If a shopper spends an entire Saturday at a store and walks away empty-handed, is it a win for the retailer? It could be, according to Olivier Bron, CEO of Bloomingdale’s, who is rethinking the usual metrics that define department store success.
Bloomingdale’s, the 150-year-old department store chain, employs 2,500 people across 31 full-line stores in the United States (and a handful of licensed stores in the Middle East). It is owned by Macy’s Inc., one of only two department store chains that remain publicly traded in the United States.
Bron, who was appointed to his current role in 2023, has far-reaching experience in the department store world. Early in his career, he spent 12 years as a management consultant before becoming the director of strategy and then the chief operating officer of the Parisian department store Galeries Lafayette. He then joined Central Group—owner of several European luxury department stores including Selfridges in the United Kingdom and Rinascente in Italy—as CEO of Central and Robinson department stores in Thailand.
In an interview with McKinsey partner Joëlle Grunberg at Bloomingdale’s in New York City—the store’s flagship location—Bron discussed the strengths of the American department store market, its opportunities for growth, and what he believes is the number-one enabler for customer service.
This interview has been edited for length and clarity.
McKinsey: Olivier, you’ve worked with department stores in Europe and Asia. Meanwhile, in the United States, department stores have seen declining revenues over the past several years. Given your international experiences, was there anything that surprised you when you came to the US market?
Olivier Bron: One thing that surprised me in the US market is the mindset that is very, very focused on the short term. I think there are a couple of factors that contribute to that mindset.
One, there’s great digital penetration in the US market. But focusing on digital does not mean you have to lose focus on your stores; I truly believe that having strong stores makes you stronger on digital. Another important specificity in the US market is the shareholder structure. Most of the leading luxury flagships in the world are owned by families and individuals who have a long-term focus. Here in the US, there is a different perspective on the way we are driving investments and considering the returns.
These two factors—high digital penetration and the shareholder structure—lead to a strong short-term business but result in a lack of investment in the store experience, in the things that make the department store truly special versus what you would experience in a mall or in a boutique.
A second surprise was the industry’s focus on the domestic market, when none of the top department stores in the world are actually located in the United States. So, I think it’s very important for Bloomingdale’s [and its] leaders to keep an eye on what’s happening in department stores elsewhere in the world.
McKinsey: Do you feel European department stores have an edge, in terms of merchandising and customer experience?
Olivier Bron: I am not sure that it is European-specific. But there are very interesting things to learn in the world of department stores outside the US. When you look at what is happening right now in Europe, Asia, the Middle East, South America, or Central America, it is very impressive—from the customer experience and the look and feel of the stores to how mature these markets are from a customer relationship and brand relationship standpoint.
US players are number one on many other dimensions, such as the maturity of the digital business and the sophistication and professionalism of merchandising teams. We have to take the best of both worlds: Take inspiration from what others are doing better, while also leveraging our very strong platform here in the US.
Bringing shoppers back to department stores
McKinsey: What do you think are the key levers that department stores should pull to get shoppers back in the stores and become attractive again, especially compared with direct stores of luxury brands?
Olivier Bron: Boring department stores are probably dead—but inspiring department stores have a bright future. The approachability, the connection with the product, the connection with the people, the ability to shop across categories, the inspiration that a shopper can get, whether on digital or in the stores—all of that is pretty unique to department stores. The department-store model makes a lot of sense from a customer standpoint. But we have to do it better.
What does that mean? First, we need to align our strategy and the way we are expressing the brands with the strategy of the brands themselves. If you are only focused on the transaction, you are losing the purpose of what you are doing. If you are putting a fantastic brand in a single rack at the back of a store with no light, gray carpet, and no customer service, you’ve lost the battle.
How much are you investing in storytelling, marketing, and in everything on top of the product? If you’re not investing enough, there will be a disconnect for the brand owners, who might wonder, “Why are you expressing my brand that way?,” and the customer might wonder, “Why would I pay such a high price for a product that is not worth it?”
The second thing we have to keep working on is creating excitement and inspiration. We cannot focus only on the blockbusters and big brands. Otherwise, what is the differentiation from other stores? The winning combination is bringing inspiration, newness, and discovery. We call it serendipity: finding something you didn’t expect to find. We need to keep curating, keep selecting, keep editing in order to make sure that we have a point of view and that we're bringing the customer something different from what they can experience elsewhere.
The third point is about experience. For us, that’s about building fantastic marketing campaigns, which create excitement and a feel-good sentiment of experiencing something very special. It’s also about service. What is more frustrating than coming to a shop floor and struggling to find someone to help you? We have to reinforce customer service—not only the number of people but the quality of the people we’re putting on the floor.
We do not want to be perceived only as product sellers. When you come to Bloomingdale’s, we want you to be able to spend your day there.
McKinsey: That’s a good lead-in to my next question. French department store Printemps has come to New York recently, bringing with it a unique hospitality experience—with many restaurants, snacking areas, bars, and so on. What’s your take on that? Is there a willingness to accelerate the hospitality journey in US department stores?
Olivier Bron: Absolutely. What Printemps has done in New York is a good wake-up call for all of us. We’ll see how it performs over time, because it probably will come with some challenges, but it’s interesting as an inspiration. Even before Printemps opened, though, hospitality was already part of our strategy. We do not want to be perceived only as product sellers. When you come to Bloomingdale’s, we want you to be able to spend your day there. The way we welcome you, the way we serve you, the restaurants and food options, all the experiences you can have at the store—it all has to be way more interconnected than it is today.
The problem we are facing—we are not the only ones, either—is that we are very much transaction focused. [Macy’s CEO] Tony Spring used to say that you have to balance art and science. We’re probably still too focused on science, which is making our model profitable and very strong, which I’m glad about—but we have to bring back a bit more art in our business. Art is about what the customer is feeling and experiencing. It can be about food or events or inspiration. That’s what we’re doing, for example, with The Carousel—our rotating pop-up space where we feature great brands. We need to invest more time and resources in less productive spaces in order to bring back the customer.
We have to challenge the way we’re measuring the performance of our business. You cannot track the performance of your business only by looking at the performance of your square feet in each store. You cannot look at the performance of a brand just by the sales or the margin of this brand. You have to bring more of long-term perspective. You have to look at lifetime value, cross-shop, experience, feeling, customer satisfaction, time spent in the store. We are not properly measuring all these indicators right now, but they are the focus of the management group because they are very important in the way we structure the experience. If you are just saying, “Hey, you’ve got to do $X per square foot in the store,” you’ve lost.
McKinsey: If other players are distinguishing themselves with hospitality offerings, what is Bloomingdale’s strategy to differentiate itself?
Olivier Bron: Our “Dream big” strategy is about waking up this sleeping beauty that is the Bloomingdale’s brand. The brand is our number-one asset. We have to keep nurturing and developing this brand, but we also have to shake up the organization and our ways of working, and challenge the status quo.
What is unique about Bloomingdale’s? First, our positioning. We’re not only luxury; we’re not focused only on the top of the pyramid. I would say premium to luxury, or aspirational to luxury, is our sweet spot.
Second, our culture makes us special. Coming to Bloomingdale’s is not intimidating; it’s very casual. Pushing open the doors of a boutique on Madison Avenue [in New York City] is pretty intimidating, even for me. At Bloomingdale’s, you’re also never more than two meters—or a few feet—away from the product. The proximity to product is very important.
On top of that, the energy you find in the store is something you rarely find somewhere else. Our “From Italy, with love” campaign or the Wicked holiday campaign1 were about reinforcing this vibe and energy in the stores. I want us to do astonishing campaigns. I want people to come from all around the city to say, “Oh, I need to go and check what’s happening at Bloomingdale’s.” We need to dream bigger and be bolder—and we can do that because we have a very healthy, solid financial starting point right now.
Our Dream Big strategy is also about being locally relevant. My dream would be, when customers leave their home on a Saturday, the first thing they do is go to Bloomingdale’s because they know they’re going to find a friend, they’re going to have a great experience and discover something new. Maybe they will end up buying something. But I just want them to come to the store because they like it.
I have more information on our customers than frontline colleagues do. It’s absolute nonsense … Bringing the right data to the right person at the right moment is exactly the purpose of our tech investments.
McKinsey: Given the consolidation in the department store landscape in the US, how do you see your role in helping up-and-coming designer brands expand and find their customer?
Olivier Bron: It’s crucial for us to keep incubating and supporting new brands. If you are launching your brand today, and you want to open a boutique in New York, it’s very difficult to go to market by yourself. We have a role to play in helping these brands build the future of fashion. And when you support brands early, then you can build together, you can work on exclusives. We can bring them not only a great real estate space in our stores or great visibility in our digital platforms, but we have such a unique set of capabilities—supply chain, marketing, digital, visual merchandising—that we can leverage and use for the development of these brands. We can be an accelerator for them.
Making truly long-term 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.
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.
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.
