Does Macy’s incoming CEO have a plan to turn the business around?
Photo: RetailWire

Does Macy’s incoming CEO have a plan to turn the business around?

Last June, Macy’s, Inc. announced that it was beginning a transition that would see Jeff Genette, the company’s president, take over as CEO from Terry Lundgren. With about a week to go before he formally becomes CEO, Mr. Genette seems set on sticking to elements of the plan that he laid out last year, such as the deployment of brand-licensed store-within-a-store concepts, while offering a few new ideas, as well.

Speaking at the Bank of America Merrill Lynch Consumer & Retail Technology Conference yesterday, Mr. Gennette discussed test projects that may eventually be rolled out across the chain’s stores nationwide.

Among these are plans to refine Macy’s couponing tactics. Mr. Gennette, CNBC reports, likes the discounts that come with coupons, but does not like small print exclusions. The chain is shifting its strategy to offer a dollar discount based on the overall purchase rather than assigning discounts to specific brands or SKUs.

The chain is also looking at a move to a more self-service model. Macy’s is currently testing letting customers in shoe departments serve themselves by grabbing boxes they need on the sales floor rather than waiting for an associated to retrieve them from the backroom.

Macy’s, in an effort to ward off share loss to off-price chains, is also dedicating an area of the store, dubbed “Last Act,” for clearance merchandise. Mr. Genette said the section helps the store maintain margins by removing older merchandise from its current merchandise racks. The chain plans to add Last Act departments to 30 stores this year.

Macy’s also plans to emphasize beauty in its stores by expanding the footprint dedicated to its Bluemercury brand along with dedicating sections to its private label lines.

Speculation has arisen lately that Macy’s may be on the block. According to reports, the company has had talks with Hudson’s Bay Company, which owns Lord & Taylor, Saks Fifth Avenue and its namesake chain, about a possible sale. The deal, however, appears to have been scuttled due to Hudson’s Bay inability to secure adequate financing. Reports have since emerged that Hudson’s Bay is in talks to acquire Neiman Marcus.

Macy’s, which saw same-store sales decrease 2.1 percent during the holiday season, announced last month that it would close 68 stores and cut roughly 10,000 jobs.

BrainTrust

"Mr. Genette is on point by doing away with the fine print."

Jasmine Glasheen

Content Marketing Manager, Surefront


"In the Amazon landscape, brick-and-mortar retailers should mandate that all of their viable hard goods vendors manage their own inventory."

Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


"While these are all interesting initiatives, what Macy’s really needs is to radically change how they merchandise stores and serve shoppers."

Patricia Vekich Waldron

Contributing Editor, RetailWire; Founder and CEO, Vision First


Discussion Questions

DISCUSSION QUESTIONS: Which of the pilot projects outlined by Jeff Genette are likely to have the most positive impact on Macy’s business? What other changes would the chain need to make to positively redefine its brand going forward?

Poll

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Jasmine Glasheen
Member
7 years ago

Small print exclusions will be the death of couponing and quickly dispel a customer’s trust in a brand. I know a handful of people that won’t set foot in certain department stores due to complex and frustrating coupon exclusions. Mr. Genette is on point by doing away with the fine print.

Using technology to increase the shopper’s ability to self service will reduce wait times and empower the customer. And putting less stress on associates during hectic times will enhance the customer experience and employee retention.

As far as putting Macy’s Backstage in full price stores, here’s my thought: only if Backstage then houses all of the stores’ clearance merchandise. Then the Backstage presence can be used to elevate Macy’s image instead of turning it into an off-price retailer.

Adrian Weidmann
Member
7 years ago

Macy’s commitment to item-level RFID tagging by their vendors should be paramount. In the Amazon landscape, brick-and-mortar retailers should mandate that all of their viable hard goods vendors manage their own inventory. This would allow Macy’s customers to select their own shoe box — saving time, money and customer aggravation. The only way this will be possible is if there is 100 percent visibility of this inventory on a daily basis. This can only be achieved by item-level RFID tagging AND automated monitoring. Handheld scanners will not work to support and maintain the workflows needed to sustain this strategy.

This approach could also viably support a discounting strategy linked through a loyalty/CRM system. “Buy three pairs of shoes over a one-year period and get the fourth pair at XX percent off” could be viable as well as encourage another shopping visit!

Camille P. Schuster, PhD.
Member
7 years ago

I was in a Macy’s store this week and had to search for someone to check me out. Another customer started calling “hello” to find someone. Self-service needs to include a way to facilitate checking out. It used to be difficult to leave the store because of all the interesting displays. This time nothing caught my interest. There are many changes that need to be made for Macy’s to survive.

Charles Dimov
Member
7 years ago

Stepping toward a more DIY model, I am surprised NOT to see an even greater push on omnichannel retail. Online retail is on the growth path. Brick-and-mortar continues to be on the defensive. The smart move is to inspire more customers to click and collect, remembering that roughly 59 percent will purchase more items when they come in for the pickup.

Macy’s is competing with Amazon and the push to online. They need to use their strength position to balance their business and get more customers to try, then become repeat users of, click and collect.

Ryan Mathews
Trusted Member
7 years ago

Look, I think Macy’s is a troubled brand that really screams for a relaunch. I don’t think reducing service and cutting price (and therefore margins) is necessarily the right path to that relaunch. Over time Macy’s has fallen into a retail funk — not high-end anymore and yet too fussy to be a good low-end retailer. I think the company needs to pick a strategy and stick to it. Stocking $80 Ralph Lauren polo shirts across the aisle from price-slashed private label goods isn’t a particularly effective way to capture fashionistas or bargain hunters.

I’m not sure what I’d advise before I could take a look at some hard customer data, but there are positions out there — a more accessible Nordstrom for example, or a focused retail-control brand backed up by great design. Nothing is going to work until somebody at Macy’s peels off all the Band-Aids and looks at the wounds. The chain needs a 21st century focus and until it finds one, all the discounting and service slashing in the world isn’t going to help.

Steve Montgomery
Steve Montgomery
Member
7 years ago

As with all strategies the devil is in the details. Customers may not like the exclusions in the coupons but for those who are looking to purchase the included items they like the depth of the discount. I don’t expect the same excitement if the coupon includes all items purchased but a far reduced discount rate.

One of the big questions with the Last Act concept is where to put it. If it’s on the main floor, Macy’s image becomes that of more of a discounter. If it’s hidden somewhere they run the risk of not moving the merchandise. When you add self-service to this it further erodes their image.

My concerns aside, Macy’s has to do something. Each of the tactics listed have merit if executed properly.

Ed Rosenbaum
Ed Rosenbaum
Member
7 years ago

Two comments:

First, self-serve should not mean there is no one around to assist the customer. That has been the case too many times even before starting this new effort.

Next is about small print on coupons. Thank you if you really mean it. When there’s small print, the customer is enticed to buy something on sale because the price is right only to find out the small print excludes it.

Dick Seesel
Trusted Member
7 years ago

Given the overall need for capital investment (outside of Herald Square) and more concise assortments, most of the new initiatives feel like nibbling at the edges.

I’m also confused by the parallel Backstage and Last Act strategies (I see both installations in some stores) and wonder whether shoppers will see the difference.

Sky Rota
7 years ago

First of all, with all due respect to Mr. Gennette, none of these things are going to help. Did you ever go into one of your stores and actually shop? After you do that, you will see what is missing. I’m not talking about a planned visit, but a surprise, undercover boss visit. Go in and talk to the workers and shop like a real person. You will see the problems. Lots of times your employees have answers and input to share with you. In my opinion, do not make the store look ghetto and put boxes out for people to pick through. If you have coupon offers, give to everyone, not just Macy’s credit card people.

And please don’t call something “last act.” How about “#looking4aHanger” or “#NeedsaCloset”? If you make things sound nice, people will want them. Nobody wants “last” anything. Most of all, hire more staff to take really good care of the people that are still coming into the store. They will spread the good word to their friends and not talk bad about you. Oh and please have somebody check the website — it is not user friendly at all.

Off school; another snow day!

Brandon Rael
Active Member
7 years ago

Mr. Genette and the Macy’s team have a monumental challenge ahead of them. What was once one of the most dominant and prominent department store brands, Macy’s has evolved into a company that is forced to redefine themselves, in the wake of eroding demand, profitability, store consolidations, buyout rumors, and most significantly an issue with brand relevance.

Having come up in the retail world via Macy’s famous “Buying Training Program” back in the mid-90s, I was proud to be a part of such a famous and powerful company, who helped to define the modern day shopping experience. It’s reassuring knowing that Mr. Genette and his team are fully aware of the erosion of business caused by the increased off-price competition, the digital disruption and ecommerce revolution led by Amazon, as well as the onset of a fast fashion, and speed to market model.

The first step the Macy’s brand needs to take, beyond all the omnichannel initiatives that former CEO Terry Lundgren and his team pushed through, is simply revamping the entire in-store customer shopping experience. It’s critical to transform Macy’s into a destination worth going to. As of now the in store experience is full of friction, frustration, lack of service, and confusion. That is paramount to any off priced offerings, and deep discounting.

Craig Sundstrom
Craig Sundstrom
Noble Member
7 years ago

“…looking at a move to a more self-service model.” Really! Who’d have thought that was even possible? (At any rate it’s 180º from what I’d recommend.)

I wish them well, but none of these ideas excites me; fewer coupon restrictions? Sounds great but why were they there in the first place? Stores-within-stores? Again, sounds great, but if it’s only in a few of their stores, or even if it’s the whole “Top Doors” group, I don’t see how it would help all the others. Indeed it might even hurt as consumers in lesser markets are disappointed to find out they’re second tier.

I think the chain as it is, is too big and unfocused and needs to be broken up into smaller, more coherent components.

Patricia Vekich Waldron
Active Member
7 years ago

While these are all interesting initiatives, what Macy’s really needs is to radically change how they merchandise stores and serve shoppers.

Ricardo Belmar
Active Member
7 years ago

While these initiatives all have merit, there are challenges and complexity across the board. Simplicity is often the best approach and I applaud the decision on removing the small print on coupons/discounts. One challenge Macy’s has here is that they have transformed into a brand people know to always wait for a coupon or discount before buying. They have been trained by the constant barrage of discount offer emails and print coupons from Macy’s over the years. Shoppers need to be retrained here.

I see much confusion between the use of Backstage and Last Act concepts. Macy’s continues to have a problem with commitment to an approach. Will there be stores with both of these concepts? How will shoppers differentiate between the two? Macy’s need to pick one, stick with it, and put it in all stores.

Focusing on beauty may be hold promise as Macy’s can differentiate here with their Blue Mercury brand. Look at the success J.C. Penney is having with a Sephora experience in their stores.

Self-service in a department store can be a double edged sword. Most of my friends and colleagues say one thing first when asked about Macy’s is “why can’t I ever find an associate when I need one?” Missing from the plan is a focus on associate training and staffing stores with the right number of associates — currently they are understaffed in most departments other than beauty. Self-service may work best for loyal customers who are willing to rely on the Macy’s app and assumes a good RFID deployment across all merchandise. Technology has often failed Macy’s here as my own experience varies greatly from store to store in connecting to high quality Wi-Fi. I personally have failed to use the Macy’s app (when I intentionally wanted to use it) due to poor Wi-Fi connectivity in the store.

The lack of consistency across Macy’s stores has also long been a problem. This is related to the number of stores. I live in an area where I could visit no fewer than 7 Macy’s or Bloomingdale’s stores in a roughly 1 hour radius. While my region has a high population density, is this really necessary? Most importantly, the overall shopping experience across each of them varies so greatly that there are only about 2 of them that consistently deliver. This is something Macy’s needs to solve.