A trial run of consumer electronics on Macy’s Internet selling site last June has left the world’s biggest department store hankering for more.
According to Kent Anderson, president of Macys.com, the company is “broadening [its] selection” of CE products after successfully launching the category with a Father’s Day promotion earlier this year.
“Consumer electronics is a very appealing category for us on the Internet for all of the same reasons that department stores decided that there are more profitable areas to pursue,” he said. Macy’s interest in a category it abdicated three years ago was re-kindled when its parent company Federated Department Stores took a 40% stake in Roxy.com via its Fingerhut subsidiary. Roxy, a three-year-old electronics e-tailer based in Hopkinton, Mass., has been providing the product sourcing, sales, customer service and Web pages for Macys.com’s CE efforts, although the latter connection is about to be cut.
“We’ve been evaluating whether the click-over model is appropriate, and frankly it’s not,” Anderson said. “So we’re incorporating Roxy’s products into our site, and we’re broadening our selection as they do.” Indeed, Roxy, which began life as a home satellite specialist, is busy beefing up its assortment of audio, video and wireless products.
Anderson’s comments followed a presentation at a Forrester Research e-commerce symposium held last month in New York. During an overview of Macy’s selling site, he noted that the three-year-old, San Francisco-based subsidiary is clearly a work in progress. “Macy’s brick & mortar business has 150 years of retail know-how behind it and understands productivity by square foot and margin by vendor,” he said. “The challenge is getting to that level of understanding online.”
“What is the right assortment? Should we carry everything that’s available in the catalog? How do you structure compensation?” he continued. “The Internet muddies those waters, but we’re learning, refining the mix, and we’ll be sorting it out over the next two or three years.”
So far, one of the “most contentious issues” he’s had to face is pricing. In an about-face from department stores’ traditional high-low approach, Macys.com has assumed a more Internet-appropriate day-in, day-out value policy.
Although Anderson acknowledged that “we’re not an Amazon and don’t intend to devalue the Macy’s brand,” the issue, along with cannibalization, was a source of “cultural conflict” between the e-tailer and his brick & mortar bosses.
Conversely, the blinding speed and efficiency required for the Internet model is also “raising the bar of the entire Macy’s organization,” he said, “and driving systems people crazy in the process.”