Fireworks on the 4the of July are as American as hot dogs and apple pie. Notice that the hot dog originated in Frankfurt, Germany, while the apple pie dates back to 14e Century England. It doesn’t matter.
Macy’s wowed many of us on the 4the with one of the most spectacular fireworks ever recorded. The five-day event, the 44e in Macy’s story, reportedly cost $ 6 million. Will Coss, the executive producer of the event, brought five barges that stretched a mile long down the East River and blew 65,000 shells, to the amazement of all who watched.
Between those July 4th extravagances and Macy’s venerable Thanksgiving Day parades, Macy’s shows he knows how to produce a great experience. So what about their stores?
The spell to revive
As complex as these major shows are to produce and perform, why has their retail performance been so underwhelming for so long? If this has anything to do with the fact that the facilitation of 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 require going private.
But wait, what about âPolarisâ and the range of other plans their PR teams have skillfully articulated over the past decade? My problem with these is that they seem to be designed to focus on tactical âtweaksâ designed to support stock prices and short-term returns, rather than long-term strategic initiatives.
The fact remains that their entire category is shrinking, while they are losing shares in favor of the big discounters and Amazon. And then there is real estate. The remaining 572 Macy’s branded stores are primarily located in the remaining 1,100 or so major shopping malls, and it is widely believed that less than 300 of them (278 according to my friend, and CNBC contributor Jan Kniffen) are positioned to long-term survival, so do the math.
Become small, all of you
The very talkative Market by Macy’s, developed to be a small non-mall concept to counter the fall of malls, makes conceptually sense. Bloomingdales follows suit with Bloomies, and the two stores, at 20,000 to 22,000 square feet, are one-tenth the size of their mall brethren. To be successful, these concepts will need to achieve an evolving mix of the right products, services and locations to hope to compensate for underperforming mall stores. And that’s not about the tons of money it would take to scale such a business. So far, their 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 not their fault. On paper, their initial location in Southlake had an ideal demographic, in an upscale suburban shopping district. But weeks after their post-pandemic reopening, Macy’s announced that its spanked new store would close again on July 10.e.
The ever-optimistic press announced that the store would undergo a complete makeover “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 to reopen in the fall.
Missing the mark
As someone who has spent over four decades designing retail prototypes, I find this big misstep confusing, to say the least. Initiatives of this magnitude typically begin with clear strategic brand, product, and marketing goals. These are closely related to customer experience planning and omnichannel strategies. This is followed by the more granular product line, service offerings, retail design and merchandise planning.
With the size, expense, and length of Market by Macy’s planning process, one wonders how they missed the mark so dramatically? Opening and closing a retail prototype within days of testing and commenting suggests massive errors in judgment in the who, what, and why of the entire business.
In contrast, when Nordstrom underwent a similar exercise with Nordstrom Local, they had a clear focus on what this store was meant to represent and how it fits into the company’s retail ecosystem. And while there was probably some âiterationâ in its deployment, they probably hit the 85% factor, right off the bat. This number represented what my company intended to accomplish (and generally did) with a new retail design prototype.
Retail is retail, but blocking and attacking matters
I have repeatedly suggested in my “Macy’s Dreams” that many of their failures are self-inflicted. Target, which continues to gain market share from Macy’s, in addition to being better merchants, with nicer stores and more strategically developed âowned brandsâ, views its customers as guests and serves them accordingly.
Macy’s, on the other hand, gives off the opposite aura. Last weekend my wife and oldest daughter were at Macy’s trying to find an open start, without a long line. They walked independently in front of closed service counters, communicating by SMS. My wife spied on a “manager guy” and asked why they didn’t have more records open. Unsurprisingly, he replied, âWe would open them all if we could find help. No doubt, but they need more than bodies.
Macy’s average starting salary ranges from $ 11 to $ 13 an hour. Workers at Target and Walmart have a minimum starting wage of $ 15 an hour, not including perks, bonuses, and other incentives. And as my colleague at Forbes.com, Walter Loeb recently reported, Target doesn’t have any hiring issues, while Macy’s has hundreds of vacancies nationwide. Plus, many other employees at Target, Walmart, and Costco see their jobs as a long-term career opportunity. It used to be at Macy’s, but it is no longer the case.
Until Macy’s rethinks and reinvents its customer service model and moves from hiring clerks to training, compensating and supporting brand ambassadors, they will continue to lose market share. And that remains even after they decide who, what and where they need to be.