What: Terry Lundgren, former CEO of Macy's, Inc. and Neiman Marcus, credited Macy's rise to fourth among US online retailers to an early, sustained e-commerce commitment, an approach he says should now guide AI adoption.

Why it is important: Macy's experience shows that a first-mover advantage erodes once bigger competitors acquire the talent they lack, a risk department stores now face again with AI.

Terry Lundgren, former CEO of Macy's, Inc. and Neiman Marcus, told the Thirty Minute Mentors podcast that Macy's launched its website in 1994, prompted by its Northern California division. The company kept investing through the 2000 dot-com collapse despite losses, and by his retirement ranked as the fourth-largest US online retailer, behind Amazon, Walmart and eBay but ahead of Costco and Target.

Lundgren attributes the erosion of that lead to two factors. Competitors caught up, notably Walmart, whose $4 billion acquisition of Jet.com he describes as a purchase of talent it lacked. COVID-19 then shut non-essential retailers such as Macy's while essential-goods rivals kept trading. He estimates digital now represents over 20% of sales at Macy's and Bloomingdale's, and argues AI calls for the same approach: identify who understands it best and hire or partner with that talent.

He also recalls using the 2009 financial crisis to consolidate divisions and overhaul the company's structure, followed by over $1 billion in annual sales growth for five years with fewer stores. At Neiman Marcus, a public endorsement from Stanley Marcus cut the rollout of his strategy from an estimated two years to about four months.

IADS Notes: Lundgren's account of how Macy's lost its early online lead sits against a turnaround that now shows measurable traction. The group posted a fifth consecutive quarter of comparable-sales growth in Q2 2026, led by Bloomingdale's and Bluemercury, a run analysts read as the end of a long decline (Inside Retail, September 2026). CEO Tony Spring credits simultaneous changes in merchandising, fitting rooms and staffing under the "Bold New Chapter" plan, with reimagined stores growing in nine of the last ten quarters (WWD, September 2026). The posture Lundgren advocates for new technologies, moving early and bringing in outside expertise where it is lacking internally, finds a current parallel in Macy's decision to take an AI forecasting overlay from pilot to broad deployment, a step Target, Lowe's and Kohl's are also taking (Supply Chain Dive, September 2026). The stakes may be higher than in the e-commerce era, as AI is expected to favour scale giants and data-rich direct-to-consumer brands, leaving department stores exposed unless they sharpen category authority and customer relationships (Forbes, July 2026). At Neiman Marcus, the downtown Dallas flagship whose Zodiac Room hosted the lunch with Stanley Marcus that Lundgren recounts was scheduled to close in September 2026 as Saks Global restructured its portfolio (Dallas News, June 2026).

Terry Lundgren on Macy's early e-commerce bet and the lessons for AI