Is Macy’s for real?

Discussion
Photo: Macy’s
May 27, 2022

Macy’s CEO Jeff Gennette has been saying that the department store company he leads is a different and better retailer than it has been in the past. The chain’s most recent quarterly results don’t appear to do anything to disprove that assertion.

The company reported a 12.8 percent increase in first-quarter same-store sales as its namesake chain posted a 10.7 percent gain and Bloomingdale’s sales jumped 28.1 percent. The two chains saw significant gains in active shoppers — 44.4 million shopped at Macy’s, a 14 percent gain, and four million at Bloomie’s, a 21 percent improvement.

Mr. Gennette, speaking yesterday on the company’s earnings call, said that Macy’s benefited from gains in “occasion-based apparel” as its customers attend more social events and return to offices to work. This development, similarly to what Nordstrom reported earlier in the week, led to increased foot traffic in Macy’s stores.

Macy’s continues to double down on its omnichannel strategy with a focus on personalization.

“We’re starting to see the results of this personalization work, with revenue driven by personalized product recommendations up 13 percent during the quarter,” said Mr. Gennette. “While we’re still in the early innings of these initiatives, we’re pleased with these results. And we continue to test and iterate to find the best communication channels, frequency, messages and offers.”

Macy’s CEO said the chain saw an increase in the number of customers actively using its mobile app of 14 percent, rising to 7.4 million in the last quarter.

He also said that progress was being made on the launch of Macy’s online marketplace, which is scheduled to go live in the third quarter.

The chain’s offprice Backstage store-within-a-store concept is a growing contributor to Macy’s results. The concept posted high single-digit comp gains compared to 2021. Macy’s is in the process of opening 37 new Backstage shops, including one in its Herald Square flagship. The retailer now operates more than 300 of the shops.

Mr. Gennette said that the retailer was also enhancing its merchandise.

“We’re putting a lot of focus here as we look to engage more customers and grow our market share.” he said. “We are in the early stages of reimagining our private brand portfolio and realigning our private brand team under new leadership in partnership with our broader merchandising and sourcing teams. Our goal is to have a private brand portfolio that is differentiated, defendable and durable.”

DISCUSSION QUESTIONS: Are you becoming a Macy’s believer? Where do you see the biggest needs and opportunities facing the company at this time?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Are the results at Macy’s sustainable? The company has a lot of initiatives happening, but I’m skeptical based on erratic results in the past."
"Count me in the skeptic camp, again. Looking at the increase in loyalty members versus the comps, there is a negative spread. Digital comps barely positive."
"He obviously hasn’t walked around his appalling stores."

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23 Comments on "Is Macy’s for real?"


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Dick Seesel
BrainTrust

Macy’s is benefiting from some of the same trends that are driving Nordstrom’s results right now. The return to the office, coupled with “occasion” dressing (dining out, travel, etc.) is moving customers to the kinds of merchandise that traditional department stores carry. This is especially true at the moderate-to-better end, while midtier retailers like Kohl’s have doubled down on activewear and may be missing this change in consumer behavior.

Are the results at Macy’s sustainable? The company has a lot of initiatives happening, but I’m skeptical based on erratic results in the past.

Georganne Bender
BrainTrust

I am a Macy’s believer. I have always been in Macy’s corner but it’s a tough spot to be in these days when there is such a discrepancy between what’s said in the press and what’s happening on the sales floor.

Mr. Gennette, some of your stores are a MESS. It’s hard for consumers to love Macy’s when they have to dig through piles of product to find what they are looking for. (If you need evidence check out the photos on @neilretail’s Twitter.) The wonderful Thanksgiving Day Parade, new stores and departments aside, to do well people need to be able to love their local Macy’s. For that to happen Macy’s must recreate and refine the in-store experience in every one of its locations.

Cathy Hotka
BrainTrust

That’s my experience, too. The stores are a mess, but there are outstanding deals to be had online. The stores team has to come up with a plan.

Georganne Bender
BrainTrust

Destroyed sales floors seem to be a trend right now, but it’s disheartening for shoppers when they find it happening in their favorite stores.

Cathy Hotka
BrainTrust

Agreed. It always seems that the music is too loud and there’s clothing on the floor. That said, I spent a ton at Macy’s last Christmas, online.

Georganne Bender
BrainTrust

Me too, but on the sales floor.

Neil Saunders
BrainTrust

We still need our joint store visits tour! We’ll neaten up those stores in no time! Haha.

Georganne Bender
BrainTrust

This year, I promise!

Lee Peterson
BrainTrust

The department store business model is still the department store business model and nothing Macy’s has done lately has changed that. It’s great to beat crappy numbers, makes you feel like you’re headed in the right direction, but in reality getting the pump working on a sinking ship only lasts so long. I don’t know of ONE person under 25 that shops Macy’s, not one. Or would think of it. The new department store is where all of us shop just about three times a week, and it’s got a big smiley face on its boxes because of it.

Neil Saunders
BrainTrust

He obviously hasn’t walked around his appalling stores. And sales are down on 2019 even though overall consumer spending has skyrocketed. That tells you all you need to know.

Brandon Rael
BrainTrust

Macy’s has made significant strides in getting its foundational customer-first elements in place. As customers return to the office, and there are special occasions to plan for, Macy’s assortments, pricing, and value proposition are well-positioned to meet the changing consumer needs. A robust store within a store concept, as well as a comprehensive private label offering, will be key differentiators in a disrupted department store sector.

Macy’s has momentum and it’s imperative that the company focus on execution on the sales floor, with proper merchandising, outstanding customer experiences, empowered sales associates, and a fully connected digital and physical commerce experience. While the first-quarter numbers are encouraging, execution and delivering on the brand promise are key to long-term success.

David Weinand
BrainTrust

The fact that Macy’s bucked the trend of negative comps is pretty amazing. It was interesting to see that personalization was called out — our data shows that personalization is used primarily at the front end (e.g. commerce phase) of the shopper journey and far less in the retention phase. If Macy’s can mature their personalization strategy, I believe they can achieve even better results. It’s a good counter punch to the department store’s weakness – too much choice. The off-brand growth is also a good strategy considering our current inflationary environment.

Ken Morris
BrainTrust

I have always been a believer in Macy’s, and these performance numbers only cement that belief. They have made big investments in technology that are now bearing fruit. They are a leader in RFID, allowing them to reduce and in some cases eliminate safety stock — which in turn enables them to sell to the last item. They are also leveraging the technology to lower shrink and improve inventory control, increasing visibility into product location throughout the supply chain. They’re even using RFID for managing returns more cost effectively. Full disclosure: we talk about the Macy’s RFID story in our recent white paper that gives an overview of RFID tech implementation and best practices in retail.

Shawn Harris
BrainTrust

I would put more weight on shopper trends as we have opened up, than on any particular executed personalization program. Macy’s requires a more structural/transformational change.

Brian Kelly
Guest
28 days 10 hours ago

While I was encouraged by Gennette’s discussion of customer segment performance, his comments about the short-term future were classic garmento blah-blah-blah. And I find the bobbing and weaving between corporate and store Macy’s numbers annoying.

Bloomies and Nordys performance suggests the high end is covered. And below $75,000 will remain covered by dollar stores and discounters. The middle needs a shopping experience that is relevant to the customer. Respecting her matters, as is pointed out by the unforgivable unkempt selling floors. Macy’s fails here. KSS doesn’t seem much better. And JCP is what again?

Returning to work will be a short-term lift. The COVID-19 delayed baby boom suggests life stage activation and a promise for greater spend. Dillard’s disproves the “department store demise” — it benefits from a tight geography? I’m still not convinced that Macy’s has its finger on the nationwide shopper’s pulse.

Jeff Sward
BrainTrust
Macy’s is as real as it gets. And by that I mean they are a great example of the stranglehold that some legacy retail strategies have on the business today as those strategies fight and compete with the strategies and tactics necessary to operate in this century. I lived through the Macy’s/Federated fiasco back in 1988. And most people need reminding that today’s Macy’s is actually a rebranded Federated Department Stores. Federated, but rebranded because of the power of the Macy’s marquee. To me, Macy’s is now like a used car that is still a daily driver, but it’s also in the shop every night getting tuned up. They are working on a lot of moving parts we aren’t yet able to see. Or it’s like the joke about the car mechanic who wonders why the heart surgeon makes more money. They are both experts and they both fix things. Except the heart surgeon says, “Try doing your job with the engine running.” Macy’s might be one of the most difficult fixes in retail right… Read more »
Allison McGuire
BrainTrust

I certainly want to believe that Macy’s is turning around, but unfortunately I think it’s just a change in consumer behavior. Due to labor shortages and supply chain issues, the stores look sub-standard. The Backstage category has been a win, but I’m unsure if that’s just replacing sales from the regular priced clothing or adding new business. Time will tell if it’s sustainable.

Ricardo Belmar
BrainTrust
Just like Macy’s annual theme — Believe! — I want to believe they are turning the ship around and headed in the right direction. But even the numbers Mr. Gennette talked about merely indicate that Macy’s is benefitting from current consumer trends in just the product categories they need. How sustainable is that? Next quarter could see vastly different rends and result in a quite different story. Is Macy’s product mix diversified and curated enough to compensate? That remains to be seen. It also seems that Bloomingdale’s stores may be in a better position that namesake Macy’s stores. There are some glimmers in the reports – especially if what Macy’s is seeing from their personalization efforts continues to mature, this could be leveraged into more reliable and consistent buying habits. Efforts like Market by Macy’s may ultimately prove unique and interesting to consumers, but the fact is until more of these locations are opened, it is not going to move the needle much. Macy’s has many experiments like this running but they need to determine… Read more »
Craig Sundstrom
Guest

No and honestly, do we really need to ask? Every time Macy’s is mentioned on RW, which is often — many might say too often given the lack of actual “news” — comes forth a flood of similar remarks: messy, poorly merchandised stores, a general lack of staffing and an endless parade of initiatives that for the most part quietly disappear. That comp sales are up from some dismal pandemic figures, in the highest inflation environment in four decades, means little.

I’ve nothing against Macy’s and they’re in a challenging spot, but it’s silly to go along with what amounts to self-congratulation.

Gene
Guest
28 days 8 hours ago

Not real as we are talking results against lousy comps. Macy’s cannot be successful if the same brands are available in discount stores even if it is different merchandise. Home Depot, Costco , TJX, target have figured it out, why can’t Macys? They need the same dynamic merchandising initiatives that they have for events, parades, fireworks, flower shows and the same dynamic efforts as they have for real estate decisions — customers have voted for more than 20 years for value just give it to them. A merchants job has always been defined as figuring out and giving the customer what they want, not what you think they need.

RandyDandy
Guest
28 days 6 hours ago
Pardon the puns, but there are a few to come. Meanwhile, bear with me: If “a chain is only as strong as its weakest link” I offer you a few (perhaps cliched but still true) points why Macy’s in Union Square, San Francisco, may be ready to break, and a clear indication that no matter the good news there’s still a lot of bad on this retailer’s horizon. One, you could “roll a bowling ball” down any aisle in this store and not hit either a customer or worker. For a city center location that dearth is undeniable and obvious. Two, of the few shoppers one may find around, they’re hardly “going to town” with any discernible lavish or impulsive buys; two factors that are highly coveted by stores of their customers. Three, the lack of “others” countered with the preponderance of “untidiness” makes for a wholly uncomfortable “Who wants to be here?” vibe, which is counter to the necessary in-person mood physical stores need in order to flourish. Or in this case, just exist.… Read more »
Phil Rubin
BrainTrust

Count me in the skeptic camp, again. Looking at the increase in loyalty members versus the comps, there is a negative spread. Digital comps barely positive. Macy’s brand remains irrelevant for younger consumers and it’s hard to see Macy’s doing much to change that, in spite of Polaris and other initiatives. Good thing for inflation and its impact on the comps though, and share buybacks on EPS.

Anil Patel
BrainTrust

I think Macy’s still has a long way to go. There’s a possibility that the positive results are due to the supply chain constraints that restricted other brands from procuring an ample amount of inventory. Whereas, Macy’s, being a retail giant had access to more resources, allowing them to sell off their excess inventory and ultimately increase sales. But this is only a temporary win because its long-term strategy and vision remain a question mark. Also, I am quite unsure of the success of Macy’s Backstage stores as their positioning, messaging, and customer profiles seem confusing and ill-defined. So only the upcoming years will tell whether Macy’s has successfully decoded the winning matrix or not.

wpDiscuz
Braintrust
"Are the results at Macy’s sustainable? The company has a lot of initiatives happening, but I’m skeptical based on erratic results in the past."
"Count me in the skeptic camp, again. Looking at the increase in loyalty members versus the comps, there is a negative spread. Digital comps barely positive."
"He obviously hasn’t walked around his appalling stores."

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