Case Studies - Macys Backstage Distribution
- Case studies
- Macy’s Backstage Distribution
- Client : Macy's Backstage
- Category : Planning and Design
- Tags : distribution design, consulting
- Planning and design of a 674,000 sq. ft. distribution center located in Columbus, OH
- How We Did It
Macy’s Backstage presents a fresh face to the world helping savvy, fashion-forward bargain hunters fall in love with shopping all over again. The off-price retailer provides an open, airy, convenient shopping environment featuring the brands Macy’s is famous for, all at incredible prices. Macy’s Backstage invites customers to relax, refresh, and recharge with unexpected amenities like an exclusive café partnership and a unique assortment of offerings, unlike any other off-price store. The growing chain operates in the spirit of Macy’s master brand attributes, specifically reimagined for this new brand. The new concept offers customers a new way to experience the thrill of the style hunt with fresh deals, and the promise of an ever-changing assortment of merchandise, including ladies, men’s, and kids apparel, home textiles, décor, and housewares, jewelry, cosmetics, handbags, shoes, and more. The group includes Bloomingdale’s outlet as well as the Backstage chain of store-within-a-store locations.
As many retail chains, Backstage began with rudimentary, manual distribution processes in whatever space was available in facilities serving the mothership brand – in this case, Macy’s. With the continued success and growth of the concept, Backstage had quickly grown beyond the capacity available in the department store distribution centers. The manual processes had become unmanageable with the growing volume. Recognizing their core competencies and desiring to learn more of the best practices for serving off-price retail stores, Macy’s Backstage engaged Johnson Stephens Consulting to plan and design a Central Distribution Center to separate supply chain functions (excluding transportation) from the Macy’s full-line retail network.
JSC utilized the JSC Space PlannerSM tool which develops a business growth plan for five years noting distribution center requirements and cost by year. The basis of understanding provided by the space planning tool then allows JSC to evaluate multiple automation technologies to determine which MHE options provide a meaningful ROI for Macy’s. JSC recommended the use of Very Narrow Aisle (VNA) storage as the increased space utilization efficiency significantly outweighed slightly increased labor cost and greater initial capital investment. JSC also recommended moving away from a tilt tray sortation system used elsewhere in the company to a 6 module, 30-zone Put-to-Light solution which provided more flexibility to pack by category and the potential for increased product mix through packing. Lastly, JSC introduced Macy’s Backstage to an Open/ Sort/Count process to facilitate more efficient and organized use of space and labor for the very manual process of identifying and sorting mixed SKU cartons of the merchandise being received.
The Macy’s Backstage Distribution Center includes storage capacity for 4.2 million units and 10 miles of conveyor for Receiving, Processing, and Shipping. Macy’s states this is the “First Macy’s facility to operate on Google Cloud, allowing further streamlined inventory management. This new technology will ensure that merchandise is accurately and efficiently received, sorted, ticketed, picked, packed, and shipped from the distribution center to all Macy’s Backstage locations.” Design of the process, selection of the MHE systems, and documentation of the standard operating procedures prepared Macy’s for the successful implementation of the facility. JSC’s Off-Price Retail expertise, frequent communication with the client, and flexibility in cooperation with the systems integrator enabled the project team to meet deadlines and deliver the desired results.
JSC leverage their extensive knowledge of off-price retail gained over the last 30 years while also serving the leaders in off-price retail including Bealls, Burlington, Marshalls as well as names from the past such as Filene’s Basement and Value City. Beginning with process design, JSC was able to design a merchandising flow that reduced processing and delivery from 10 days to less than 5 days for in-season merchandise. The improvement is based on the age-old Theory of Constraints to balance the flow of product and the work content/cycle time for multiple, sequential workstations. What makes off-price retail unique is the need to identify the merchandise and quantity received upon receipt then following that series of steps with ticketing and value-added services to prepare for merchandising. The process was completed in 2018 and the facility began operation in 2019.
Currently serving over 250 stores and rapidly growing, the distribution center is a classic off-price model of open/sort/count, reticket, prep, and allocate for in-season merchandise as well as long-term storage of off-season merchandise for future allocation.