Macy’s May See Changes

JUNE 30, 2016 | BY JEFF GREEN

Macy’s may be flailing, but the department store icon can’t be accused of taking its struggles lying down. As sales were falling 7.4% in the first quarter of 2016 (numbers that represented the fifth straight quarter of declining sales, and capped off a year in which Macy’s stock prices were nearly halved at 47%), Macy’s continues moving forward on plans to roll out its new off-price Backstage concept – both as a series of new stand-alone stores and as in-store locations integrated inside a number of existing Macy’s stores.

 

Perhaps most intriguing, however, is Macy’s recent announcement that it plans to debut an entirely new store design at its newly remodeled Easton Town Center location in Columbus. According to The Columbus Dispatch, the 200,000-sq.-ft. location will reopen with a comprehensive series of décor and design updates. When the prototype makes its formal debut on June 25, changes will be evident in everything “from the lights to the flooring to the fixtures.” 

 

That is an encouraging development, as many Macy’s locations are in dire need of a facelift. The aesthetic refresh is far from the only big news, however: Macy’s has announced that it will be unveiling a number of new concepts and services including dedicated store-within-a-store spaces for LensCrafters, Papyrus, and the Tux Shop (a Men’s Wearhouse brand), a Connect @Macy’s kiosk that will offer “one-on-one service to customers as soon as they walk into the store,” and a complimentary personal shopping service called My Stylist @Macy’s.

 

While similar personal shopping services have been available for some time at high-end brands like Nordstrom, Von Maur, Neiman Marcus, and Saks Fifth Avenue, Macy’s is the first department store brand in its price range to offer such a service. While Macy’s deserves credit for being willing to try something new, I’m unconvinced that the new services are the right fit for the Macy’s brand. Unlike at Nordstrom, for example, where the personnel operating the personal shopping service are compensated based on commission and sales volume, my understanding is that the Macy’s service providers will not be paid commission. Without that incentive, I wonder how successful the program will be. More importantly, this feels like a strange fit for a brand that has long based its value proposition on deals and lower prices. While personal shopping services might have some appeal to those who cannot afford or prefer not to pay premium prices, but still want premium services, it doesn’t seem like something that going to drive traffic to Macy’s stores. In other words, I see this as more like a welcome perk than a difference-making differentiator.

 

From Macy’s perspective, however, the calculus is probably fairly straightforward. Implementing these services is relatively inexpensive, and Macy’s can offer the service, promote it heavily, and potentially raise interest based on fairly minimal risk and investment. It also may have the result of making Macy’s look and feel more like a higher end brand, which makes me wonder about Macy’s overall strategy going forward. Prior to the price-and-promotions model Macy’s has pursued for some time now, Macy’s used to be very service oriented. Is this the beginning of a larger attempt to reclaim some of that original service-oriented reputation?

 

Macy’s is also clearly trying to diversify its offerings, as the LensCrafters, Papyrus, and the Tux Shop openings are clearly designed to continue a formula Macy’s began experimenting with when it added Blue Mercury as a store-within-a-store brand. From a brand standpoint, I think Papyrus is a good fit with its selection of stationery and greeting cards that offer the kind of impulse buy item that could do well in a department store setting. Incidentally, it’s not a bad move for Papyrus either, which is facing stiff competition from Paper Source. The Tux Shop also works. Tux rental has long been available in malls, and so bringing it into a department store seems like a natural move that confers a certain level of quality. However, I’m not convinced that LensCrafters make sense. The eye care retailer is already convenient and easy to get to, and Macy’s can’t be everything for everyone.

 

But, then again, maybe Macy’s doesn’t have to be; maybe they just need to look like it. 

 

Maybe it’s more about optics and impressions, and about making Macy’s seem like a place where shoppers can go for everything they need. Maybe it’s all part of that shift back to service–and perhaps also a move toward increased quality, convenience and variety. If it works, it’s a way to add value in ways other than price and promotions, and it’s new, fresh, easy, and relatively inexpensive to implement. Most importantly, it’s something Macy’s can try: The brand is in such disarray that they have to try something. 

 

There’s no doubt that from an economic and operational standpoint, the store-within-a-store concept is fundamentally a great use for the oversized boxes. It allows Macy’s to fill space in stores that are often too large, and to make that space more productive in the process. As for all the speculation about strategy, brand direction and fit, maybe I’m overthinking it: maybe the bottom line is simply the bottom line, and a brand that has taken some financial roundhouses in recent years is simply trying to find a way to punch its way off the ropes. Macy’s is clearly reeling, but this willingness to try new things shows that it’s clearly not time to throw in the towel.