Macy's Doing 'Great' Heading Back-to-School

Macy's seems to be heading into a period when it is finally putting the merger-and-consolidation issues in the rear mirror so that it can focus on merchandising initiatives--many of which seem to be paying off. It is also in a position of significant strength compared to its key department store competitors--not only JCPenney but especially regional laggards like Dillard's and Bon Ton Stores. If anything, it's repositioning as a more "upmarket" store than its competitors is paying off as the economy slowly revives. There are still plenty of merchandise content and execution challenges, but Macy's is heading in the right direction.

Richard Seesel, Principal, Retailing In Focus LLC

One of the biggest drivers of Macy's success is the fact that it was up against an 11% drop in July '09. Put slightly differently, July of '10 was about 4% below July '08, another horrendous month.

That cynicism aside, there's no question that there is a lift from the My Macy's initiative. Whenever you show your regional/local customer that you're aware that they have different preferences, you win. Also, the more upscale customer is spending relatively more (Neimans was up 12%), which helps Bloomingdale's and the internet business is booming, moving the total comp by almost a full point.

These are all positives and Macy's should feel happy about their direction. When they start comping positive on 2008, then there should be a celebration.

Bill Emerson, President, Emerson Advisors

All glory to Madonna. Seriously...what a brilliant marketing stroke - '80s themed fashions for teens and pre-teens, which will resonate with the moms, and "fronted" by her daughter Lourdes, which charms the heck out of people like me, and the face of the brand is Taylor Momsen, designed to totally resonate with the customer.

Terry Lundgren should be thanking Madonna every day.

Paula Rosenblum, Managing Partner, RSR Research

The "My Macy's" campaign seemed to make an immediate difference in our local Washington, D.C., stores. The downtown Macy's, in particular, feels like the first "local" department store we've had in 30 years. Looking outside our market, the housekeeping problems seem to have been corrected. I still believe Macy's is too much in the muddy middle to be a real competitor for my clothing dollar, while housewares seems to be very concise and have found a unique positioning between big box and luxury.

Robert Craycraft, Vice President, Industry Relations, American Resort Development Assn. (ARDA)

Not only should Macy's be thanking Madonna and kneeling at her feet, but add J.C. Penney to the list. Macy's has outclassed J.C. Penney over recent years and continues to do so mainly because Penney's is not sure who they are marketing to, and what their brand should be. I don't know either, and don't often shop there for that reason.

Macy's does need to get a better grip on their coupon program. The program sends many different coupons to their frequent shoppers. The only hangup is you can't redeem them on Sundays if the temperature is over 85 degrees or the last number in the price is a 9 or the item you want is blue. I say this tongue in cheek; but continue to hear my wife's frustration at trying to redeem the many Macy's coupons she receives. Even the sales clerks are not sure what is what when it comes to coupon redemption.

Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Macy's has done an admirable and tenacious job of positioning themselves as an upscale, fashion-driven department store. The local market assortment initiative is having a positive impact. I can see it in the assortments of our Houston area stores. When you look around at the second tier assortments of JCP and the empty racks at other regional department stores it is easy to see why people gravitate to Macy's. Yes, they still have a lot of work and I agree they must keep their eye on the merchandise mix, but they well may be the last man standing in the department store war game.

'jaljobe'

"...it having gotten away to a degree from its 'upmarket image,' putting it in a position to steal market share from rivals such as J.C. Penney."

So being downgraded is now a success? I think it's fair to say many people--myself included--have little faith in the whole nationwide macy*sization concept, and would still have little enthusiasm even if it had been executed flawlessly...which, of course, it was not. Or to put it in simpler terms: America already has a JCPenney, it doesn't need another one.

'notcom'

I really question the "doing great" assessment for Macy's or for that matter, any department store. To look at comp numbers this year vs. last is not an accurate measure in retail right now, and especially for them. As we all know, the overall size of the department store category has been reduced significantly over the last 20 years, to the point where, sooner or later (last year? doubt it) it had to bottom out. But has it?

To get a more accurate read of the 'state of the business', take a look at their numbers two years ago, then look at them for 10 years ago, then 20. It's a shrinking proposition. And it's the model itself, not the brand. Macy's is just the last significant one standing.

To be more upbeat though, the best thing department stores have done in a long time is SKU rationalization. Taking a cue from Target and others that are kicking their tails, they've finally gotten their inventories in line with not only sales, but with more modern space issues (see Paco's books for details).

Having said both of the above, without a continued hard attack on innovation (more than just cool online features), I would predict that graph line to continue towards the Southeast for the department store category.

Lee Peterson, EVP Creative Services, WD Partners

Customer insight drives customer loyalty, engagement and profitability. Create and engaged relationship with your customers and watch the profits rise.

Mark Johnson, President and CEO, Loyalty 360

The idea that Macy's is finally through it's M&A "challenges" of the past (there were a few), as aptly suggested by Richard above, along with its focus on customers and relevant assortments via My Macy's suggests the power of customer-centric merchandising combined with customer-centric communications.

While there is a substitutability of Macy's and JC Penney, given the heritage and the commitment to customers and localization, Macy's should no longer be written off as irrelevant. As both chains push towards creating and delivering an improved proposition, it will be interesting to see if JC Penney can exploit its recent loyalty marketing initiatives to maintain its proximity and comparability to Macy's.

Phil Rubin, CEO, rDialogue

The bar was low compared to last year and while market share has come with discounting, at what cost? Macy's service is nothing akin to the legacy of Miracle on 34th Street. Once they get that right, they will deserve the word "great."

Bob Phibbs, President/CEO, The Retail Doctor & Associates

Macy's downward drift from its up market image being seen as a positive is curious to me. Down market equals discount which puts them in the position to slug it out on price with not only JC Penney but the likes of Target and Kohl's as well. They may be realizing some success bringing in new customers with their localization strategy and celeb partnerships, but they continue to drive their loyal base away with their lack of service. And what's happening to their margins in the mean time? Macy's must realize that if they continue to cut services and require their customers to service themselves, it will have a direct impact and ultimate cost to them in lousy margins and little customer loyalty. Both of which are key ingredients to survival.

Marge Laney, President, Alert Technologies, Inc.

Several other posters have mentioned the My Macy's initiative, and I think localizing product assortment will always boost sales--assuming the correct local consumer data is collected, of course!

In addition, although the economy is still very precarious and the threat of "double dip" looms, the success of a higher-priced department store like Macy's while Wal-Mart struggles a bit may be a sign consumers have more disposable income these days.

Dan Berthiaume, Editor, Independent consultant