Reference no: EM132155637

Faced with some surprising sales declines and threats to its status as the leading department store brand, Macy’s has developed a multipronged strategy, seeking to leverage its existing advantages as well as some new retail options. Three key efforts reflect its expansion as an omnichannel retailer, its pursuit of relevant target customers, and its partnerships with other retail sources. First, Macy’s has a great online presence, and it simultaneously has adopted in-store technologies that help customers find the items they want, design fashionable outfits, make payments more easily, receive discounts, and even have their purchases delivered if they so choose. For example, with large Look Book displays, consumers interact with a sort of digital catalog in the store, finding fashionable ideas, ways to extend their existing wardrobes, and images from forward-thinking fashion icons. Touching the screen enables them to check the availability of various colors and sizes as well as receive more detailed information about items that are of interest. The POP (point-of-purchase) terminals in Macy’s stores similarly are touchscreens that provide extensive inventory information, though they are more functional than fashionable. These smaller kiosks indicate which colors and styles are available and also identify which items have prompted the most Facebook likes or customer favorite rankings. When it comes time to pay, Macy’s is working to make the process easier and quicker by installing Apple Pay capabilities throughout its network of stores. As one of the earliest adopters of this new technology, Macy’s is seeking to appeal to Apple fans who love to use their iPhones for nearly everything. With Macy’s Wallet and the Shopkick app, customers have two methods to receive coupons and special offers. Once downloaded, the Shopkick app requires people to opt in, and then, as they enter a Macy’s store, reminds them to open it so that they can receive personalized notifications. It tracks their movements through the store, so that a shopper in the outerwear department receives a discount offer on gloves rather than cosmetics, for example. The Macy’s Wallet program is similar, except that it is unique to this retailer and links to consumers’ loyalty cards. A shopper who has earned a percentage-off offer, on the Page 544 basis of her or his prior purchases, thus no longer needs to worry about forgetting and leaving the paper coupon at home rather than bringing it on the current shopping trip. Finally, using a crowdsourced delivery service called Deliv, Macy’s offers customers the option of making their purchases in the store, then having them delivered to their homes, such that they no longer have to lug heavy packages through the mall.37 However, according to one analyst, the inventory in Macy’s stores is often messy and seemingly overstocked, without sufficient on-duty personnel to keep the experience moving along nicely. Thus it might need to reorient its focus more on people and less on technology to maintain its high level of customer experience. As we discussed in the opening vignette to this chapter, to compete with Amazon, which continues to wow customers with its innovations, rapid delivery options, successful appeal to consumers, insurmountable product and service selection, and effective pricing, it needs to leverage its multiple channels and exploit its omnichannel potential to its full extent.38 Second, Macy’s had determined that it needs to pursue those elusive young shoppers known as Millennials. Accordingly, it has implemented a $400 million renovation effort for its flagship New York City store, testing out various options that might attract more of the market of shoppers between the ages of 18 and 35 years. The basement level is newly designated “One Below,” and it offers a notably different shopping experience. In addition to merchandise designed to appeal to Millennials, it provides services such as blow-drying stations, jean embroidering, and watch engraving. Shoppers can use a 3D printer to create their own custom jewelry, and a touchscreen wall allows them to take high-quality selfies.39 These tests, if successful, are likely to spread to other locations as well. In the meantime, Macy’s is opening more off-price stores, seemingly following the successful lead of Nordstrom with its Nordstrom Rack stores. A photo of the Benefit brow bar at Macy’s At Macy’s flagship New York City store, the newly designated “One Below” in the basement offers merchandise designed to appeal to Millennials, as well as services like this brow bar. © Chris Goodney/Bloomberg/Getty Images These moves reflect the conventional wisdom about what Millennials want. In particular, studies show that these young consumers tend to devote their spending more to personal or digital services than to apparel. They also suffer higher levels of debt, mostly due to student loans, and earn less on average than previous generations have. As a result, they generally seek lower-priced options for their fashion choices. This preference puts them in direct contrast with the previous big cohort of shoppers—namely, the Baby Boomers. The consumers in this age group, as they start to retire from the work force, exhibit strong spending patterns and have enviable levels of discretionary income and time. From this perspective, some observers suggest Macy’s might be going after the wrong age demographic—unless Baby Boomers like selfie walls too. Page 545 Third, noting the success enjoyed by Best Buy when it opened dedicated stores within the stores, which reflect its strong relationships with vendors and ability to offer the kind of variety its customers demand, Macy’s entered into a partnership with Best Buy but flipped their roles. That is, as the host location, Macy’s opened several Best Buy operations within about a dozen of its department stores. The mini-Best Buys take up about 300 square feet of space and offer tablets, smartphones, smartwatches, audio devices, and accessories. As in traditional Best Buy stores, Samsung has a strong presence. Staffing the in-store stores will be Best Buy personnel, ready to answer shoppers’ questions about high-tech devices. Best Buy’s recent resurgence, as well as Macy’s willingness to innovate, have contributed to the new initiative. In addition, Macy’s notes that customers are seeking more variety in the items available to them, whether to purchase for themselves or as gifts. By adding the latest and coolest electronics gadgets—whether as tools to help people shop or as an expanded variety for consumers to purchase—Macy’s seeks to ensure that it is a shopping destination for virtually anyone.40 Questions

In which channels is Macy’s attempting to appeal to consumers?

What is Macy’s plan to attract Millennials? Do you shop at Macy’s? Why or why not?

Using the factors for choosing retail partners outlined in the chapter, do you believe that Eva’s line of green cosmetics should attempt to get placement in Macy’s?

Develop a strategy for Macy’s to promote Eva’s line of green cosmetics.