The Future of Retail is Virtual, with Macy’s Mohamed Rajani

Macy’s has been in the news a lot this week, and many are worried about what the latest round of store closures mean for the long-running retailer, and the future of in-person shopping in general. But Macy’s resident XR guru Mohamed Rajani came by our podcast a little while back to suggest that the future of retail exists in the virtual world.

Alan: Welcome to the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Mohamed Rajani, responsible for VR and AR initiatives at Macy’s. Mohamed is part of the new Business Development and Innovation team at Macy’s, and is responsible for driving change through the development of new retail concepts and partnerships amidst an evolving retail landscape. “Mo” also leads Macy’s immersive technology initiatives, including VR and AR in furniture, which is removing key friction points for the customer, enabling an AR view in-room capabilities on the Macy’s mobile app. To learn more about the work he’s doing, you can visit macys.com.

Mohamed, welcome to the show.

Mohamed: Thank you. Thanks for
having me, Alan. Happy to be here.

Alan: We had the opportunity to
to have a few calls prior to Augmented World Expo. We were on a panel
together, and you were talking about the amazing work that you’re
doing at Macy’s. So let’s start unpacking that. Mo, tell us about
what you guys are doing at Macy’s.

Mohamed: So just a little bit of
context that our team does. Our team’s about two and half years old.
I’ve been with the company for over eight years, across a variety of
different functions. But about two and a half years ago, as a
company, we decided to establish a dedicated team that’s purely
focused on what’s new, what’s next. That’s focused on the emerging
consumer landscape, the emerging technology landscape, and making
sure that the Macy’s brand continues to be relevant not only today,
but 10, 20, 30 years from now. So as a team, we’re purely focused on
looking at new business models, new concepts, emerging technologies,
but then really tying those to our strategic businesses. We want to
make sure that any new innovation that we bring into the organization
has a lasting impact. But more importantly, a meaningful impact that
is actually moving the needle.

So if we think about from that context
of how we ended up playing in virtual reality and augmented reality,
in our business we have a strategic business fillers, and furniture
is one of them. It is a business that is high touch, a high margin
business, so it’s margin accretive, more profitable to the company,
and it’s destination business for us. We’re top of mind for the
customer when they’re thinking about furniture. And if you’ve had any
experience in buying furniture, it is not a very easy process. It’s
one of the few businesses that’s still overwhelmingly physical
purchases. More business happens in-store than online, and by a
higher margin. And part of it is just the friction involved in it.
You don’t know how it’s going to look, how it’s going to fit. And
it’s a business that we, as a company, need to fortify. It’s a
business that if we want to remain relevant for the next five, 20
years, we want to make sure that we’re not only fortifying the
business, but growing and capturing market share. So is that context,
whereas we came across emerging technologies as part of our job, we
were navigating the landscape and looking at what’s coming out.

This was 2016, into 2017. We started
seeing virtual reality technologies, especially in the furniture
space, and we started exploring and we wanted to make sure that there
was a practical a

Macy’s has been in the news a lot this week, and many are worried about what the latest round of store closures mean for the long-running retailer, and the future of in-person shopping in general. But Macy’s resident XR guru Mohamed Rajani came by our podcast a little while back to suggest that the future of retail exists in the virtual world.

Alan: Welcome to the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Mohamed Rajani, responsible for VR and AR initiatives at Macy’s. Mohamed is part of the new Business Development and Innovation team at Macy’s, and is responsible for driving change through the development of new retail concepts and partnerships amidst an evolving retail landscape. “Mo” also leads Macy’s immersive technology initiatives, including VR and AR in furniture, which is removing key friction points for the customer, enabling an AR view in-room capabilities on the Macy’s mobile app. To learn more about the work he’s doing, you can visit macys.com.

Mohamed, welcome to the show.

Mohamed: Thank you. Thanks for
having me, Alan. Happy to be here.

Alan: We had the opportunity to
to have a few calls prior to Augmented World Expo. We were on a panel
together, and you were talking about the amazing work that you’re
doing at Macy’s. So let’s start unpacking that. Mo, tell us about
what you guys are doing at Macy’s.

Mohamed: So just a little bit of
context that our team does. Our team’s about two and half years old.
I’ve been with the company for over eight years, across a variety of
different functions. But about two and a half years ago, as a
company, we decided to establish a dedicated team that’s purely
focused on what’s new, what’s next. That’s focused on the emerging
consumer landscape, the emerging technology landscape, and making
sure that the Macy’s brand continues to be relevant not only today,
but 10, 20, 30 years from now. So as a team, we’re purely focused on
looking at new business models, new concepts, emerging technologies,
but then really tying those to our strategic businesses. We want to
make sure that any new innovation that we bring into the organization
has a lasting impact. But more importantly, a meaningful impact that
is actually moving the needle.

So if we think about from that context
of how we ended up playing in virtual reality and augmented reality,
in our business we have a strategic business fillers, and furniture
is one of them. It is a business that is high touch, a high margin
business, so it’s margin accretive, more profitable to the company,
and it’s destination business for us. We’re top of mind for the
customer when they’re thinking about furniture. And if you’ve had any
experience in buying furniture, it is not a very easy process. It’s
one of the few businesses that’s still overwhelmingly physical
purchases. More business happens in-store than online, and by a
higher margin. And part of it is just the friction involved in it.
You don’t know how it’s going to look, how it’s going to fit. And
it’s a business that we, as a company, need to fortify. It’s a
business that if we want to remain relevant for the next five, 20
years, we want to make sure that we’re not only fortifying the
business, but growing and capturing market share. So is that context,
whereas we came across emerging technologies as part of our job, we
were navigating the landscape and looking at what’s coming out.

This was 2016, into 2017. We started
seeing virtual reality technologies, especially in the furniture
space, and we started exploring and we wanted to make sure that there
was a practical application to a business there. A couple of things
that align. One was here is a technology that had a practical
application and here is a business that was a strategic priority for
the company. So our job was then to go out and figure out how to
integrate the two. And so we did that first by launching a pilot in
two stores in August of 2017 with a company called Marxent. And
really the goal was to understand how this technology can apply to
our business, but with two ultimate objectives. One was to drive
employee adoption so our Macy’s colleagues and making sure they’re
adopting the technology, and two is consumer adoption on the other
end of it, making sure that our consumers are adopting an innovative
but emerging technology. And we felt if we tackle these two goals,
everything else will come together.

Alan: You’re talking about
employee engagement or adoption. That is one of the most important
things when you bring a new technology into a company. If people
don’t use it, then it’s kind of useless. And I’ve heard some stories
where a company will buy VR headsets and they just sit on the shelf.
So how did you get your employees to use this? What were some of the
techniques that you did, and what is the adoption rate now?

Mohamed: The ultimate goal–
you’re right. In the past, we may have been guilty — just like a lot
of other retailers — in bringing the technology either without a
clear practical application or the execution is lacking for some of
these basic parameters. So for us, it was critical that we had a
comprehensive training program. We worked with our Marxent partners
to really build a robust end-to-end training program that clearly
outlined and communicated the benefits of the technology, the
practical application of it, and what it means for our colleagues. If
you’re in the furniture business, your ultimate goal is to drive
sales. That’s how you’re evaluated. That’s how you’re commissioned.
So it’s really to drive sales. And the idea for us was that if we
were able to jump the hurdle and get our colleagues to adapt to this
new technology, we knew that the upside was higher basket sizes and
lower returns.

So the ultimate goal for us is to
communicate with the colleagues, to say “Here is a technology
that can not only help you drive higher meaningful paychecks or
higher meaningful basket sizes, but also reduce returns,” which
if you’re in the furniture business, you know the percentage of
returns is not very high, but the cost of maintaining and managing
those returns are as significant, as very burdensome as well. It was
clearly outlining the benefits of the technology and the fact that we
piloted in two stores and saw the results for ourselves. That allowed
us to then take it to the balance of the organization and tell them,
“Here are the benefits. We’ve done this before. This is what it
looked like.” And that allowed us to drive really employee
adoption. And that’s critical, because the consumer adoption cannot
come if our colleagues don’t adopt the technology. So if we’re able
to cross one hurdle, the other one becomes a lot easier, too.

Alan: Let’s talk numbers. You’ve
seen some incredible uptake with this technology. You started with
two stores. Talk to us about what you saw or what your original
findings were in those two stores, because they’re almost
unbelievable.

Mohamed: The first two stores
eventually allowed us to make a decision that typically retailers of
our size did not make: to scale something very, very quickly. So in
the first two stores we launched in August of 2017 in Paramus, New
Jersey, and in Miami, Dadeland. And we added our third location —
our flagship location — Herald Square, a few months after that. But
what we saw was staggering: in the initial pilot we saw our basket
sizes increase by 60 percent. That’s 60.

Alan: Hold on. What?

Mohamed: Yeah.

Alan: Sorry. The basket size.
Now, what does basket size mean?

Mohamed: The dollars for a
transaction. So that includes number of items in the basket, and the
average unit retail of each product. So the combination of that
obviously is the basket size. And we saw the average dollar per
transaction increased 60 percent for every sale that went through VR.
Now, because–.

Alan: I don’t believe you.

Mohamed: [chuckles] Well, that’s
exactly what everyone else said, but they had to see it for
themselves. And when you go through the experience, you realize it is
not anecdotal information. When you go through the experience, you
realize that, yes, I can see how this would increase basket size,
because I’m more confident in my purchase, so I’m less likely to
return. But more importantly, I have now more confidence in how this
is going to look. So you’re seeing more expensive items being
purchased, because you’re more confident in your purchase.

Alan: Can you walk us through
the experience?

Mohamed: Well, the experience
starts way before you put on the headset. You walk into a furniture
gallery, you’re met by our colleagues, our season trained colleagues
who know the furniture business in and out. They’re probably one of
the best in the industry. And when you walk into the stores, you’ll
typically engage with a Macy’s colleague, who’ll walk you through our
assortment, will tell you how it’s merchandised, and really ask
questions around what you’re looking for. And typically, as someone
who’s coming in to browse or exploring furniture, you have a sense of
idea of what you’re looking for, and you’re tying that to now with
either you’re trying to add extra pieces to your living space or
you’re totally furnishing a new space. You have a sense of what
you’re looking for, but you really need someone to guide you through
what the best options are. Around that same process, and they’re
typically used to identifying that hesitation around fit, “I’m
not sure how this is going to look in my space. I don’t know exactly
how big my living space is, or what the relation to the furniture
space is.” And that’s where the colleagues now try to solve that
problem for our customers. And they’ll bring them to our VR design
experience in the store, and through a 3D design application on an
iPad, they’ll be able to design. You will provide your general
dimensions of your living space. They’ll put input it into the iPad
application, and design it with Macy’s 3D content. So we’ve
rendered– when we started, we had rendered about a small section of
our furniture assortment in 3D. Our library now is ten times bigger
than what it was when we first started two years ago. You’re able to
design in the 3D application, and then you put on the headset and
that’s where the magic happens. With the right dimensions, the exact
sizing, you’re able to move things around, you’re able to add new
things, edit things if they don’t look right. You’re able to move in
closer, look at the texture of the furniture, and really brings the
experience to life.

Alan: Can you add windows when
you’re designing?

Mohamed: You can at windows,
telephones, fireplaces. You can add plants to the experience. You can
really mimic your living space.

Alan: Can you change the wall
colors and stuff?

Mohamed: You can change the wall
colors, floors. You can add wooden floors. You can change different
kinds of colors. Everything they can imagine in a design application,
you can do it here. And the best part is you can visualize it and do
it on the fly. And really, when you go through the experience, that’s
when you can really start understanding the numbers and saying,
“Okay, these numbers are real, because this experience is so
much better. And I have a much better idea of how this is going to
look, how this is going to fit. So I’m more confident in my
purchases.”

Alan: One of the metrics that I
found almost more impressive than your basket size increase of 60
percent was the return rates. What is a typical return rate before
VR?

Mohamed: So typically furniture
is in a mid-single digit returns. Anywhere between 5 to 10 percent in
returns. Just generally in the industry average. And what we were
seeing through the pilot — and that’s held through as we scaled, as
well — is about a 25 percent reduction in returns. When you take
that number and put it at the scale that we have, that’s a monumental
impact on the returns line for the company and eventually to the
bottom line.

Alan: So 60 percent increase in
sales and 25 percent reduction in returns. These are not immaterial.

Mohamed: They’re not. They’re
three stores, but not immaterial.

Alan: Yeah, and that’s what I
was going to say, is OK, so now you’ve presented this in two stores.
You got some data. You go to your executives and say, “Hey,
guys, we have something here.” What was the response met like,
and how did it go from two stores to 100 stores? Was this like a long
term rollout? How did this work?

Mohamed: If you asked me this
maybe three years ago, maybe that would be the trajectory. We would
do it in three stores and say “This works, let’s take it to five
stores. Let’s take it to 10 more stores.” What we met with the
reaction from our executives– and they’d seen this, so our CEO was
on the ground in stores. Our leadership had been in stores, and
they’d seen this in real time and seen how it was working. They’d
seen the feedback — from our colleagues in-store, from the
leadership in-store — that this was a game changer. It was a
differentiator against our competitors. We were the only retailer
that had this in VR form inside our stores. And it could be a
differentiating factor for us and a competitive advantage in the
business. So the feedback from the leadership was “How can we go
faster, and how can we go bigger?”

And then it was up to my team to start
building the plan to roll out. And we went back a week or two later
with our plan to roll it out to 50 stores initially, actually. And
that was tying to our strategic priority at the time of our Growth 50
initiative, which was fortifying our 50 top stores across the country
with new investments. So we went with the plan to take 50 more stores
and add VR to it. The response we got was “No, we meant bigger.
How do we go bigger?” And that was 100 stores, which at the time
was 100 that ended up being 110 stores. So within a space of actually
six months, we added 100 new stores, so by the end of January of 2019
we were in one 110 stores.

Alan: Wow. OK. So there’s one
other thing that I think– it would be an incredible addition to any
retail location to get an increase of 60 percent and a decrease of 25
percent returns. But let’s talk about the cost that Macy’s spends to
bring a furniture store into a typical Macy’s. The cost savings alone
of bringing this in versus a traditional furniture store.

Mohamed: That’s the beauty of
the technology, right? There’s multiple formats, models that we can
really try out. And so the format that we’ve gone with today is to
augment the furniture buying experience in our furniture galleries,
in our furniture stores. And we’ve got about 250+ of those stores and
we’re in about half of them. And the hope is to expand that to all of
them. But what the technology now allows us to figure out is there
are markets where there is demand for furniture. There is demand for
Macy’s to play in. But it’s cost-prohibitive. The ROI is in there, in
context of what it cost to build a furniture store there. And that’s
where we think this technology could play a critical role in us
taking furniture across the nation. We’re in markets where we can not
justify a fully fledged investment in building a furniture gallery.
Can VR play that virtual furniture gallery with an endless island?

The key there is that if we can expand
our 3D content — and we’re on the path to doing that — it’s still a
cost-prohibitive process in driving 3D content. But we’ve come a long
way to where we were two and half years ago, where the cost continues
to go downward. But the idea is that if we’ve been able to build a 3D
library that allows us to now take furniture to stores where we don’t
have to invest in the inventory in that space, we don’t have to make
a 50,000 square foot or even a 10,000 square foot furniture store.

Alan: What is the footprint of
the VR area?

Mohamed: The VR space today is–
the largest we have is about 500 square feet, but that’s in our
flagship stores. You can do it in up to 100, 150 square feet. So
that’s– a typical furniture gallery for us is 50,000 square feet, a
furniture store inside of Macy’s is about 10 to 20 thousand square
feet.

Alan: So 60 percent increase in
sales. 25 percent reduction in returns. And a hundred times decrease
in the space required, which in retail is dollars.

Mohamed: Exactly right. And so
the goal becomes, remember, the 60 percent increase is on any
transactions that’s going through VR. Some of that is a function, a
result of how much your 3D content library is, or how big your
library is. Today that’s a small percentage of our library. But the
goal is to continue to expand that. And as I said, we’re increasing
in multiples. We’re about 10x where we were two years ago. And the
idea is to continue to expand that library, because we know the
upside is higher basket sizes, lower returns, and smaller footprints.

Alan: Let me ask you a personal
question. If you were any other company in the world, why are you not
doing this?

Mohamed: That’s a good question.
And if I wasn’t in the role that I am, I probably wouldn’t know that
either. I think at the heart of it is, you need a champion, you need
an internal champion. You need someone who is– one exposed to the
technology. But you also need someone at the leadership level to say,
“OK, I’ve seen enough in this. This is big. This is a
differentiating factor.” And the companies that get it, by the
way, are doing this. The beauty about the Macy’s business is that we
have– we’re not a pure play retailer. We’ve got a massive store
footprint, and we’ve got some of the best real estate across the
country. And then you’ve got a massive digital footprint. So we’re
able to leverage this technology across both channels, online and
in-store. I think when you talk about investments and when you talk
about ROI, sometimes that’s where the hurdle becomes, where you don’t
have enough use cases to leverage the technology.

Where the beauty for us is, our
singular investment in 3D content goes across our mobile app, goes to
our digital properties, goes to our store. So we’re able to spread
the investment as well and move faster. I think if businesses really
hunkered down and looked at the practical application of this
technology, it’s not right for everyone. It’s not even for us. Not
all categories have the same practical application. So we’re still
thinking about today, how do we take this technology and where else
can we use it? Furniture is an important part of a business, our
business, but it’s a smaller part of our business.

Alan: Clothing, for example, it
would be great to see your own avatar with clothing on, but the
technology just isn’t really there yet.

Mohamed: It’s not there yet.
Exactly. And that would be the holy grail for us, right? That’s the
bread and butter of our business. Apparel.

Alan: If we figure this out,
will you sign a contract with us? No, I’m kidding.

Mohamed: I mean, you’ve piqued
my interest. Trust me, I spent a lot of time looking at what other
technology companies are doing in the non-furniture categories. In
fact, we’ve made some investments this year in starting to build our
3D content library in non-furniture, as well. So we’re doing it
across apparel, across accessories, footwear. In a small scale, but
really trying to understand where also can we leverage this
technology? Having spent the last two and half, three years in this
space, I truly believe the consumer of the future is going to
interact in 3D. We’re one of the earlier movers, and we’re trying to
set the foundation. But if businesses are not making those
investments today, they’re going to be left behind five years from
now.

Alan: Yeah, absolutely.

Mohamed: Macy’s as a brand as
you, in spite of everything that you hear from the reporting in the
media that department stores are dead, the reality is that Macy’s has
always been one of the pioneers. We launched our e-commerce business
in 1998, way before any of the other retailers had even started. And
that’s a core reason why today we’re one of the largest Internet
retailers in the country. And so it’s always been a leadership that
has been excited about change, and been investing in it, and having
the courage to invest in change. And that’s what we’re seeing here as
well. By leadership that we’ve got, their support to really explore
how do we evolve our e-commerce business, evolve our stores business,
and invest in emerging technologies that really have a practical
application to our strategic priorities.

Alan: It’s true. And being able
to take the knowledge and experience that you guys have gained. And
then thank you, first of all, thank you for joining this
conversation, because I think people listening, especially those of
you listening in retail, this punctuates the value that virtual and
augmented reality brings. Talk about your AR component, because I
know you’ve built these furniture visualizers in VR, so you can go
into a store. But I think equally as important is something like what
you guys are doing in AR, being able to see these same 3D models, you
don’t have to create anything new, just the same 3D model. Maybe you
decimated a bit or make it smaller for the AR to use on a mobile
phone, but you can now see that couch, or that hutch, or whatever in
your own house.

Mohamed: Absolutely. And that’s
the beauty of this. I was talking about diversifying the ROI. And
that’s where an investment in 3D content allows you multiple use
cases. Today we’re absolutely scaled in VR in-store. But since last
year, we initially started as a test in piloting the augmented
reality component in our furniture business on our mobile app. Now
mobile is a core part of our strategic priority. It’s our flagship
location. Our best customers are omni-channel customers. They shop on
our mobile app. They shop on our mobile properties. They shop on our
website. They shop in our stores. And really, the goal for us is to
continue to drive the mobile app experience.

We’ve got one of the highest-rated
retail apps in the app store. Last year, we grew our mobile business
by about 50 percent. We did nearly a billion dollars through our
mobile app last year across Macy’s and Bloomingdale’s. So you can see
it’s a top priority for the company. And the goal is to continue
growing that. The way to grow that is when you pack value inside the
mobile application, you drive different experiences. And that’s where
we’ve made sure that we’re able to extend the AR experience into
mobile apps. So we tested it last year. We launched it this year
across Android and iOS. So all our app users are able to do that. And
really the experience is if you’re on the furniture product page,
you’re able to click a button that says “View in my room”
and you’re able to– it will use your camera to superimpose the 3D
content in your actual living space. And the beauty is you’re able to
change colors and try different things. What I’m excited about is
with where that technology heads today, so single scene experience.
You can put one product and view that in your room. We’re not far
away from doing a multi-scene environ where you’ll be able to bring
in multiple products and look at how that. And I think that’s going
to change.

I think if you think about the beauty
of VR, where I like it is, it’s a location-based experience. I have
600 locations across the country in about 250 to 300 furniture
locations. So I’m able to drive consumers to our store through VR.
Really, the scale is in AR when the consumer through their
smartphones will be able to interact with the technology. So that
gets us excited. We’re seeing some really good early results, that
I’m not able to share yet, we haven’t made them public yet. But
they’re really meaningful results in terms of driving conversion,
when a consumer interacts with AR in our furniture business. I’m
excited about where that’s going to go.

Alan: There’s so many
opportunities. Now, something that comes up on almost every one of
these podcasts is training. Are you guys using this technology in
that capacity, as well?

Mohamed: So– we’re not. Not
yet, I would say. I think it’s one of the core opportunities for us,
especially as a retailer with a lot of stores and a lot of retail.
We’re 130,000 strong organizations, so clearly there’s a lot of
requirements for training. And it’s something that we’ve started
exploring. We’ve had some conversations, and it’s something that
we’re deeply looking into. I think there’s– if I look at that three
core uses for immersive technology in general, clearly the need for
practical application to specific business is one of them. Training
is the second one, where I really think it can add value and
meaningfully drive costs, but also increase engagement, and as a
result, retention of the training material. And then the third piece
is obviously as a branding and entertainment avenue. And as you know,
Macy’s is a powerhouse in that sense. We run some of the most sought
after events, from the July 4th fireworks, to the big annual
Thanksgiving Day parade, to the flower show. So there’s a lot of
opportunity for us to leverage immersive technology in these three
streams.

Alan: I have one for you. So on
the Fourth of July, I posted a couple of AR apps that you could do AR
fireworks, and all of them were meh. So let’s make the Macy’s Fourth
of July fireworks AR app.

Mohamed: I mean, all year. I
think the idea is you want to make sure the experience is authentic.
You want to make sure that one, the experience is authentic and you
really get immersed into it. So I’m not sure if the fireworks in AR
is the right– it’s something that we want to explore. We want to
look into it. But we want to make sure that the experience that
someone who’s live in that space is experiencing, you’re able to
replicate that in an immersive technology setting. So we’re going to
look at that space closely. We’ve spent some time with our leadership
in that space to talk about it. And I’m excited about what could come
down the line.

Alan: There’s so many great
things that you guys are doing. And I think one thing that’s really
interesting about the work that you’re doing at Macy’s in general, is
that you got bit by the VR bug. You found an early use case that
showed real ROI. And now you realize, “Wow, if it shows this
kind of ROI in one section of our company, what else can it do?”

Mohamed: And that’s the key,
finding a practical application. Because that’s the catalyst. If
you’re able to find a practical application — when I mentioned
earlier about core goals are on driving employee and consumer
adoption — because there is a practical application, our job got a
little bit easier in driving the employee adoption and the consumer
adoption. But then — as you just alluded to — it’s exactly that.
Like as soon as– if it worked here, where else can it work? Where
else can I take it? And that’s been the mentality on our team. That’s
been the mentality with our leadership to say, “OK, this was
great. Now figure out how do we spread it to other parts of the
company.”

Alan: Absolutely. What advice
would you give a new company that’s new into VR? What would the first
steps be for somebody that is looking to invest in this technology?

Mohamed: Technology for
technology’s sake is not going to work. So there is always that shiny
object that’s out there. But I think really focus on what you were
trying to solve. Identify a problem that you’re trying to solve, and
figure out a practical application. That’s exactly the approach that
we’ve used. We had a business that was a strategically important
business to us. It was full of friction in the consumer buying
process. And here was a technology that could alleviate that problem.
If you’re in that situation, then constantly focus on the end user
experience — whether that’s the employee who’s going to use that
technology or drive the adoption of the technology, or the customer
— make sure the end-to-end process is fully embedded out and fully
thought through. From training to execution, all of those need to be
really focused on how the end user is going to use the technology.
And if you’re able to do that– and not all of those, even if you
follow that to the tee, things may not work out, but you will learn a
whole lot about what are the aspects that worked and what didn’t, and
that allows you to pivot elsewhere. But really, the core is to find a
problem you’re trying to solve, versus something that’s good to have.
So get the basics right, then try to identify real problems that
either your employees are having or your customers are experiencing,
and then go about finding a technology that’s truly solving that
problem.

Alan: Mo, this has been really,
really intriguing, and I think it’s really amazing that you’re
sharing this information. And I think I want to applaud you and the
Macy’s executive team for sharing this, because without these early
case studies and these early wins, this technology doesn’t go
anywhere. If you guys had just said, “Yeah, we’re seeing these
great results, don’t tell anybody,” there would be no reason for
other companies to invest in it. And I think what we’re going to see
is a much, much larger pie be created from all of this, rather than
the scarcity mindset. So thank you for being one of those people that
champions this technology.

Mohamed: No, I’m happy to. And I
think there is a benefit for us in ensuring that. One, obviously, it
highlights some of the great work our teams are doing. Obviously I’m
the face of it, but it’s a massive team behind me that’s actually
executing this on the ground every day. But more importantly, even
our investments today are early investments. So we’re typically–
because the market’s not– it’s still not mainstream yet. Our
investments are a lot higher than what it would usually be. So the
hope in return is that as we evangelize the technology and continue
to share, and more players enter the fray as that demand increases,
we’ll be able to see some of the costs come down as well, and as a
result improved ROI for later players as well. But more importantly,
some of our– some of the early movers, such as us. So I’m excited to
share. It’s something that I’m deeply passionate about. I think
there’s a lot of opportunity in this technology and a lot of
retailers — the ones that are truly serious in this space — are
actually making meaningful investments alongside us. And the hope is
that more retailers come on. I think it’ll be good for the industry
in general if more players join the fray.

Alan: It only serves to decrease
the costs for everyone because, for example, three years ago, VR
developer wasn’t really a thing. You know, you had to kind of go
hunting for people that were making video games, and bring them over
to the dark side of enterprise. But as more and more people start to
see this technology as it expands, I think we’re gonna see what we’ve
already seen, a dramatic decrease in the cost to produce this type of
content. 3D objects or 3D assets for retail. Three years ago,
building a shoe in 3D would be a 1,000 bucks to build one shoe. And
now there’s lots of people that will do it around the world. And then
there’s photogrammetry techniques, there’s different ways of doing
it.

Mohamed: If you think about it,
just on our mobile channels we’ve got over a million and half units
or products. So if you think about it, the scale that we require, the
content price to be able to scale 3D content is monumental. And so
we’re seeing it move in the right direction. Our costs are
significantly lower than where we were two years ago, but we’re still
not at the rate where we need to be to scale. But the hope is that as
more players come in, and to your point is there is higher demand for
designers, and we’ll be able to continue to see that moving in the
right direction. I’m excited about where it’s going, but there’s a
lot of work to be done to get to scale.

Alan: Well, it sounds like you
and your team are leading the way, so thank you again. I can ask you
one last question. Mo, what problem in the world would you like to
see solved using XR technologies?

Mohamed: So I will be biased,
because I am still– I’m a retailer at heart. So it’s the consumer
experience. If we think about where the consumer five years from now
is going to engage with retailers, I think XR is the space where that
can bring that experience closer to life. If you see today why
physical retail continues to be strong, you hear about store closures
everywhere, but you’re also hearing about a lot of new store
openings. And part of it is because the physical experience going to
a store, the online experience can’t replicate that. And if you think
about it five, 10, 20 years from now, and if you want the online
business to continue to grow and become an equal share of global
commerce revenue, XR is, I think, an avenue to help solve that
problem, to create a digital experience that mimics as closely to a
physical experience. And until we get there, you’ll continue to see
physical retail thrive. So that’s one I’m really curious. I mean,
obviously I’m at the center of it for some parts of it, but I’m
really, really interested in seeing how that comes to life and how–
not only does it solve consumer pain points, but also enhances and
augments that experience.

Alan: Thank you again for taking
the time to join us on this podcast. And I think on behalf of
everybody listening, this has been a fantastic opportunity to learn
about Macy’s and the technological advancements of a 100 year old
retailer remaining relevant in 2019 and beyond. So thank you.

Mohamed: My pleasure. Thanks for
having me.