BrainTrust Advice 2006: ‘Told You So, Macy’s’
You could say 2006 has been a lot of things, but if you work for Macy’s, one thing you couldn’t say was that it was boring.
The retailer began the year still looking to integrate the businesses it acquired from May Department Stores and, in the process, launch the first truly national department store banner. Of course, that meant retiring a number of iconic department store names, sometimes over intense objections from customers in places such as Chicago.
Over the course of the year, Macy’s sold off Lord & Taylor as well as May’s bridal business. It doubled up stores in some malls and sought to establish a more upscale profile for many of the stores acquired in the May deal. The chain sought to sweeten the pot for customers at newly acquired stores with the introduction of a new rewards program that enabled shoppers to gain points quickly and with a faster payback than those previously in place.
Macy’s continued to focus on building its already strong private label business and also went out and signed exclusive deals with Martha Stewart and others.
A lot went on over the year at Macy’s and RetailWire’s BrainTrust was there to offer advice every step of the way.
Challenges and opportunities of building a national banner
“In Detroit, we loved Hudson’s. Then Hudson’s became Marshall Field’s. Many older Detroiters still refer to the stores as Hudson’s, which just confuses their children. Now, Marshall
Field’s will become Macy’s. I assume some people will still refer to the stores as Hudson’s, some will insist on calling them Marshall Field’s and most will adjust to calling
them Macy’s. Will there be gigantic consumer pushback? Not likely unless the name change is accompanied by a change in merchandising and/or pricing. Brands are a lot more perishable
than branders like to believe.” – Ryan Mathews, Founder/CEO, Black Monk Consulting
“Consumers identify with local companies and names they trust. If it is a name consumers value, why go to the expense of changing it? One size certainly does not fit all. And
many companies have found that bigger is not always better. Federated is certainly taking a big risk in changing valued brand names such as Marshall Field’s in Chicago… It is
now up to Federated to show consumers why the name Macy’s is better in terms of product selection, price, services and overall atmosphere or they will face continuing sales declines.”
– Odonna Mathews, President, Odonna Mathews Consulting
“Macy’s is undermining its own rationale for its single national brand strategy. Although the following language is from a Macy’s ad dated 11/7/2006 in the New York Times,
it’s typical of many other Macy’s ads: ‘This advertisement applies to Macy’s stores in NY (excluding Binghamton and Horseheads), PA (excluding Altoona, Frazer Heights, Greensburg,
Hermitage, Homestead, Monaca, Pittsburgh, Scranton, State College, Washington, West Mifflin and Wilkes-Barre), VA (excluding Hampton, Lynchburg, Newport News, Norfolk, Richmond,
and Roanoke), CT, DE, MA, MD, ME, NH, NJ, RI and VT.’ The Big Strategy: One brand name, national advertising, consistency. The execution: one brand name, inconsistency.” – Mark
Lilien, Consultant, Retail Technology Group
Store brands and exclusive labels
“Private label requires that the organization have the skills to identify trends before their customer is ready, interpret those trends for their customer, and bring them to market
in time and at the right price. Additionally, the organization absorbs the entire financial risk of the assortment, elevating the requirement for a flexible and efficient supply
chain to the same importance as the trend management capability. Federated has invested an enormous amount of time and money to develop, enhance and sustain these skills. Both
in terms of flexible supply and trend management, the organization has technology, processes and people dedicated to being excellent in these mission critical capabilities.” –
Don Delzell, Partner, Retail Advantage
“‘Fast fashion’ translates to ‘expendable fashion’ and that one factor is a huge driver for the recent rush in private label apparel (along with the ongoing margin and differentiation
benefits). Blame H&M, Zara (and Limited before them). As vertical players’ product development cycle and trend interpretation timelines accelerate to head-spinning speed (how
about two weeks in the case of Zara?), new standards are set for the big guys… standards that make the efficiencies of do-it-yourself brand-building more attractive than ever.
Zara, Federated, Target, Wal-Mart, Penney’s… all have invested major bucks to hone their private label and product development prowess.” – Carole
Spieckerman, President, newmarketbuilders
Discussion Question: What advice do you have for Macy’s going into 2007?
- Macy’s Learns New Ways to Communicate – RetailWire 11/09/06
- Store Brands and Exclusive Labels Make or Break the Retailer – RetailWire
- One Too Many Macy’s x 85 – RetailWire 9/6/06
- Macy’s Looks to Reward Loyal Customers – RetailWire 07/17/06
- Macy’s Takes Hit Over Name Change – RetailWire 06/07/06
- Federated Takes Local Approach in Chicago – RetailWire 04/28/06
- Another May Question Answered: Federated to Sell Lord & Taylor – RetailWire