Will Apple bring Macy’s a merry Christmas?

Discussion
Photo: Macy's
Sep 09, 2016

Struggling Macy’s is looking for any way it can to put its traffic and sales trends on a positive track heading into the critical Christmas selling season. Has it found an answer in a new partnership with tech giant Apple?

Jeff Gennette, president and CEO-designate for Macy’s, Inc., told analysts yesterday that it has signed a deal with Apple to open one of its customer magnet stores inside the department store’s iconic Herald Square flagship location in New York City. The new Apple (they don’t call them stores anymore) will be the first the tech giant has opened inside a department store in the U.S.

In addition to the Herald Square news, Mr. Gennette said Macy’s will also begin selling the Apple Watch at 180 of its top stores heading into the holiday season. Apple unveiled its second generation smartwatch earlier this week. The new water-resistant (not waterproof) Apple Watch Series 2 features built-in GPS, a dual-core processor and a brighter display than the first model.

The Apple deal is not the first time that Macy’s has turned to consumer electronics to help provide a boost for its business. Last year, the retailer reached a deal with Best Buy to open 10 shops inside Macy’s locations in time for the 2015 Christmas season. Mr. Gennette has pointed to store-within-a-store concepts as one of his strategies for sparking a rebound at Macy’s.

Last month, Macy’s announced plans to close 100 of its 728 department stores. Mr. Gennette positioned the move, at the time, “as an advancement in our thinking on the role of stores, the quality of the shopping experience we will deliver, and how and where we reinvest in our business for growth.”

DISCUSSION QUESTIONS: Do you see store-within-a-store concepts as a promising strategy for Macy’s to lift its sales? What is your reaction to the department store’s deal with Apple?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"It's a good first bite of the Apple for Macy's, but it's not a fresh baked apple pie yet. I apologize for the corn."
"What’s differentiating? Do I get a special discount on other items, or a value-add service, if I buy Apple at Macy’s? "
"Oh stop with the negatives. Macy’s has already done very well with the store-within-a-store strategy they follow."

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13 Comments on "Will Apple bring Macy’s a merry Christmas?"


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Ken Lonyai
BrainTrust

This isn’t a typical store-within-a-store scenario like in cosmetics, this is Macy’s trying a foray into a space it long lost out on — consumer electronics. Almost certainly, the upside here goes to Apple. Macy’s will probably see some gross sales benefit, but I can’t imagine it affecting their bottom line in any significant way. For tourists in NYC, Apple in Herald Square lets them conveniently tick off two stops in one with no real lasting benefit to the department store.

Time will tell if I’m right, but this feels like Macy’s desperation to me.

Lyle Bunn (Ph.D. Hon)
Guest

Agreed Ken. Conversion strategy is the critical success factor, otherwise the showrooming serves Apple alone, which might invest in other promotional approaches with higher ROI, and Macy’s could generate stock turns (revenue/margin) by focusing on other product categories. I’m marking my calendar for four quarters out to see what Apple and Macy’s decide upon. Hats off to each for experimenting.

Dick Seesel
BrainTrust

Part of Macy’s problem is its Herald Square-centric approach to the business, and this is another example. The flagship store in Manhattan has always been a showplace for new shop concepts and brand features, especially because it’s an easy place to show off to those members of the investment community who don’t do channel checks around the country.

Meanwhile, there are hundreds of Macy’s stores across the country — not just the 100 likely to be shuttered next year — that are in desperate need for capital investment and revamped merchandise assortments. Not long ago, I visited the Macy’s store at the University Town Center in La Jolla — and even though a brand-new Nordstrom store is being built next door, this Macy’s store hasn’t had a facelift (paint, tile, carpeting, lighting) in a long time.

So is a partnership between Apple and Macy’s a good idea? Sure, but it can’t mask the long list of issues that Macy’s management needs to address nationwide.

Dick Seesel
BrainTrust

And one more point: If Macy’s rolls out Apple shops nationwide, it already has mall competition (in its “A” mall stores, at least) from the Apple store.

Patricia Vekich Waldron
Staff
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
5 years 8 months ago

I know the UTC stores well, Dick! While it may help a bit on holiday sales, Macy’s problem is that their stores are a mess — they are not assorted, merchandised or staffed to entice consumers. Everyone I know is counting the days until the new Nordstrom’s is open!

Max Goldberg
Guest

The Apple (store) inside Macy’s could bring some sales, but selling Apple products will not be a magnet for consumers. There are too many other retailers already selling Apple products. I salute Macy’s for broadening their product offerings, but the problems that the company is facing won’t go away with the addition of Apple.

Paula Rosenblum
BrainTrust

I’m not a fan of store-within-a-store as a solution to department store woes. Plus, in all likelihood there’s an Apple (store) in the same vicinity as most Macy’s.

Not a great category, not the right product (For Bloomingdales, maybe, Macy’s, not so much) and, in my own opinion, not the right direction.

I’d so much rather see lifestyle affinities placed adjacent to each other in department stores. But that’s an even more complicated solution.

Tom Redd
Guest

Oh stop with the negatives. Macy’s has already done very well with the store-within-a-store strategy they follow. This is not just at the Herald Square store, either.

For Q4 Macy’s is on the mark with moving out the major markdowns to their last call stores and ready with inventory that aligns with the major jump in denim that the industry is seeing. New denim means new tops, shoes and more.

Most of the negative Macy’s people will be surprised by their Q4 and Q1 and Q2 2017 performance … and do not forget Bloomies — that is part of Macy’s. Macy’s has a strong team and people truly committed to their success.

Bob Amster
BrainTrust

Certain store-within-store brands will help. While everyone can tell that an Apple store creates traffic (look into one of their mall stores and see for yourself), it is the concept in the aggregate that may help Macy’s. It’s a good first bite of the Apple for Macy’s, but it’s not a fresh baked apple pie yet. I apologize for the corn.

Shawn Harris
BrainTrust
Shawn Harris
Senior Director, Global Retail and Hospitality Strategy & Business Development, Turing.ai
5 years 8 months ago

I will be surprised if there is a material impact on Macy’s top line. I like to look at these sorts of partnerships through a number of dimensions and in this case it’s a negligible channel expansion for Apple and the leveraging of the Apple brand by Macy’s. What’s differentiating? Do I get a special discount on other items, or a value-add service, if I buy Apple at Macy’s? You can buy Apple devices at many retailers and if a shopper is going to Macy’s to buy an Apple device, then that’s what they’re going there to do. Shoppers today are list-driven and highly focused.

Gene Detroyer
BrainTrust

The opportunity for both partners is to provide an Apple store to geographies where there are none. But in this particular situation, why would anyone go to Macy’s Herald Square for Apple when they could go to any of six Apple stores in Manhattan, all in great locations?

Brian Kelly
Guest
5 years 8 months ago
Store-within-a-store, aka dedicated brand space, makes sense as long as the brands are curated. And its a tactic as old as the escalator. So, meh. For Macy’s, adding Apple to Best Buy is not compelling as each brand will have a superior experience within its own stores. Further, how many retail options are needed for Apple? (Apple has 44 percent share, so it’s mass) As recently discussed, Apple has its hands full trying to get its own stores right as phone sales de-comp. So what’s the unique relevant differentiation of a couple of counters with Apple product? Will Macy’s have a Genius Bar? How will it solve service issues? How many phones will it have to sell to drive a comp? How will Macy’s build an Apple purchase basket? Sears hardlines, dominant in its categories, couldn’t save Sears. Macy’s, as currently constituted, is in a no-win position and adding a national mass brand with its own unique stores won’t help. Macy’s has to solve each store individually and by market. The national mid-market mass play… Read more »
Craig Sundstrom
Guest

For the 180 stores, fine; but what of the 500+ others? It’s no secret that Macy’s want’s to focus on its “Top Doors” strategy — offering more upscale brands, different amenities and more focused service — and while that makes a certain amount of sense, it also adds to a growing confusion as to what Macy’s represents. A shopper walks into their local store and has to think “which one am I getting, the good one that has something I want, or one not worth going into?”

And I can’t see that being good for the brand overall in the long run. It also makes me wonder if the ultimate goal isn’t to pare down the store count to a more Nordstrom-like 200 or so locations.

wpDiscuz
Braintrust
"It's a good first bite of the Apple for Macy's, but it's not a fresh baked apple pie yet. I apologize for the corn."
"What’s differentiating? Do I get a special discount on other items, or a value-add service, if I buy Apple at Macy’s? "
"Oh stop with the negatives. Macy’s has already done very well with the store-within-a-store strategy they follow."

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