Macy’s Case Study

Danielle Hughes

With the millennial generation becoming the largest population, retailers are having to find

ways to keep up with the quickly changing tastes of this tech savvy generation. They also have to find

ways to draw them not only to their store locations and continue the brand loyalty that was established

with their parents. Macy’s has made it one of their initiative to reach out this generation by establishing

marketing strategies that will give them the competitive advantage over their competition.

Macy’s has changed the way they bring service to its customers with M.O.M. which stands for

My Macy’s, Omnichannel and Magic Selling. My Macy’s ‘focuses each store on its merchandise

assortment, visual merchandising, service levels and specials events that are right for customers. By

giving locally based executives the power to make more and better decisions, My Macy’s custom tailors

a store fit with its community to capture customer loyalty and market share while driving same store

sales and profits’ (Macy’s 2012 Annual Report). Macy’s is making sure that it fits itself to what customers

need to bring their loyalty and return business to the company. Omnichannel means taking store,

website and m-commerce and making them all one inventory. This will help the company get through

their inventory more quickly and bring in new stock more quickly. MAGIC selling stands for Meeting and

make a connection, Ask questions and listen, Give opinions/Give advice, Inspire to buy and sell more and

Celebrate the purchase. These five statements move Macy’s customer service to a more personalized

experience that will show customers that they are cared about and will make customers want to return.

Macy’s retail strategy should focus on how to bring the millennial generation into their stores

instead of using the internet and mobile devices to purchase their goods. One of the ways Macy’s is

trying to bring people into their stores is with private labels. Macy’s current private labels make up 5-

10% of their current brands focused on the millennial generation. With plans to expand their private

labels, their products will make up at least 50% of their floor. This could be a huge step for Macy’s to

find their step in the millennial hold, but will it be able to keep up with their competitors?

The top competitors of Macy’s have stepped out of other department stores such as Nordstrom

and JcPenny and into that of fast fashion retailers such as H&M, Zara and Forever 21. The merchandising

strategies that these companies have installed (more styles, less depth, more often) has given the

competitive edge that they need to bring customers in more and has helped them stay ahead of

everyone else in the retail business. Macy’s would benefit from following this strategy. The millennial

generation is looking for a retailer that is going to give the more options and keep up with not only their

fast paced lives, but also the trends that are quickly changing in the fashion industry.

Macy’s area that they have set up to reach to the millennial group is the Impulse area of their

stores. This area consists of brands such as Rachel by Rachel Roy, Free People, Lucky Brand Jeans and J

Brand. Macy’s has placed their own private labels into this area as well, their two most prominent are

Made and Bar III. One of the initiatives that Macy’s has placed is that they will be releasing 13 new

private labels in the Impulse area by the end of 2013 (Macy’s 2012 Annual Report). Private labels are a

risky merchandising strategy to take on, in my opinion. With focusing most of their energy in this area, it

will fall back on to Macy’s if their brands do not perform well. Macy’s competitors are more focused on

bringing customers in more often and keeping them interested.

Macy’s is also finding ways to market themselves to the millennial generation. They are taking to

the internet and posting on Facebook, Twitter, Pinterest and Instagram. These are all ways to get the

millennial attention. Macy’s has also started Mblog which is a Macy’s blogging site. On this site, bloggers

give unique perspectives on trends, styles and what is happening in the fashion industry. Since the

millennial generation is such a tech Savvy generation, these ways are of marketing to this group will

defiantly catch their attention if done correctly.

The Impulse are of Macy’s has a lot of brands happening that bring different styles to the

customer. It also reaches into the area of shoes and cosmetics. With bringing in more private labels,

Macy’s needs to make sure that they have a competitive pricing strategy against H&M, Forever 21 and

Zara, but also needs to make sure there pricing strategy does not lower their brand equity and keeps

them competitive with higher price point companies such as Nordstrom. Macy’s needs to not focus most

of its attention to private labels, but to marketing itself to the millennial group through social media and

bring in the concept of fast fashion.

The Competitors:

H&M’s merchandising strategy is that of fast fashion. More options and less depth, customers return on

a weekly basis to see what new products have been placed in the store. It keeps them continually

interested that they can get new things every week. Their price points also help with their competitive

advantage. H&M has cloths as low as $4.95 up to $50+. This reaches out to all age spectrums in the

millennial group, those who are getting allowance from their parents to those who are college graduates

and working in entry level jobs. The one point that Macy’s has over H&M is customer service. H&M

seems to be under staffed and whenever you do find someone to help you, they seem put out that you

are asking them a question. Macy’s can learn from H&M that having more options with a smaller depth

will bring in the customers more than once a month.

Nordstrom has set the bar high in customer service for years. Now they are setting the bar high

with the millennial generation. Nordstrom has created high quality private labels that has customers

returning for them knowing what they are paying for. Nordstrom has also stepped into the realm of fast

fashion in their SAVVY department. This department changes its trends and looks every 21 days. All the

other department that aim to the millennial generation (point of view, T.B.D. and Brass Plum) receive

new merchandise every week, which also brings customers into stores on a weekly basis. Nordstrom

also does in store events such as trunk shows and trend shows that give customers an inside look on

how to put themselves together and receive advice from professionals in the industry. Nordstrom also

uses social media such as Facebook, Instagram and now Pintrest to grab the attention of the millennial

group, who spend a good amount of time on their phones and internet.

The products that are offered in the Impulse department range from dresses, tops, skirts, jeans,

rompers and skirts. Each brand offers a different assortment, but they are similar due to the seasons and

trends. 50% of the assortment is tops (all brands being a part of this percentage), 30% consists of

bottoms (jeans, slacks skirts, etc), the last 20% consists of dresses, rompers and miscellaneous articles of

clothing. At the moment, there are not as many private label brands as there are other brands in this

department. With the plan of 13 new private labels, the department will probably see a drop in certain

brands to make room for the new brands. The average price points for this department begin at $59 and

reach up to $215. The price points are higher than those of H&M and Nordstrom in their departments

that reach out to the millennial. This could be a strategy that Macy’s should reconsider to give them

more of a competitive advantage. With competitors with a lower price point, Macy’s may not reach their

target market due to their pricing.

Macy’s is one of the biggest advertisers in the retail industry. They run advertisements in the

newspapers as well as magazines and TV and radio spots. They also reach out to their customers via

email to let me know of new promotions and sales. With the initiative to reach out to the millennial,

Macy’s now takes part in Facebook, Intagram, Twitter and Pintrest. They also have launched their own

blogging website called Mblog. All of these social media avenues are ways to reach their target market

which is always on the go and using their mobile devices. When in store, there are signs posted about

sales as well as their Macy’s credit card. Macy’s has also had many celebrity collaborations both long

term and short term. One of their more well-known ones is with Madonna and her Truth or Dare brand.

The customer experience for the Impulse section of Macy’s.com is simple to understand but

could use some changes. When you first go to the Impulse section of the website, it has links to look

books for Made and Bar III as well as links to both of the collections. It has moving pictures with the

most current trend that is being highlighted as well as links to contest. There are clear links to bags,

accessories, shoes, and beauty to go to the Impulse brands in those locations. I had to search for the link

that said ‘brands’ which took me to the other Impulse brands that were not Macy’s own private label.

When looking at the products it provides pictures, with a description and sizing chart that can be used.

Shipping is free with a purchase of $99 or more. For any purchase under $99, shipping is a flat fee of

$9.95. Returns can be made in store or mailed back to online. My only suggestions for the online

experience would to be to make it easier to get to the other Impulse brands instead of a small link at the

bottom of the page.

The in store experience has changed within the last couple of months at the San Francisco

Macy’s. The store was once cluttered on the Impulse floor and hard to look through things. The floor is

now clean and well organized. Sales associates are very knowledgeable about products and willing to

answer any questions you may have. When if the fitting rooms, they take your name and return

frequently to see how you are doing and ask if you need anything. The store layout is easy to navigate

and find the different brands. What was once a frustrating floor for me to go look through has now

become clean and easy to find what I am looking for. The only suggestion that I would have is to have

more associates on the floor. When I was at this location there was only one associate in each

department and the women who was helping me had a lot of customers that she was trying to help and

take care of.

Macy’s is making its way towards bring the millennial generation to its store. I think that

bringing in so many private labels in very risky for the company. There is no one to help with their gross

margin, and if the labels do not do well, Macy’s is taking 100% of the hit. I believe that they are taking

the right steps to advertise to the millennial group and let them know that they have the brands that

they will love. I believe that Macy’s following M.O.M. has really changed their customer service in a

good way and will build their customer loyalty more than they already have. I also believe that with

turning to an omnichannel, Macy’s will be on the path to having more ideas, less depth, more often and

bringing in the millennial generation more than once a week or once a month.