Photo: RetailWire
Will a former eBay and Home Depot exec help Macy’s get turned around?
Macy’s announced yesterday the hiring of Hal Lawton, eBay’s senior vice president, North America, as its new president.
As Macy’s president, Mr. Lawton will be responsible for merchandising, marketing, stores, operations, technology, consumer insights and analytics. He will report to Macy’s CEO Jeff Gennette who previously held the title of president at the company. He joins Macy’s at a time when the company has seen sales decline for 10 straight quarters.
Mr. Lawton brings with him a strong background in digital operations and technology. At eBay, he was responsible for overseeing marketing, merchandising, operations, advertising, business and consumer selling as well as global shipping. Prior to joining eBay, Mr. Lawton spent 10 years at Home Depot in various roles, including SVP for merchandising. He was responsible for starting the home improvement chain’s e-commerce business, helping to grow the segment to nearly $2 billion while at the company.
Mr. Gennette said Mr. Lawton has “a track record of successfully driving a change agenda at scale.” He said Macy’s “has one of the strongest omnichannel businesses in the industry,” and the addition of Mr. Lawton would help “accelerate the integration of digital both online and in our stores to deliver the world-class experience our customers demand.”
Mr. Lawton’s hiring was not the only Macy’s news yesterday. The retailer announced the restructuring of its merchandising, planning and private brand groups into a single merchandising unit. Intending to speed decision-making at the company, Macy’s will eliminate about 100 positions with the move. Macy’s expects to save about $30 million annually as a result.
The merchandising group will report to Jeff Kantor, currently head of stores and human resources. It will be built around five areas including ready-to-wear, center core, beauty, men’s and kid’s, and home. Macy’s says the group will be supported by “strengthened customer insights and data analytics,” which will now include inventory and pricing.
Mr. Gennette, calling exclusivity “a great customer loyalty tool” has set a goal of growing private brand sales to 40 percent of Macy’s business. Private brands now represent about 29 percent of Macy’s total.
- Hal Lawton Named President of Macy’s – Macy’s, Inc.
- Macy’s Hires eBay Executive Amid Management Shakeup – The Wall Street Journal
- Will dropping prices on cosmetics drive traffic to department stores? – RetailWire
- Will Backstage shops draw customers to Macy’s mall stores? – RetailWire
- Is a self-service model Macy’s ticket to success? – RetailWire
- Does Macy’s incoming CEO have a plan to turn the business around? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What might Hal Lawton’s hiring as president of Macy’s mean for the retailer? Do you expect the company will benefit from the restructuring of its merchandising? Do you see 40 percent of total sales coming from private brands as a realistic goal for Macy’s?
Poll
BrainTrust
Phil Masiello
Founder and CEO, CrunchGrowth Revenue Acceleration Agency
Joan Treistman
President, The Treistman Group LLC
I do hope so. But it depends on the amount of authority he is given to speak truth to power. Agendas can make status quo adherents deaf and blind.
I’ll start with George’s last question first: Growing private-brand penetration from 29 percent to 40 percent will only drive Macy’s sales if the company gets the merchandise content right. I’d argue that there are already too many private brands and lack of clarity between them, especially in women’s apparel. Macy’s execs may be able to tell the difference, but I doubt the average shopper can define what Karen Scott vs. Style & Co. vs. Charter Club (and so forth) really stand for. Let’s face it: Most stores trying to grow their private label business are doing it as a margin play, not a loyalty tool, and it’s often moved the sales needle in the wrong direction.
As to the new hires and restructuring: It’s clear that Macy’s is doubling down on omnichannel with the hiring of Mr. Lawton. It’s also clear that streamlining its merchant organization is meant to bring more speed to the decision-making process. Let’s see if the new team can tackle those “clarity of offer” problems after all.
Well said. Private labels should offer a brand more control over the customer’s experience and more agility responding to changing demand, and I’d never attribute either of those traits to Style & Co or Karen Scott. Macy’s has stagnated for the same reasons a lot of its peers have, and just one more head at the top will not change that unless they’re ready to take some risks.
Thanks, Joanna. I think what Target is doing is a lot bolder. It’s actually tossing out two of its biggest “exclusive brands” (Merona and Mossimo) that have outlived their usefulness. (This is after replacing two kids’ brands with the faster-growing Cat & Jack.) Each represents more than a billion dollar business but neither one is resonating with the consumer any more. Maybe Macy’s could learn something …
Attracting an executive like Lawton who has had success in online and brick-and-mortar retailing is a great move. Macy’s, and department stores generally, need to re-think their business. Bringing in new leadership to help create a new vision is a good start. Given the challenges Macy’s has had, restructuring their merchandising organization and processes seems like a good place to start. When well executed, private brands can create exclusivity and enhance margins so the strategy is sound, however achieving a 40 percent sales share in private brands will take time.
The development and growth of private brands is vital for Macy’s, particularly since luxury labels are pulling back from department stores. Such a move has helped Nordstrom to differentiate and hold its own. Macy’s should take inspiration from the UK’s John Lewis, which is one of the best examples of how department stores can thrive by having a compelling line-up of their own powerful brands.
I am amazed at moves like this. Women drive between 70 and 80 percent of all consumer purchases and influence over 80 percent of all purchase decisions. A fashion retailer especially is marketing towards women. How is a man, who came from an auction site primarily selling electronics and a hardware chain going to revive an ailing fashion company? How are the three men mentioned in this article going to determine how best to engage with their core shoppers?
I think this is a terrible move and a waste of time. Macy’s problems are not in logistics or digital programs. The issues are more structural. Their primary issue is they are not connecting with their base. They have lost sight of who they are and who they sell to.
There won’t be any great turnaround in this equation.
I’m always happy to see IT report up to merchandising rather than to finance or operations. That’s the first good sign!
The question we have to ask ourselves is, does Macy’s have the resources, time and talent to create really desirable brands that cover 40 percent of its business? That’s a tough ask.
I certainly think it’s a good idea. World class. But very few retailers with such a large store footprint can create that many solid brands to fill it up (or 40 percent of it, anyway).
I have mixed feelings over this development. One area where bringing in Hal Lawton may help is streamlining operations. Macy’s is not lacking for interesting/innovative ideas. Having spoken to people in various areas within Macy’s I hear a consistent theme — poor execution due to too many organizational silos resulting in too many people required to get anything done. Like many department stores suffering in today’s market, Macy’s legacy structure is holding them back. If Mr. Lawton can truly streamline operations (and this isn’t specific to stores vs digital — it permeates throughout the company) it will go a long way toward improving their omnichannel capability and controlling their cost structure.
Is 40 percent private label sales too lofty a goal? Maybe, maybe not. The larger issue is, what do those labels represent to the Macy’s customer? Macy’s today is getting the majority of their sales from maybe 10 percent of their customers. This extremely loyal base is maintaining life support for Macy’s but that means the existing private labels just don’t appeal to other shoppers. Macy’s needs to focus on this issue first if they hope to increase the proportion of private label sales. It would be most helpful for them to evaluate the product mix for those extremely loyal customers — are they buying high-end fashion brand or private label? That would be a most telling metric for Macy’s to understand.
The hiring of Mr. Lawton demonstrates Macy’s commitment to a future that acknowledges the primacy of online retailing to any future growth trajectory.
Restructuring merchandising, planning and private brands into a single merchandising unit will help with visibility as well as with ensuring better information flow and more integrated processes that include inventory replenishment and pricing. As for private label, the 40 percent goal is a sufficiently big jump from current levels. The company needs to execute on the “Only at Macy’s” private brands with a proper marketing programs targeted at the right lifestyle, from in-store environment to online presence.
All-in-all, this is a very good start in setting the table for the new Macy’s executive team to initiate change and execute.
Mr. Lawton was at Home Depot for the successful transition from Nardelli to Blake. So he should be uniquely qualified to participate and lead the Macy’s repositioning. All of Macy’s is fair game for meaningful change. Macy’s has plenty of issues and they all start with a clear understanding of their customer.
A national department store chain is a concept never proven and now Millennials moving into the key life stages no longer live a departmentalized life.
Macy’s credibility in fashion is suspect. And so are Ralph/Tommy/Calvin/et al. There is no more one-brand-fits-all. The rules for mass “lifestyle” branding are no longer relevant in an age of personalization. So 40 percent seems like a stretch.
The biggest challenge will be to rationalize the store portfolio and then all that selling space.
This beats bringing in a non-retailer to lead a retail company– there are a few examples of that not working before. I think on the whole this is a good move. Traditional retail is changing fast, it needs a change agent.
I’m not optimistic.
It could be that I don’t think e-commerce is a cure-all for overcoming merchandising challenges. Hal Lawton’s hiring suggests that Macy’s omnichannel asset will be directed to emphasize e-commerce.
With private label declining in so many sectors, I wonder why Macy’s would want to place so much of its future into the promise of private label growth. How well does private label work via e-commerce?
What might hiring Hal Lawton mean to Macy’s?
1. Finally a retailer with experience in technology and digital operations. Mr. Lawton’s strong leadership experience in tech and digital experience, combined with retail is a unique leadership quality few retailers possess.
2. Today, walking into a Macy’s store, customers are greeted by an ocean of clothes. Clothes tending to look alike, packed into rounders and t-stands. No differentiation, no heart, no brand message — overwhelming. All accomplished by merchandising, buying and design by committee, by spreadsheets, and by computers.
2.a. Restructuring merchandising to reduce costs and streamline expenses is tactical and will not build private brands, strategically designed and built to inspire new customers to shop Macy’s. Macy’s needs a strong brand and product vision differentiating each private brand from the other … designed to inspire the intended customer to buy is the key. I know this well; in the ’90s I was hired to design direct the transition of Nordstrom’s largest women’s private label program into a $200M Nordstrom private brand.
3. Macy’s private brands [private label] are very similar in look and feel. The use of fabrication, color, print, and pattern are pretty much the same look and feel Macy’s private label programs have had for years. And many products are very similar to the outside brands Macy’s carries. A clear product vision and sharp differentiation between the outside brands Macy’s carries is needed to match the success Nordstrom has created with its many Nordstrom private brands.
While none of these ideas (to the extent that reiterating a bunch of clichés equals “ideas”) is bad, per se, they aren’t exciting either. Cut some people here (there and everywhere), analyze the data for the umpteenth time, come up with a new slogan….
The reality is, Macy’s has too many stores — too many bad stores — and while it seems clear the long-term plan is to reduce that portfolio to half, or maybe even (only) a third of what they have now, it will be a dispiriting ride.
People might recall the plan years ago supposedly was a three-tiered structure with Bloomingdale’s at the top, Macy’s in the middle and Sterns at the bottom (competing against Nordstrom et al, JCP/Kohl’s and Sears, respectively). The May acquisition complicated this, but a plan of retaining strong regional brands (Fields, Burdines, Kaufmann’s) for flagship/premier locations, selling-off the weaker stores, and retaining “Macy’s” for the rest, might have allowed for a more coherent marketing strategy. Too late now, I guess.
Let’s give Macy’s a chance. They’re late to the game, but the game is not over yet. They’ve finally caught on to the secret of success other retailers are finding — forget all the discounts and present the value, as many other retailers are doing, and the other retailers are going to private brands as a better way to compete, and Macy’s is doing the same. They sound as if they have found a good combination of characteristics in their new exec and internal plans and execution to turn things around. Restructuring of merchandising, private brands, and planning sounds like the right direction. No Hail Marys yet.
Merchandising decisions make and break fashion retailers. Technology helps accelerate supply chain and improve reach to customers, but for Macy’s to succeed they have to get back to what their positioning and product offering is, and how it is relevant to its target audience. Today retailers can’t be everything to everyone and be stuck in the middle. I hope the new leadership addresses their core issues first and foremost.
Selling price has little or nothing to do with a winning strategy for Macy’s. Hal Lawton has his training and experience in doing just that. Macy’s is in urgent need of an individual that can hit the ground at flank speed. While Lawton knows retail his shortcomings in clothier retail and high-end brand marketing will be most difficult to overcome before this year’s Christmas selling is upon us. Bad idea.