We Can Be an Accelerator for Them: Making Truly Long-Term Investments

In today’s rapidly evolving retail landscape, the need for long-term investments has become more crucial than ever. As department stores like Bloomingdale’s navigate through digital transformation, operational enhancements, and customer experience improvements, the key to sustainable growth lies in making strategic and impactful investments. In this article, we delve into the insights shared by Olivier Bron, CEO of Bloomingdale’s, on the key areas of focus for their investments and the future of department stores.

Key Areas of Focus for Investments

McKinsey: What are the key areas in which you want to focus your investments?

Olivier Bron: For me, investments are not only about capex but also opex. In terms of capex, we will accelerate the renovations of the stores. We will keep investing in tech to support our digital growth. We still have a lot to do in elevating the digital experience. In terms of opex, we’ll keep investing in building one-of-a-kind marketing campaigns. And we will keep investing in the service in the stores.

McKinsey: Does that also mean investing in associates in the stores? That’s been a place where some department stores may have streamlined too much.

Olivier Bron: Yes. Store associates are probably the number-one enabler of the in-store customer experience. Historically, US department stores, particularly premium and luxury department stores, focused a lot on the top of the customer pyramid—with personal shoppers, for example. We did that at Bloomingdale’s as well, and it performed fantastically well. But we cannot focus only on the top of the pyramid. We have to take care of all our customers.

We have to keep investing in developing people to make sure we have the right level of service. The best way to do that is to have great frontline managers. You can do all the trainings in the world, but after two weeks, everyone will have forgotten about them. The best way to maintain consistency in the store is through frontline management.

Ultimately, we’re a people business. In my 18 months in this role, I’ve come to truly believe that one of our clear differentiators is our people. We see in our employee surveys that people feel good working at Bloomingdale’s because we’re a community of people who truly care for others. The best retailers I have seen in my life are people who genuinely, authentically care for others.

Digital Ambitions and Role of Tech

McKinsey: Can you expand on your digital ambitions and the role that tech will play for Bloomingdale’s?

Olivier Bron: A couple of years ago it was really about bringing digital screens everywhere in the customer journey. I don’t think that bringing tech to the customer journey is necessarily about bringing more widgets to the customer. But it’s very important that we keep improving our customer relationship both digitally and in-store.

Let me give you some examples. Right now, I have more information on our customers than frontline colleagues do. It’s absolute nonsense. If you ask me right now about any of our top customers, I can give you information about them in two minutes on my computer. If you ask the same thing to a frontline colleague, it might take a lot of time. Bringing the right information, the right data to the right person at the right moment—that’s exactly the purpose of our tech investments. We have so much data, but we’re not using and leveraging even one percent of it. We need to find a way of analyzing it in order to develop the right use cases that really create value for the customer.

The rest of the tech investment includes what we’re doing behind the scenes to make our AI models—which we’re using for things including digital content—more efficient. The way we’re using AI in reporting and analyzing the business is more sophisticated than it has been, and it’s evolving fast.

The Future of Department Stores

McKinsey: What do you think the future department store will look like?

Olivier Bron: If we do not change the department store model, it might be at risk at some point. Will it be digital or physical? It will be omnichannel; it might even be channel agnostic. It’s not about where you are shopping or where you are transacting; it is how you interact with the department store brand, which is my biggest concern.

It’s about how we’re connecting locally with the customer using our different platforms. We are already very strong in e-commerce, though not in terms of online inspiration. We can do better. I think we are pretty strong in stores. We can do better there, too. When I was in Asia, for example, their relationship with social media and social shopping is next level compared with the United States. So we have room for improvement: We have to keep inspiring and surprising the customer, regularly bringing newness and inspiration.

We should be storytellers. We’re building a story not only for the next three months but for the next five to ten years. We’re building the new golden age of Bloomingdale’s.

Industry Insights and Recommendations

As the retail landscape continues to evolve, department stores like Bloomingdale’s must make strategic investments in areas such as store renovations, tech enhancements, and employee development to stay competitive. By focusing on the customer experience, leveraging data-driven insights, and adopting innovative technologies, department stores can redefine their role in the omnichannel retail environment.

Recommendations:

• Invest in store renovations to enhance the in-store customer experience.
• Utilize data analytics to personalize customer interactions and drive engagement.
• Empower frontline managers and associates to deliver exceptional service.
• Embrace digital technologies to create seamless omnichannel experiences for customers.
• Continuously innovate and adapt to changing market trends to stay relevant.

FAQ

Q: How can department stores differentiate themselves in a competitive market?

A: By investing in customer-centric initiatives, leveraging data analytics, and embracing digital technologies, department stores can differentiate themselves through personalized experiences and innovative offerings.

Q: What role does employee development play in enhancing the customer experience?

A: Employee development, particularly frontline manager training, is crucial in maintaining consistency and delivering exceptional service in-store. Investing in employee training and empowerment can drive customer satisfaction and loyalty.

Conclusion

In conclusion, making truly long-term investments in areas such as store renovations, tech enhancements, and employee development is essential for the sustainable growth and success of department stores like Bloomingdale’s. By focusing on the customer experience, leveraging data-driven insights, and embracing digital innovations, department stores can position themselves for the future and navigate through the dynamic retail landscape with confidence.