That’s How You Use Data

The WSJ has a short piece on how Macy’s has avoided inventory glut, unlike most of its peers and competitors. Here’s the story and lessons for all businesses. 

Let’s set the context. As people entered lockdown, they shifted their spending to consumer goods in an unprecedented manner. Many retailers weren’t expecting the increase in demand and were caught flat footed. For example, Kohls estimates that it missed out on $250 million dollars in sales due to lack of inventory. 

Despite the challenges, retailers had a great pandemic. Even Bed, Bath and Beyond benefited from the unexpected demand before their stock came crashing back to earth.

By 2022, most retailers had figured out the whole supply chain issues. One of the tactics they used was simply to stock up more than in the past. Better to be safe than miss out on millions of sales like Kohls did. 

Unfortunately, consumer demand shifted back into services as COVID restrictions were lifted. Many retailers now find themselves with too much inventory and rapidly decreasing sales. Richard Hayne, CEO of Urban Outfitters, calls their discount strategy a “bloodbath”. 

Here’s where Macy’s enters our story. They avoid the inventory issue because of better decisions and data. It is one of the most tangible examples of how to use data to make better decisions that I have ever seen. 

Here’s how the WSJ describes the actions Macy’s took:

“Early this year, Macy’s executives noticed an uptick in the amount consumers were spending on food and gas, the result of rising inflation, on the company’s co-branded credit cards that shoppers can use at other retailers. They also detected a shift as consumers began spending more on travel and entertainment outside the home. 

They sifted through data showing inflation was outpacing wage growth for many workers among other economic indicators that suggested some discretionary categories like apparel would get squeezed, Mr. Mitchell said.

The group decided to cut orders of comfy clothes and items for the home that had been big sellers during the pandemic, and increase orders of dresses, suits and shoes for wearing outside the house, to return to work and for occasions like weddings.” 


If you’re not Macy’s, you might dismiss the story for a variety of reasons. You may not own co-branded credit cards that give you the level of data Macy’s gets. Or you may not have such a sophisticated data approach. However, every business can benefit from the principles behind Macy’s story.

Principle 1: Speed is of the Essence

Macy’s moved quickly for a big company. In a matter of weeks and months, they shifted the composition of their inventory orders. Companies need the latest data as soon as possible. Technology makes this incredibly easy today. There’s no excuses. 

Nearly all companies have access to real-time data. They just aren’t looking at it or simply don’t have the capacity to convert into dashboards and reports. 

Principle 2: You Need a Regular Review Structure

Macy’s mentions a monthly meeting where leaders review the latest numbers and discuss their relevance. Simple and effective. You need a way to regularly review the latest numbers and determine what to do about them. 

Principle 3: Dissenting Opinions Wanted

I bet many retailers had people inside their organization who were skeptical about the continual consumer demand. After all, the initial shift to goods happened because consumers couldn’t spend their money on services due to COVID restrictions. It was logical to conclude that once restrictions were lifted, the same spending would go back to services. 

Organizations need dissenting opinions. The Catholic Church uses a  “devil’s advocate” during canonization but organizations don’t need to be so dramatic. People just need an opportunity to present counter-evidence to the prevalent wisdom. Macy’s, the retailer, accomplishes this through monthly meetings driven by the latest numbers. 

The moment there’s unanimous agreement on something, that is the moment that companies should be wary. Create a culture where people are comfortable challenging each other. That’s the best way to end up with good decisions. 

Photo by Nick Sarvari

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