Macy's Enlists Google to Open High-Tech Distribution Center

Originally published by Retail Info Systems:

Macy’s has turned to Google to help it improve business on the back-end, starting with its new next-gen distribution center in Columbus, OH.

The department store retailer’s 675,000 square-foot Backstage distribution center is now up and running and operates on the Google cloud platform.

By moving its infrastructure to the cloud, and taking advantage of Google Cloud data warehousing and analytics solutions, Macy’s is aiming to streamline retail operational functions across its network. The retailer is leveraging the scalability of Google Cloud to ensure that merchandise is accurately and efficiently received, sorted, ticketed, picked, packed and shipped from the distribution center to the stores.

The technology is expected to give Macy’s “improved efficiency, speed and scale” to support the continued growth of Macy’s off-price business, CEO Jeff Gennette noted during the retailer’s recent earnings call.

Macy’s is currently expanding its off-price Backstage business, opening an additional 50 stores this year with 47 of them already complete. The retailer has more than 200 Backstage locations and according to Gennette, Backstage locations within Macy’s stores open for more than 12 months continue to comp mid-single digits.

“We are getting better at off-price every day,” he noted.

Going forward, the Google cloud platform will be rolled out to all of Macy’s distribution centers in 2020, “providing additional network flexibility and speed for both Macy’s and Bloomingdale’s,” said Gennette. The DCs service Macy’s and Bloomingdale’s department stores, as well as Macys.com and Bloomingdales.com.

“This is a muscle we are building,” Naveen Krishna, Macy’s chief technology officer, said in an CNBC interview. “We can then extend this to other parts of Macy’s ... not just the supply chain.” The total cost to Macy’s to manage the software in its distribution centers will also be going down, he said. “This is solving a key problem for us.”

Macy’s is applying cloud technology to its merchandising activities in the wake of disappointing second-quarter performance that included plummeting income. 

Here is a review of additional moves Macy’s is making:

• Mobile growth: Mobile remains Macy’s fastest-growing channel and the retailer expects it to grow 50% in 2019 and to get to $1.5 billion in sales.
• Vendor direct: Macy’s continues to aggressively grow the SKUs and brands it offers on macys.com through Vendor Direct. It is now halfway to its goal of adding 1 million SKUs this year.
• Partnering with thredUP: Macy’s launched a pilot this month with thredUP, the world’s largest fashion resale marketplace in 40 Macy’s doors across the country. “We know many consumers are passionate about sustainable fashion and shopping resale,”Gennette explained. “This partnership gives us the opportunity to reach a new customer and keep them coming back to shop an ever-changing selection of styles and brands that we don’t typically carry.”
• Fashion rental: Bloomingdale’s is launching My List, a subscription rental service with Castle. “Learnings from Bloomingdale’s will inform the development of a similar rental service at Macy’s in the near future.” Gennette said.