Features, Leadership

Macy’s: The Charade on 34th Street? (Part 1)

Note: This is the first of a two-part series. The article is strictly the opinion of the author and not necessarily the viewpoint of The Robin Report.

Today, Macy’s is no “Miracle on 34th Street as celebrated in film. Now, it’s more a charade than anything else.

Macy’s Past

  1. Macy’s should have waited to purchase May Company, its principal competitor, until after it fell to the ground. That way, Macy’s could have picked and chosen the real estate that would have truly added value to its portfolio rather than take on a full collection which included so many also-ran stores. Instead, Macy’s, not only overpaid, but was forced to accommodate a legacy of second-tier stores overly reliant on excessive price promotion.
  2. The company’s adoption of its “My Macy’s” strategy, allegedly created to ensure local market relevance, was really put in place to survive the chaos and confusion that resulted from the lack of a unified and well-planned national strategy by rolling up the precedent regional Federated, Macy’s and May divisions. This stopgap solution was expensive, short lived and did not lead to a forward leaning point of view. Instead, the company then moved onto a nonsensical theme, “The Magic of Macy’s,” which though catchy as it rolled off one’s tongue, meant nothing. In fact, “The Magic of Macy’s” was not much more than a celebration of mostly less than ascendant celebrity partners such as Donald Trump, Martha Stewart, Jessica Simpson, Tommy Hilfiger etc.
  3. It feels as if the company has remained trapped in the same web of coupon-driven, double- and triple-dipped discounting for decades. Compare a Macy’s “One Day Sale” newspaper insert 20 years ago with one today and you would be hard pressed to discern a difference. Look at Macy’s fashion advertising past and present and all you see are what vendors have been willing to pay for. There’s no unified imagery, no cohesion and certainly no “magic’ of any sort. As for cohesive messaging within the merchant groups – forget it. The silo behavior of old Federated and Macy’s remains in place. It’s every merchant group operating within their own bubbles. This is what you get without singular, directed leadership and a unified and congruent corporate strategy.

Macy’s Present

Give Macy’s credit where due. The company moved into the e-commerce space relatively early on. But what is macys.com other than a surrogate for their legacy newspaper price-driven promotions? Any editorial content? Any storyboarding or storytelling? Nothing of the sort. Just a hodgepodge of what’s on sale today … and every day. The company has been very proud to tout the growth of macys.com volume. Early on, the company spoke proudly of how incremental the e-commerce business was to their total sales. Today, much of these sales appear to be coming from customers either no longer shopping in Macy’s stores or shopping far less frequently in those stores. This can’t possibly be a surprise to anyone as many of these stores have received little if any capital investment and therefore are hardly physically inviting and have less than inspired assortments to say nothing of inconsistent and diffident staffing and customer service. The reality is that the company has been running out the clock financially on hundreds of these stores, as if there are no consequences to putting on a mediocre face to thousands of its customers every day.

Then of course there is the issue of operational integration of a legacy brick-and-mortar portfolio with an ever-burgeoning e-commerce platform. Surely there can be no mid- to long-term success from e-commerce order fulfillment pulled from the inventory of brick-and-mortar stores. While Amazon is busy creating a network of increasingly automated fully integrated distribution centers geared toward shipping complete customer orders quickly and efficiently, Macy’s has store associates picking, packing and shipping customers’ orders, often piecemeal from their own store’s inventory. Rather than biting the bullet on hundreds of less than productive stores, Macy’s has seemingly convinced itself that this expedient pathway is defensible. It is not.

A Sock Story

Granted anecdotal and therefore possibly unfair, I still feel compelled to describe a very recent personal transaction with macys.com. I wear a particular style of designer crew sock which I have purchased for many years from Bloomingdale’s. Comfortable and fashionable, albeit somewhat poorly made and therefore sshort-lived I regularly refill my sock drawer as needed. Alas, Bloomingdale’s, both in store and online, has dramatically cut back the colors it offers in this style. Enter macys.com which carries this sock in a broad array of colors. I bought a boatload of these socks from macys.com and was pleasantly surprised to see that they were being deeply discounted through a “Family and Friends” promotion. Because of the size of my purchase (18 pairs in a variety of colors), I qualified for free shipping to boot. Great. I promptly received an order acknowledgment from Macy’s confirming my order as being in stock and in process. Great. But then I received another note from Macy’s informing me that my order would arrive in multiple shipments from multiple locations over multiple delivery dates. This was because these 18 pairs of socks would be coming to me from Macy’s facilities from coast to coast – apparently from four different Macy’s stores. One of these “sites” has apparently been tasked with shipping me one pair of socks (one of five pair that I ordered in black no less!) However engaged this designer is (or is not) in the price promotion that I’ve taken advantage of, and however successfully Macy’s has negotiated shipping rates with UPS, this transaction is most definitely not contributing to the company’s bottom line. Sorry Macy’s, there’s not only no magic to doing business this way, there’s no future in it as well.

Macy’s Future

With a relatively recent change in leadership, Macy’s has embarked on a whole host of changes purportedly to enable it to better position itself in the future. Great. But only if these changes do more than merely moving the proverbial deck chairs around on the Titanic. Unfortunately, that’s all they appear to be. Recruiting senior leadership from somewhat unrelated fields – is not usually a winning formula. Creating new-age leadership titles like Chief Customer or Chief Experience Officer: please spare us from this foolishness. Closing unproductive stores is vital but the number to be closed is nowhere near enough. Shutting down selling space and cutting back inventory and staffing in less than full bodied stores, a stopgap at best. And then there’s that same old same old crappy newspaper insert each week mirrored by a web version that simply parrots the same old, same old promotion announcements.

Macy’s is going to need a “Miracle” if it’s going to survive. A “Charade” like the one we’re witnessing isn’t good enough to be sustainable.

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