Macy’s Doing ‘Great’ Heading Back-to-School

Discussion
Aug 06, 2010
George Anderson

By George Anderson

Macy’s reported better than expected numbers for July with
same-store sales up 7.3 percent and total dollars up 11
percent for the period. For the year-to-date, Macy’s same-store
sales are up 5.2 percent and, overall, the retailer has a
year-over-year gain of 7.2 percent.

"Our strong sales performance in July and the second quarter resulted
from the continued evolution of our core Macy’s strategies, including My Macy’s
localization and centralization of the organization. We also are benefiting
from the continued strength at Bloomingdale’s, which will open its newest store
tomorrow in Santa Monica, CA," said Terry Lundgren, chairman, president
and chief executive officer of Macy’s, Inc., in a statement.

A Wall Street
Journal
article suggested that Macy’s numbers improvement
may be due to 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.

Charles
Grom, an analyst with J.P. Morgan, told the Journal that Macy’s
continues to be more expensive than Penney, but has introduced more moderately
priced items in the past year.

Mr. Lundgren pointed to exclusive brands as a
reason for optimism.

"We have planned for a successful back-to-school season and it is off
to a great start with the phenomenal launch this week of Madonna’s new Material
Girl juniors brand," said Mr. Lundgren. "We also are launching our
exclusive brand for young men, Slade Wilder, and the early response has been
very strong."

Macy’s has also benefited this year from greater integration
of its store and online channels.

"Our Search & Send capability has now been rolled out to every Macy’s
store nationally and is helping us to capture new sales opportunities in every
location by accessing online inventories," said Mr. Lundgren.

Online sales
for macys.com and bloomingdales.com were up 28.1 percent in the second quarter
and 31.0 percent for the first six months of 2010. Online has given the company
a 0.8 percent boost for its same-store numbers this year.

Discussion Questions: What is your assessment of Macy’s at this point and
time? What initiatives have impressed you most and where do you think the company
continues to face challenges?

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13 Comments on "Macy’s Doing ‘Great’ Heading Back-to-School"


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Dick Seesel
Guest
10 years 9 months ago

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.

Bill Emerson
Guest
Bill Emerson
10 years 9 months ago

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.

Paula Rosenblum
Guest
10 years 9 months ago

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.

Robert Craycraft
Guest
Robert Craycraft
10 years 9 months ago

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.

Ed Rosenbaum
Guest
10 years 9 months ago

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.

Jal Jobe
Guest
Jal Jobe
10 years 9 months ago

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.

Craig Sundstrom
Guest
10 years 9 months ago

“…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.

Lee Peterson
Guest
10 years 9 months ago
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… Read more »
Mark Johnson
Guest
Mark Johnson
10 years 9 months ago

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

Phil Rubin
Guest
10 years 9 months ago

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.

Bob Phibbs
Guest
10 years 8 months ago

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.”

Marge Laney
Guest
10 years 8 months ago

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.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 8 months ago

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.

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