Macy’s Needs Some Fireworks In Its Retailing

Fireworks on the 4th of July are as American as hot dogs and apple pie. Mind you, the hot dog traces its origin back to Frankfurt, Germany while the apple pie goes back to 14th Century England. No matter.

Macy’s blew many of us away on the 4th with one of the most spectacular fireworks displays on record. The five-day long event, the 44th in Macy’s history, was said to have cost $6 million. Will Coss, the event’s executive producer brought in five barges that spanned a mile long stretch on the East River, and blew off 65,000 shells, to the amazement of all who watched.

Between these fourth-of-July extravaganzas, and the venerable Macy’s Thanksgiving Day parades, Macy’s shows it knows how to produce a grand experience. So, what’s with their stores?

The Plight to Reignite

As complex an undertaking as these major spectacles are to produce and execute, why has their retail performance been so consistently underwhelming for so long? If it has anything to do with the fact that facilitating their spectacular events depends on considerable outsourcing, perhaps it is time for Macy’s to bring in outside expertise to create a meaningful survival plan. In my opinion this might necessitate going private.

But wait, what about “Polaris” and the array of other plans that their PR teams have artfully articulated over the past decade? My problem with those is that they appear to be engineered to focus on tactical “adjustments” designed to support a stock price, and short-term returns, rather than strategic long range initiatives.

The fact remains that their entire category is shrinking, while they are losing share to great discounters and Amazon. And then there is the real estate. Macy’s remaining 572 branded stores are primarily located in the 1,100 or so remaining major malls, and it is widely believed that less than 300 of them (278 according to my friend, and CNBC contributor Jan Kniffen) are positioned for long-term survival, so do the math.

Getting Small, Y’all

The much-ballyhooed Market by Macy’s, developed to be a small, off mall concept to counteract mall fall, conceptually makes sense. Bloomingdales is following with Bloomies, and both stores, in the 20,000-22,000 square foot range, are one-tenth the size of their mall brethren. To succeed, these concepts will have to hit a moving bullseye mix of the right products, services, and locations to hope to compensate for the underperforming mall stores. And this does not address the tons of cash that it would take to scale such an endeavor. So far, their track record is less than stellar.   

The first Market by Macy’s store opened in February 2020, in Southlake Town Square, outside of Fort Worth, TX, and it was immediately sidelined by the pandemic, certainly no fault of their own. On paper their initial Southlake location had ideal demographics, in an upscale, suburban shopping district. But within weeks of their post-pandemic reopening Macy’s announced that its spanking new store would again close July 10th.

The always upbeat press announced that the store would undergo a complete renovation “to create a brighter and more open shopping environment for our customers to showcase the best of Macy’s fashion as a source of personal style”. They plan a reopening in fall.

Missing the Mark

As someone who spent a four-plus decade career designing retail prototypes, I find this grand misstep baffling, to say the least. Initiatives of this magnitude typically begin with clear strategic brand, product, and marketing objectives. These are dovetailed with customer experience planning meshed with omnichannel strategies. The more granular product mix, service offerings, retail design and merchandise planning follow.

With the importance, expense, and duration of the Market by Macy’s planning process, one wonders how they missed the target so spectacularly? To open and close a retail prototype with mere days of testing and feedback suggest massive misjudgments in the who, what, and why of the entire venture.

By contrast, when Nordstrom underwent a similar exercise with Nordstrom Local, they had a clear objective of what that store was meant to represent and how it fit into the company’s retail ecosystem. And while there has likely been some “iteration” in its roll-out, they probably hit the 85% factor, out of the box. That number represented what my firm intended to accomplish (and usually did) with a new retail design prototype.

Retail Is Detail, But Blocking and Tackling Counts

I have suggested many times in my “Macy’s musings” that many of their failings are self-inflicted. Target, who continues to take market share from Macy’s, besides being better merchants, with nicer stores, and more strategically developed “owned brands”, thinks of their customers as guests, and services them accordingly.

Macy’s on the other hand exudes just the opposite aura. Just this past weekend my wife and eldest daughter were in Macy’s, attempting to find an open check out, without a long waiting line. They were independently wandering past closed service counters, communicating via text message. My wife spied a “manager type” and asked why they didn’t have more registers open. Not surprisingly he responded, “we’d have them all open if we could find the help.” No doubt, but they need more than bodies.

Macy’s average starting wage ranges between $11 and $13 per hour. Target and Walmart workers have a minimum starting wage of $15 per hour, not including benefits, bonuses, and other incentives. And as my colleague, Walter Loeb recently reported, Target is not having issues hiring, while Macy’s has hundreds of unfilled job openings nationwide. Additionally, many more Target, Walmart, and Costco employees view their employment as a long-term career opportunity. This used to be the case at Macy’s, but no longer is.  

Until Macy’s rethinks and reinvents its customer service model and evolves from hiring clerks to training, paying, and supporting brand ambassadors, they will continue to lose share. And that stands even once they decide who, what and where they need to be.

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