Will Macy’s change marketing direction as CMO departs?
Macy’s is searching for a new chief marketing office with the news that Martine Reardon, a company veteran of 32 years, has decided to leave. The question, aside from whether the company will promote from within or look outside for its new CMO, is whether Ms. Reardon’s replacement will take the department store operator’s marketing off in some new strategic direction or follow the current script?
Ms. Reardon, who was named CMO in 2012, is leaving the chain following four years of same-store declines. Macy’s has been losing business to discounters and fast fashion chains alike. In January, the company announced around 3,000 job cuts.
Last November, the company said it planned to create “shareholder value through real estate initiatives.” A little over a week ago, Macy’s announced the hiring of Douglas Sesler to “oversee the company’s real estate function and lead high-priority initiatives to increase shareholder value through real estate strategies, including creating potential joint ventures or other partnerships involving the company flagship locations and mall-based properties.”
On her leaving, Ms. Reardon said, “I am extremely proud of the work that I have led in building Macy’s into an international omnichannel brand. We have established a clear and compelling brand promise rooted in fashion, entertainment, pop culture, value and newness, and opened potential new avenues for growth.”
- Martine Reardon to Depart Macy’s – Macy’s, Inc./Business Wire
- Macy’s, Inc. Outlines Cost Efficiency Initiatives and Lists Store Locations to Be Closed – Macy’s, Inc./Business Wire
- Macy’s, Inc. Hires Douglas W. Sesler as Top Real Estate Executive – Macy’s, Inc./Business Wire
- Is Macy’s in trouble? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS:
Do you think Macy’s should look inside or outside the company for a new chief marketing officer? Why? What do you think the new person will need to do to reverse Macy’s current sales trajectory?
Poll
BrainTrust
Camille P. Schuster, PhD.
President, Global Collaborations, Inc.
Mark Heckman
Principal, Mark Heckman Consulting
This may be a good opportunity for Macy’s to look at its stale marketing (and especially its sales promotion) with a fresh set of eyes. Macy’s is in a promotional rut where all of its print sale events look exactly the same (red and black, coupons, a bunch of boxes on every page) and the customer is bombarded by the same kinds of overlapping offers they are used to seeing from J.C. Penney or Kohl’s. Surely Macy’s has an opportunity to use its promotional tactics as part of an overall re-branding strategy. (What is “The Magic of Macy’s,” anyway?) Without knowing the inside candidates, I’d look outside first.
If the reason for the change is to create a new direction in marketing, then a person with new ideas and strategies is needed. The new marketing direction needs to be consistent with a new strategic direction for the company. A person to spearhead the new marketing could come from inside or outside. I am not sure how a focus on real estate creates value for shareholders and have even more questions about how that creates value for consumers. Without a strong company vision for consumers a new marketing direction is impossible to recommend.
Whichever way they go, hopefully it will be someone who has actually worked in retail and understands how this business works. This venerable retailer doesn’t need to go down the path of reinventing retail and tanking the company like several others have tried and spectacularly failed at. (Well, they got the tanking part right … ) Retail is largely about consistent and relentless execution on good strategy, not fanciful strategy.
I have no idea what they will do but, if I were them, I’d look outside for both a marketer and a new head of merchandising and/or insert operations.
The Macy’s closest to me looks like a TJ Maxx on bad acid — clothes piled on top of each other, racks and racks of discounted merchandise and suffering from a lack of any semblance of a brand identity.
Having a vision is one thing, but to be effective that vision has to be executed on the store floor.
Right now, outside of convenience or emergency need, I can’t think of a compelling reason to go into a Macy’s let alone shop in one. I don’t have a clear idea of what the brand value is (despite being bombarded by flyers and “deals”) and I’m not sure anyone else does either.
So, wherever they come from the first job of the new CMO ought to be rethinking the brand and then — and only then — can she or he proceed with a new marketing plan.
Where Macy’s finds their next CMO is less important than getting their business strategy and revenue model figured out and ensuring the entire organization (down to in-store execution!) is solidly aligned.
A quote generally attributed to Albert Einstein reminds us that “insanity is doing the same thing over and over again and expecting different results.” So to stem the comp store declines, Macy’s needs a fresh approach versus tweaking what already exists. Caution though to those that see the way into improved financial results via a real estate pivot. That can be a secondary approach but cannot overshadow their reason for existence.
We can debate the viability of department stores and malls from now ’til the cows come home, but the bottom line is Macy’s — through a fresh strategy and store execution — can do much more despite those structural limitations.
No department store marketing strategy can succeed if consumers come in to find worn out dirty stores, bad lighting, no service and poorly displayed merchandise. It used to be fun to go to a department store and browse around. Going to Macy’s makes me feel like I need a shower and a tetanus shot.
Whoever takes that position, it should be noted that problems Macy’s and other traditional, large-store retailers have extend well beyond the scope of a CMO. Certainly a quality person in that role is essential to success, but without a common vision with finance and operations and a special connection to the CEO, the new CMO will be less than effective.
Sometimes when retailers are faced the necessity of making dramatic changes across the entire business they opt to pin all of their hopes on a new CMO, wanting to believe that all that ails them is curable by simply by invoking a new marketing strategy. That may or may not be happening at Macy’s, but before answering the question as to WHERE the next CMO should come from, perhaps the better question might be “WHAT are the expectations of a new CMO?”
If the new CMO is tasked with bringing in new ideas and driving a dramatically new strategy with the cooperation of other senior leaders, that will require a very different set of skills, personality and leadership compared to someone who will be constrained by intractable perimeters of the existing business.
The challenge for Macy’s isn’t the CMO, its the CEO. The consolidation of the department store category was a good fit for the current CEO. The reinvention of the department store will require a new vision and set of skills. A new ad campaign or loyalty program has nothing to do with Macy’s relevance. Macy’s needs to recast its value proposition.
All the regional chains that were acquired were struggling. Macy’s got some of them on the cheap. Those brands were already losing steam, current market conditions and Macy’s self-inflicted efforts delivered the coup de grace.
The store portfolio offers some premium mall locations as well as some monstrous and ancient urban buildings. Sorting that out is in and of itself quite the hurdle.
Or as we like to say, “retail ain’t for sissies.”
Right off the top of my mind I would say, fresh perspective is key. Macy’s has done a stellar job of keeping the Department Store alive and I attribute that to the leadership of Terry Lundgren. In my opinion, Terry is one of the smartest retailers I have ever witnessed. Hey, and I’ve been “witnessing” in retail for over 40 years.
What I would really like to know is, how well has the One Below concept done at the flagship store? It appeared to be a great way to pull Millennials into the store so they can just hang, which is something they really like to do. And hopefully hanging turns into both loyalty and sales.
The department store has been a great concept. Get everything you want under one roof and with higher quality than the fast casuals. A reasonably priced place to get your nicer staple clothing for work or special occasions.
It just needs to tell its story in a way and with a format that appeals to Millennials. What are they wearing to work these days? That is the market that might want to pick up higher quality basics and finish outfits out with the trendy stuff, that doesn’t last as long, from the fast casuals.
I grew up with Federated so my heart is with the department store. Go for it, Terry! If anyone can do it, you can!
And that, my friends, is my 2 cents!
Anyone promoted from within is likely to be too steeped in the category driven, promotional marketing approach that Macy’s and other department stores have long relied on. They need an outside CMO who can work with other functions to drive a CRM/lifecycle approach to marketing in order to revive a struggling business.
They need to go outside for fresh blood and perspective and they should not stop with the CMO position. Terry Lundgren also needs to retire if there is any hope of saving Macy’s. When the final chapters are written at the end of the long and proud Macy’s story, I believe that Mr. Lundgren will be recognized not only as the catalyst of its sad demise, but because of his merciless national consolidation of unrelated department stores he also will be justly seen as the catalyst for the demise of that entire already weak retail segment, as well.
I share Lee’s high opinion of Macy’s chairman and CEO Terry Lundgren, under whose watch “The World’s Largest Store” has grown into America’s largest department store chain.
Massive scale in retailing has its advantages when times are good, but it also can amplify strategic errors and add distance between the chain and its shoppers. I’ve been a fan of the My Macy’s initiative in the past because of its potential to provide a more relevant experience to shoppers in different geographies or with different need states.
The departure of Ms. Reardon after a long career may look a little bit like scapegoating, but she’s a proven executive who shouldered a vast responsibility and led massive innovation in an era when Macy’s performance as been influenced by much more than just its latest marketing theme.
Yes, I believe it’s a good moment for Macy’s to bring in an outsider to the CMO role. It will need to be someone with exceptional credits and he or she will need to be empowered by Terry and the Board to question everything about the company’s positioning, merchandising, customer experiences, media and promotional tactics. Macy’s advertising themes and marketing activities should flow from the results of those analyses, not precede them.
I’d venture too, that Macy’s understands that its soft performance in the past few years is attributable to many more internal and external factors besides its marketing programs. The real estate initiatives just announced are one bit of evidence that the company is not putting all its eggs in the marketing basket.
With comps declining, I suspect we’ll see a Soviet style purge of everyone old — with a few notable exceptions — because that’s what companies that are having performance “issues” do. It often doesn’t make sense, and indeed in can be counterproductive, but that’s the way business works (or perhaps doesn’t work, actually). So forget what you learned in statistics, in the C-Suite, correlation IS causation.
Will it help? I doubt it, for a variety of reasons. Department stores as a whole have been in a decades long slide, and with Macy’s now representing such a big share of the industry, it’s essentially impossible to avoid that long-term trend.
Macy’s should look outside for the next CMO. The change required to take the retailer into the 21st century requires a deep technology savvy combined with a strong sense of customer experience design. The brand is also languishing, not really a high-end retailer, and not Kohl’s. That middle area is where the business is dying.
A strong visionary leader who can not only change marketing, but lead a customer experience reinvention effort is required to bring Macy’s to a strong competitive position in the market.
I recommend Macy’s proceed as the poet Robert Frost wrote in the “road not taken.” Seek a six pack of six candidates, three from inside and three from outside. Once the “six” are identified, each one in theory unbeknownst to each other assigned to work four weekends in a row, “live”! They all work the floor discovering, gathering , defining and recommending how Macy’s design should be moving forward. The Macy’s BOD meet with, listen to, be shared with the final six’s perspectives for pursuing the path unknown. The candidate who recognizes and delivers the unknown is brought forth as the new CMO.