Machine may peddle electronics at renamed Field's

Ellen P. Gabler, Staff Writer
Minneapolis/St. Paul Business Journal

MINNEAPOLIS - When Macy's takes over Marshall Field's this fall, shoppers might find themselves buying from vending machines.

But instead of plunking in quarters, they would swipe a credit card and reach in for a $300 iPod.

The concept, called Zoom@Macy's, targets tech-savvy young customers, a key demographic the department-store chain needs to remain relevant in a competitive retail scene, said Frank Guzzetta, chairman of Macy's North, the Minneapolis-based division that will oversee Upper Midwest operations.

Guzzetta said Zoom is one way Macy's is modernizing its retail strategy. He spoke this week before a group of business reporters and editors at a national journalism conference in Minneapolis.

Other strategies he mentioned included stocking the hottest brands, continually updating displays to make stores look fresh and better matching merchandise with demographic data collected by each Macy's location.

"The only way we're going to survive is [by] being much more nimble," Guzzetta said.

The Zoom robotic store brings the same kind of convenience to retail as the ATM has brought to banking, said Gower Smith, founder and CEO of San Francisco-based Zoom Systems.

The 30- to 40-square-foot structures encase popular, high-end products behind glass. Customers stand at a computer touch screen and choose whether they'd like to buy an iPod nano or an iPod with video, for example. Add some earphones, maybe an AC adapter, and it's time to check out. After the shopper swipes a credit or debit card, a robotic arm gently pushes the product into a mobile delivery bucket, which returns to the customer.

Just like buying products over the Internet, customers can mail in merchandise they wish to return.

Officials at Macy's parent company, Cincinnati-based Federated Department Stores Inc., wouldn't comment on Zoom, except to confirm that it's in at least one Macy's store in San Francisco. A local spokeswoman said there's no signed agreement for Zoom in Macy's North stores.

This fall, however, Federated will convert hundreds of department stores -- including Marshall Field's -- to the Macy's brand, leaning heavily on economies of scale to increase profitability at its stores.

Zoom would be a cheap way to spice up the Macy's brand, said George Rosenbaum, president of Leo J. Shapiro & Associates, a retail consultancy in Chicago.

"I think it's almost irrelevant whether or not this actually produces revenues," he said. "It's a signal that says, 'Macy's is pretty hip and has done something different [than] at Marshall Field's.' "

Marshall Field's already sells a few iPods in its men's accessories department, but the department store hasn't had a larger electronics section for years.

Smith wouldn't comment on his business relationship with Macy's, but said the robotic store format is ideal for retailers because it essentially runs itself. With Zoom, high-priced items such as consumer electronics don't need to be locked up or have watchful sales assistants nearby.

Zoom stores generate between $1,000 and $15,000 per square foot each year. That compares with about $200 to $500 per square foot annually for traditional retail stores, Smith said. Department stores also get a small cut of the profits.

Zoom has 100 stores open so far in hotels, airports, grocery stores and at least one Macy's. The company is targeting 10,000 stores within five years.