New York – The plan for 2023 inventories across Macy’s Inc. banners for 2023 boils down to 3 words: Clean. Healthy. Flexible.
The company has invested in and is leaning more heavily on data science. Buying decisions are made by bringing merchants, planners, the supply chain team and finance together in one room to hash out where the business needs to be and what trade-offs have to be made to ensure stores are maximizing full-price sell-through, minimizing inventory liability and driving healthier margins.
“Meshing human judgement with machine data [findings] is really important,” CFO Adrian Mitchell said during a fireside chat this morning at the Morgan Stanley Global Consumer & Retail Conference. “We’re fundamentally changing the way we buy.”
The company is on track to exit the fiscal year with clean and healthy inventories, he added.
“We’re buying more conservatively and we’re building reserves into our buys. That reserve gives us flexibility to be able to adjust within the season. If demand picks up, we can chase. If demand slows down, we don’t buy into the reserves.”
Macy’s Marketplace – the curated, third-party digital marketplace the company launched in late September – allows the department store nameplate to add categories and sub-categories that aren’t core to Macy’s without the expense of owning additional inventory. The integrated assortment currently includes electronics, toys, certain types of home goods, pet merchandise, kids and maternity – all fulfilled by the sellers.
Thus far, Marketplace is attracting a younger customer, resulting in larger baskets and higher units per order. Equally important, 96% of marketplace shoppers are also tapping into the broader macys.com assortment. The company will launch a similar marketplace for Bloomingdale’s next year.
“It’s a margin driver for us. Within our own supply chain we have to have very productive products,” said Mitchell. “In Marketplace, you can have slow movers and it’s okay. The seller is your partner.”
In planning for spring ’23, Macy’s is keeping a close eye on consumer sentiment, he said. Consumers seem to be enthusiastic about spending for the holiday season. And although their savings are dwindling, credit access remains strong. However, the company is also monitoring the indicators for bad debt.
“Post holiday, when they look at the credit card bill…there’s going to be some real important choices,” he said. “Is the consumer going to continue the spending levels we’ve seen in the last two years, or are they going to pull back and be more conservative?”