Macy’s Local Approach Works
It’s been a long time since Macy’s acquired the former Federated
Department Stores and it seems as if the company has been trying to get itself
straightened out ever since. Heading into the holiday season, there are
signs the nation’s largest department store is finally getting to the place
envisioned when the acquisition took place and a good portion of the credit
goes to its "My
Macy’s" local assortment approach.
"We had to do something different," Terry
Lundgren, CEO of Macy’s, Inc., told Bloomberg News. "I wanted
to maximize the business on a local level, but how do you do that today with
810 Macy’s stores?"
According to a Houston Chronicle article,
the local approach Macy’s has taken can been seen by comparing two Texas cities,
Houston and San Antonio. In Houston, women buy boots, jeans and other cowgirl-type
gear at Rodeo time. In San Antonio, they look for brighter-colored clothes
around Fiesta.
This year, Macy’s promoted "Rodeo Chic" in Houston
with stores featuring boots, hats, jeans and plaid shirts. In San Antonio,
the company launched seasonal "Fiesta
Shops."
George Burch, a district merchant for Macy’s who serves as a liaison
between buyers and store managers in Houston and Louisiana, told the Houston
Chronicle, "The
longer we do it, the more we can learn about the customer and the more we can
refine the assortment."
Discussion Questions: What is your assessment of the My Macy’s program?
Of all the large retail chains, which one(s) do you think use local assortments
to the greatest advantage?
Based on a general upswing in same-store sales during the past year, My Macy’s so far appears to be a success. As even brand-name designers are finding their way into discount retailers, more upscale department store chains like Macy’s can no longer rely on having certain brand names to lure discerning shoppers. Localization is a great idea that has been around for quite a while but when pulled off correctly can still provide significant market differentiation.
40 years ago, there were over 130 individual department stores in America, each with their own buying staff whose offices were typically adjacent to their categorys’ sales floors. The buyers worked their floors and had a deep understanding of their customers’ preferences. They lived in the community and were part of it. There were two clearance events a year and, oh by the way, margins were fat and customer service was good.
Fast forward to today and there is effectively one national department store with buying offices in New York. Prior to My Macy’s, there was essentially one national assortment. Endless promotion was the only approach to driving revenue. Margins were, to say the least, not fat. Expenses were relentlessly cut and service disappeared.
The obvious truth is that geography and demographics vary across this incredibly diverse country. The better a retailer’s assortment reflects this, the better the business. While My Macy’s is showing a lot of promise, it is still in the very early stages. As I’ve said before, this is a cultural change and it will take time and perseverance. If they stick to it, it should produce terrific results.
I only have three data points to go on here. Living in Chicago, the conversion of Marshall Field’s was a big deal, of course. I have three women in my life who all swore never to set foot in a Macy’s. Two are now dedicated Macy’s fans. The third is an 88 year old who I believe to in fact be the woman Marshall Field’s was referring to when he said “just give the lady what she wants.”
In the end, all retailing is a local phenomenon. The drive by retailers of all types to increase efficiency (i.e., same assortment) has resulted in “cookie cutter” versions of their stores. Often this is defended in terms of the customers finding consistency when they visit the various retailer outlets.
If a retailer truly claims to be market-focused then it needs the permission of the customers in their market when it comes to the assortment of products and services offered. Doing this the retailer becomes more of a merchant like the days when customers and merchants knew each and each other’s needs. This is not to suggest that we return to the “good old days.” Rather to incorporate the merchant-concept to today’s retail environment and offerings.
Like Ben, I too live in Chicago and witnessed the Field’s-to-Macy’s conversation. I would say the change has been mostly successful. I would agree that the assortments vary by store which is why we have a tendency to shop at a location other than the local store. We fit one of their profiles–just not the one to the Macy’s closest to us.
Ben, Stephen and Bill have all hit on it–local matters. Again, a Chicagoan here–remember when Macy’s said, ‘we can’t keep the Marshall Field’s brand because it will destroy our efficiencies in national advertising”? Yet, years later here they are spending more on local. Local matters and not just in retail–people want to feel connected to their community and they want unique experiences tailored to the way they live their lives. Social channels have demonstrated people’s desire to connect to their community (in whatever way they define it)–using analytics and integrated media and marketing marketers can still get some of the efficiencies of national while tailoring down to the local level when and where it matters.
I appreciate Macy’s willingness to continue to stick with ‘localized’ assortments.
That said, they’ve been working on this effort for many, many years now (and it seems to get reported as ‘news’ each of those years).
It would be interesting to compare their sales results (or segments thereof) with comparable or similar retailers over that same lengthy period to see if all the better merchants have done a better job of growing sales over that same time frame or if Macy’s has enjoyed disproportionate growth over that same span. Comparing yourself to yourself vs YAG ot over a few years is not sufficiently robust analysis. Nor for that matter is the annual anecdotal “we no longer send parkas to Florida and bikinis to New Jersey in November” story.
Macy’s has only begun to clue in to something that will slap every retailer in the face when the 2010 Census gets unpacked next year.
America is now essentially 4 countries under one roof and only 3 of those “countries” are growing. The West, The South, the Northeast and the shrinking Midwest have become so intrinsically different demographically and economically, they can’t possibly be served by a central buying program.
This isn’t new…it’s just overdue.
Hmmmmm…I think Marshall Field was speaking of all women to all retailers. I think Terry Lundgren heard that each and every time he came through Chicago. Or Loop versus Oak Brook stores. Or Atlanta, etc.
Knitting together legacy databases is no small task. Once together on a stable platform, Macy’s can begin to give the household (or better, lady) what she wants in her store or on her “my Macy’s.” We are just beginning to experience long-elusive, intelligent/rationalized assortments. It’s a long way from regional Christmas ornaments to planner nirvana.
Or as we like to say, “retail ain’t for sissies.”
If it’s truly taken Macy’s five years to figure out that they will sell more if they stock what their (potential) customers want, rather than making them buy only what purchasing central cares to order, I’m not sure I’d call it “success.” And if Ben’s example is typical, then they have two thirds of the customers they started out with pre-May…a number which, sadly, seems to be matched by the figures offered the other day on department stores’ continued declining market share.
One size doesn’t fit all, and My Macy’s is ample proof. Tailoring the store’s product offering to more accurately reflect the lifestyles and desires of local consumers is smart. For years, the department store shopping experience was hobbled by product sameness. Private labels and designer exclusives helped, and now localization programs go several steps beyond by stocking the products local consumers want in their preferred sizes, styles, tastes and team colors.
I find the “local” strategy by Macy’s (deemed ‘My Macy’s’) to be somewhat baffling. If Federated wanted to be ‘local’ as a brand, why did it do away with Lazarus, or Marshall Field’s (the list is long Seems to me that the original strategy was to centralize what was once local stores with local buyers, local employees and local fans into a giant, global corporation with a name everyone recognizes from watching TV on Thanksgiving. That way, as I recall, the stock price would go up. Right?
Having said that, a ‘strategy du jour’ like this may work. Thankfully for retailers of all stripes, the American consumer generally has a very short memory (as mentioned above). But not all of us do.
It appears Macy’s is getting it with their “My Macy’s” approach. What impresses me is they are committed to it and are not backing off when they encounter a problem. They back up, analyze the problem, then put steps in place to overcome it. Then on to the next. I am impressed with the commitment.