What’s Going On at Macy’s?
Last month’s rumors of a potential buyout of Macy’s by investor Edward Lampert and Vornado Realty Trust have apparently died down, but there’s a lot of activity being reported within the organization, some of it strategic and proactive, and some of it amounting to damage control. As we mentioned a couple of weeks ago, Macy’s marketing division has had to withstand a couple of senior management resignations this year. Nevertheless, a major ($100 million) celebrity-based ad campaign is under way, part of an effort to make Macy’s more upscale. With the holiday season upon us, it remains to be seen how well the campaign works.
For one thing, Macy’s is spending relatively little on ads related to e-commerce—$4.5 million for “Internet spending,” but not including “spending on online search marketing or rich media ads that include video,” according to a TNS Media Intelligence report. That’s interesting. We would hope that the media not included in that TNS figure amounts to significant ad expenditures elsewhere that will grow with more experimentation and use to support Macy’s e-commerce channel.
Meanwhile, the brick-and-mortar Macy’s is weathering another storm. A front-page New York Times article this past week pronounces that Macy’s CEO Terry Lundgren has been forced to backtrack on at least some of the strategy to reinvent the brand and revitalize the 800+ department stores that now bear the Macy’s name. Supposedly, a move to reduce the number of shopping coupons stores issued to customers (for stores in some regions the reduction was around 60%) and to eliminate midprice brands (the article cites Levi’s and Dockers) has left customers unimpressed. In fact, they have been downright unwilling to shop. Macy’s is actually blaming its coupon cuts for “four consecutive months of falling store sales this spring.” Although comparable discounts are still available for customers who use a Macy’s charge card, the results have been nowhere near as positive as coupons have been historically.
And don’t forget Marshall Field’s, now the State Street Macy’s store in Chicago. Feelings there run high about the change in name, the quality of goods sold, and many say, in service. Macy’s Chicago store announced last month that toy store FAO Schwarz will open a 4,000-sq.-ft. store inside the Macy’s store for the holiday season (Schwarz closed its Chicago store in 2003 as part of a bankruptcy filing). But even that news has failed to impress some diehard Field’s customers. One observer sums it up thus: “[Macy's] has run the stores straight into the ground and most certainly will end up selling the Field’s name and the State Street store to a quality retailer like Neiman-Marcus or Harrod’s. Most Chicagoans will never shop at Macy’s. Never.”
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Curt Barry is president of F. Curtis Barry & Co., a multichannel operations consulting firm� with expertise in the selection and implementation of warehouse management systems. Learn more at: http://www.fcbco.com.
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