says Dawn Robertson, president of Federated Direct. “Federated did this to put a stake in the ground about what we believe the direct-to-consumer business should be online.”
Federated was one of the first online retailers with Macys.com. It set the pace with an operation that was separate and, based in San Francisco, a whole continent away from the parent. It had a separate marketing plan and a separate buying plan, separate management and separate goals. But it always recognized the power of the brand name, reporting, in fact, that it was receiving orders from consumers who lived hundreds of miles from a Macy’s store at the same time it was noticing customers in stores with print-outs of web pages.
Now with its re-launches, Federated has demonstrated that it is prepared to stay in the vanguard of online retailers. It gets high marks for its revamped sites-not just because they feature new technology and a slick look, but also because Federated took into account what its customers wanted. “Federated has shown an excellent understanding of what their customers expect from them,” says consultant Duif Calvin, vice president in the global retail practice at iXL Enterprises. “At the same time, they’ve done a good job translating that into something that is appropriate for the different channels.”
Federated has added new search functions, wish lists, designer boutiques, fashion content and even virtual closets to its revamped web sites. These new features will bring in shoppers in droves, Federated believes. That has happened, so far, at least. Transactions and traffic in August at the Macy’s site grew significantly, says Kent Anderson, president of Macy’s Direct. Conversion rates in August were 150% over last year, while orders have increased over 200%.
Calvin is not surprised by the growing usage. “The new sites have a number of merchandise improvements,” she says. “In that sense, they should see some clear increases in conversion rates.”
Anderson is pleased with the growth because it confirms that Macy’s is achieving what it set out to achieve: meeting customers’ expectations as to what a Macy’s web site should be while advancing Federated’s multichannel strategy and providing shopping experiences that are unique to the web. “Our customers expected the web site to be a clear representation of Macy’s in the real world, but they also were willing to try new online features that emulate real world shopping, such as comparison shopping, search capabilities and personalization,” Anderson says.
Among the first moves for Federated was to combine Macy’s and Bloomingdale’s catalog operations with their respective web site businesses. For Macys.com, that endeavor consolidated merchandising and planning in New York, with buyers buying for both the catalog and macys.com. At the same time, finance, web management, human resources and technical operations functions for both online and direct mail operations were consolidated at Macys.com headquarters in San Francisco. The new business line operates under Macy’s Direct. Bloomingdale’s consolidated its direct mail and online business in April. The new Bloomingdale’s Direct organization under Federated Direct management also streamlined merchandising, fulfillment and other areas similar to the Macy’s Direct integration.
The consolidation allows Federated to make sure it is sending a single message to customers. “We want to speak with one voice to the customer,” Robertson says. “We have developed a powerful mission of who we want to be and we’re lucky we have the brand recognition that we have.” She says shoppers expect Macy’s to have the best gift selections as well as home fashions and they expect Bloomingdale’s to have the latest fashions and trend commentary.
When developing Federated’s multichannel direction, the company relied on its own brand names as well as those of the top designers they feature. “We want the branding and creative experience to be truly a combination of all the channels,” says Robertson. “We put together what we thought the new site should be strategically from a technology point of view and then we spent time on how to fulfill that vision and on what the service ramifications are. We have exclusive collections of some of the greatest brands online. And one reason the vendors keep coming to our dot-com companies is that we can extend their brand as well as our own. Our brands sell a lot of trust.”
One area that Federated improved upon for both the Macys’ and Bloomingdale’s sites is the search functions. Federated officials explain that the revamped search engine reflects consumers’ surgical approach to online shopping. “Customers are using search engines to an incredible degree,” says Robertson. “Customers are comfortable with the key word search. We’ve been working hard on giving them good, solid search results. Once you punch an item in, the results come quickly.” Both Macy’s and Bloomingdales’ sites allow customers to view content by category as well on the entire site.
Macys.com was the first of the two Federated sites to announce a relaunch. The company began last year to build its web infrastructure. “We spent time talking to our customers and we represented them in the design,” Anderson says. In July, Federated relaunched Macy’s.com with some new features which accented the Macy’s brand and enhanced the multichannel shopping experience. The company worked with Mercado Software Inc. to improve its search engine capabilities including comparison shopping. It also added several designer boutiques, a wish list, and a new technology called My Macy’s Closet that allows customers to mix and match apparel and store their selections for later purchase.