Macy's shows how it's matching up the customers and the goods

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Clothes swing gently on the metal cart Francine Stout is pushing through the darkened junior's department at the Macy's in South Hills Village. The store won't open for hours -- it's not even 8 a.m. yet as she hunts down an American Rag sweater, scans the tag and waits for the computer to confirm she's pulled the right color and size.

"It won't scan unless it's correct," said Curt Rowland, the fulfillment team lead in charge of the store's online fulfillment center, as he watched Ms. Stout hurry along as she worked down her list.

She's part of a team that fills dozens, sometimes hundreds, of orders sent to the store daily, either by associates in other locations who need something that's not in their own inventory or by online customers.

Macy's now has online fulfillment centers in about 500 stores, including eight in the Pittsburgh area. The department store chain with roots in the 1800s -- when horses still helped move merchandise -- has been incrementally closing the loops between the bricks-and-mortar structures built over the decades and the digital commerce offerings launched in recent years.

The mantra is that customers should be able to shop where they want, how they want and for whatever they want without worrying about how Macy's gets the goods to them.

"It should be seamless. The consumer shouldn't work hard to spend her money with us," said Shawn Hummell, vice president store manager at the South Hills Village Macy's.

Inside, it's been a learning process, a slow progression that's added new links to the behind the scenes bucket brigade trying to get those size 10 shoes or that extra large men's pullover to the customer without stops and starts and baffled moments at the register.

Macy's started its "search and send" offering a few years ago, in which store customers who couldn't find the right size would be able to ask an associate to order it. To make it work, tens of thousands of cash registers had to be replaced with Internet-capable versions.

That done, orders could be easily sent from stores to distribution centers. But if a distribution center didn't have the right item, "We sort of lost that sale," said Jim Sluzewski, senior vice president, corporate communications and external affairs with the Cincinnati-based retailer.

In 2011, Macy's ran a test in four California stores to see if it could figure out how to fill orders from one store with inventory in other stores. The company expanded that to 23 stores, then almost 300 last year and then 500 this year.

Since online shoppers sometimes want something carried only in stores, the retailer also built the capability to fill online orders from store shelves -- meaning at this point almost anything offered by Macy's can be ordered from anywhere inside the chain.

There's still some risk of disappointing a shopper.

At South Hills Village, Mr. Rowland sets a goal of filling at least 95 percent of the orders that his team gets each morning. He'd like to be able to fill 100 percent, but the reality is that sometimes merchandise can't be found and the order is sent on to another store to be filled.

Then there are the situations where someone places an order for a suit that the system says is in stock, even as a customer is wandering around with it in a pile to take to the checkout. Macy's hasn't perfected that part, which is why it's testing a buy-online, pick-up-in-store option in stores in the Washington, D.C., area.

Even without that almost instant service, employees like Ms. Stout are kept busy filling orders daily in stores around the country. On a recent day, the South Hills Village store computer showed 81 orders to be filled. Mr. Rowland had sorted them so his team could work efficiently, pulling goods from departments in one area before moving on to another.

The staff has to be very familiar with an inventory that changes regularly, as seasons change and new deliveries are stocked on the sales floor. "You can waste a lot of time," noted Mr. Sluzewski.

Back in the fulfillment center -- a dignified name for a windowless room behind the housewares department -- Lisa Trozzi had her own cart stacked with shoe boxes labeled with brands like Nine West and Clarks (this store ships a lot of shoes). She efficiently folded a teal robe into a plastic bag and wrapped it for shipping.

On this October day, the fulfillment team only had three members working. More will join as the holiday season picks up. Typically, orders are filled before stores open, but on peak days they may pull merchandise all day.

In the past year or so, the computer software has gotten better about choosing which stores to send orders to, based on shopping patterns and inventories. "The system looks at weeks of supply and your sales history," said Ed Kulczak, district operations director for the Pittsburgh North area.

Goods can be pulled from Texas and sent to New York, or from South Hills to Ross Park, but the computer balances factors such as shipping costs, the cost of having to markdown unsold goods, and demand in particular locations. "We don't want to jeopardize the customer in the store," Mr. Kulczak said.

Retailers all over the country -- including Pittsburgh-based retailers Dick's Sporting Goods and American Eagle Outfitters -- are working through this same type of process, smoothing out the lines of communication and merchandise flow between their different operations.

Many call this strategy "omnichannel," although others say it's just back-to-basics in providing a consistent face to the customer despite the advent of smartphones and tablets.

Macy's has discovered that having the ability to tap into inventory at various stores has meant smaller stores can be stocked with styles and fashions that the sales levels didn't justify in the past since now goods aren't trapped there if they don't sell locally.

Karen M. Hoguet, chief financial officer of Macy's, admitted at a September analysts conference that there have been stumbles along the path to omnichannel enlightenment. A couple of years ago, she said, one vendor's dresses were selling especially well through the company's website, so Macy's kept ordering more.

But the dresses didn't really fit right, so customers were bringing them back to their local stores. "The two channels weren't speaking," Ms. Hoguet said. "They're marking them down left and right, the dot-com is ordering more. It was a bad situation. Interestingly, though, the buyers in the two channels figured it out themselves and have fixed it."

Macy's is expecting online business to be more important than ever this holiday season. The company expects to hire about 83,000 seasonal associates this year, with 6,600 of those jobs to come in the four distribution centers that handle online order fulfillment. Another 1,200 seasonal jobs will be assigned to in-store fulfillment centers.

Teresa F. Lindeman: or at 412-263-2018.

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