Future-Forward Retail: How Macy's is Reinventing the Customer Experience


Allene Yue

Macy’s recently announced that they plan to lay off over 2000 employees AND shut down several stores entirely. But why?

The answer is simple. Traditional marketing, sales, and growth strategies were simply no longer cutting it, so they had to cut down on costs to fund new projects that would completely change their business strategy for the better.

Moving in the Wrong Direction

Macy’s 3rd quarter results in 2023 showed a decline of 7% for both digital AND brick-and-mortar sales. And of their total sales in 2023, over 2/3rd’s were attributed to Macy’s Star Rewards program members. When comparing these sales rates to the fashion industry’s CAGR of 7.53%, there was clearly something wrong.

These metrics hint that Macy’s must do 2 things in particular:

  1. Quickly adapt to new trends in the fashion industry
  2. Hone in on retention and customer loyalty

Fashion’s Tech Boom

Personalization has become huge in the fashion industry. This is a big issue for large department stores, which specialize in offering broad selections of products to consumers. Companies like Macy’s pride themselves on being able to offer a fun in-store shopping experience that allows customers to make their own decisions. But now, this is no longer as relevant.

THE YES was one of the first new companies that added an AI and machine learning twist to the shopping experience — and it was a hit among consumers. Rather than having customers do the shopping themselves, they brought the recommendations directly to the customer using new technology. And while this was a huge evolution in the fashion industry, it would mean that companies like Macy’s had to rethink their business strategies going forward.

New Year, New Strategy

According to Fox-Glassman, Macy’s SVP of Customer Journey, Macy’s has begun to set forth a new personalization strategy that consists of:

  1. Driving first-to-second purchases

Macy’s has promised to improve their upselling strategy and post-purchase experience for customers in 2024. By more accurately personalizing which complementary products to recommend, this would help significantly increase AOV and improve Macy’s retention rate. With over 30 million loyalty members, Macy’s knows that building up customer retention and loyalty is essential to their success.

  1. Creating personalized experiences

Macy’s is also planning to build stronger customer loyalty and higher CLV by creating more tailored customer experiences. Throughout 2023, Macy’s experimented with new multi-touchpoint journeys and automation systems that ended up producing very successful results.

Research conducted by IHL group predicted that as Macy’s begins to incorporate AI and new technology into managing inventory, generating targeted recommendations, creating customized marketing campaigns, and analyzing consumer insights, there is room for up to $3.8 billion in increased sales and $3.8 billion in improved gross margins and cost savings due to new optimizations.

For example, Macy’s has already begun to open smaller-format stores with a more curated selection of products, all while using technology to make these tough inventory decisions and to better understand specific customer needs in certain regions. This has already dramatically improved the navigability of its stores and website and has heightened customer satisfaction.

  1. Re-engaging churned customers

Fox-Glassman has made it clear that Macy’s existing and past customers have been their key growth drivers. This is why they plan to invest in personalized campaigns and promotions that aim to re-engage high-paying customers that have churned.

In fact, they’ve set aside a budget of $3 billion over the next 3 years simply to invest in technologies that will make re-engagement campaigns and customer experiences notably more personalized and engaging.


The fact of the matter is that the fashion industry isn’t the only industry that’s evolving. Every industry is being affected by both new technologies and constantly changing consumer preferences. So, now is the time to:

  • Leverage AI and machine learning to create customized customer experiences
  • Invest in more tailored retention strategies
  • Learn how to re-engage churned customers through personalization

Let me tell you a story about customer experience ...

We run a podcast interviewing best in class CX teams. We get to know how they are helping their businesses win.

We'd like to share some stories of what good CX looks like, and what, uhhh! - less than good looks like. Are you in?