DISCUSSION TOPIC

Other’s Loss is Macy’s Gain – 5/14/09

TOPIC SUMMARY:

Macy’s has developed a strategy to take advantage of the misfortunes (specifically the move into bankruptcy and liquidation) of competitors such as Fortunoff, Gottschalks and Mervyns so it can pick up their customers.

“Wherever there is a store that has gone out of business, we are honing our sights on that customer,” Terry Lundgren, chairman and chief executive officer of Macy’s, told The Wall Street Journal.

Macy’s strategy, as The Journal article points out, is nothing new in retailing circles. In New Jersey, for example, even though Walgreens purchased prescription files from the failing Drug Fair chain, every pharmacy within miles of the former chain’s stores have signs posted letting consumers know their business is welcome.

Picking up a fallen rival’s customers is more important than ever considering the realities of consumer spending at this time. According to Deutsche Bank, closed chains in the clothing, electronics and home furnishings businesses left behind roughly $21.4 billion in sales this year.

Macy’s, as an example, is considering adding patio furniture to its stores in the New York area following Fortunoff’s collapse. Outdoor furniture, according to The Journal, was the most successful category for Fortunoff. The company has even talked with former execs at the chain about participating in an online launch of patio furniture this year with product to reach stores in 2010.

Discussion questions:  Has market share become more important for a chain or independent’s success in the current market than it has in the past? What are your thoughts about the opportunity for retailers to pick off the bones of fallen competitors in the current market?

My post: 

Macy’s is well positioned to grab market share from the demise of Gottschalks and Mervyns and other retailers selling the core product categories like apparel, home furnishings and cosmetics.  I do question the idea of going after categories that may not be in their stable of core competencies – like outdoor furniture.  This could prove a distraction they don’t need.  History has shown us that retailers who understand their customer and where they shop can devise effective market share strategies.  The key is to understand those customers who are shopping with you and with your competition.  Macy’s has the best chance of grabbing more of the customer’s dollars for categories they already bought at both Macy’s and the failed retailers.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

————————————————-
Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13742

————————————————-

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.

————————————————-
RETAILWIRE DISCUSSION TOPIC

Penney and Polo Ralph Lauren Launch Exclusive Line  – 2/12/08
————————————————-

TOPIC SUMMARY:

J.C. Penney is getting ready to kick off the biggest exclusive brand launch in its history on Feb. 24 with the American Living line from Polo Ralph Lauren.

The line, which will only be sold by Penney, is initially being introduced to consumers in the chain’s women’s, men’s, children’s, home and luggage departments in stores and online. Eventually the American Living line and its flag and eagle logo will have items in every one of Penney’s 40 departments.

Penney’s move is a definite nod to more upscale shoppers, an approach it has taken before with lines such as Nicole by Nicole Miller, Bisou Bisou and Chris Madden. The retailer has also done well with the Sephora store-within- a-store concept.

Discussion questions: Does Penney have a hit or a miss on its hands with the American Living line from Polo Ralph Lauren? How might it affect the retailer’s image? What do you think about the timing of the launch?

My post:

The merchandise has already started arriving in the stores. I went to my local mall to check out the line and was pleased with the fit, quality, styling, and pricing.  Though the styling was unmistakably Ralph, there was nothing stating “by Ralph Lauren” on the product, the signing, the fixtures, or on the website.  This is the same strategy RL used when they decided to distribute Chaps exclusively at Kohl’s (prior to that, “Chaps by Ralph Lauren” had wide department store distribution).

In their newer and remodeled stores, JCP is doing a good job of highlighting brands like Sephora and Bisou Bisou so they stand apart from the sea of fixtures filled with more moderate fare.  However, in my local, older, un-remodeled JCP, the American Living product was smashed in among the rest of the apparel.  My biggest shock though was finding this brand new product already signed “Buy 1 get the 2^nd at 50% off.”

Why would they already be discounting their “premier” brand???  Discounting the brand upon arrival was unnecessary.   They could have at least designed the promotion to be “Take advantage of introductory pricing.”

Aside from the discounting I think JCP should have a long term winner with American Living.  It is just aspirational enough for the moderate crowd and will certainly pull some moderate business from Macy’s.  I’m excited about the marketing launch (during the Academy awards).  If you haven’t already, I urge you to look at the launch video on the jcpenney.com website.

I am a big fan of CEO Mike Ullman.  He has done a masterful job converting a once-stodgy and irrelevant retailer into a successful multi-channel retail force.  American Living will be another win.

Mike Osorio, your Dare to be Contagious! ™ strategist www.OsorioGroup.com

————————————————-
GO TO THE FULL STORY AND DISCUSSION:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12752   

————————————————-

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!

————————————————-
Destination: Wedding – Martha Stewart Collection with Wedgwood Launches in Macy’s Stores – 1/29/08
————————————————-

For those who love all things Martha Stewart, you will be thrilled to know that she has partnered with Macy’s and Wedgwood to bring Martha-branded china, crystal & flatware to a Macy’s near you (and online).  From this morning’s press release:

NEW YORK–(BUSINESS WIRE)–Jan. 29, 2008–Shopping for those special items to last a lifetime will be a little easier for nuptial-bound couples this spring with the launch of the Martha Stewart Collection with Wedgwood exclusively at Macy’s. This new tabletop line, featuring 10 fine bone china patterns, six crystal stemware patterns, and six stainless steel flatware patterns, is now available at Macy’s (NYSE:M) stores, macys.com and macysweddingchannel.com. 

“I have always been an avid collector of fine china, crystal and silver, and my personal collection includes many Wedgwood pieces I am very proud to own. Our line with Wedgwood offers a range of beautiful and timeless pieces that can be collected and enjoyed for years to come,” said Martha Stewart, Founder of MSLO. 

I absolutely applaud Macy’s strategy of negotiating exclusives with mass-appeal designers like Martha Stewart and Tommy Hilfiger, to name just two.  Target has certainly shown us the power of the excusive deals which positioned them as relevant arbiters of trends – even in a discount environment.  Of course, Macy’s is not Target and is supposedly courting an aspirational customer, including those who may now be shopping at Target.

Macy’s is seeking to make department stores relevant again and this is one of many well-considered strategies they are employing, as well as effectively positioning their own brands (INC, Hotel Collection, etc.), improving the store environment, etc.  

Here’s my question:  Will the consumer (particularly the aspirational customer) ever tire of the next great Martha collection?  

I was shopping in my local Macy’s in December.  I was amazed by the percent of the housewares department devoted to the Martha Stewart Collection.  I did think the Collection was quite good – nice product, effective packaging, good value and quality.  I noticed also the nice chunk of real estate in bedding and furniture devoted to the exclusive Martha products.  And now, the table top department will likely carve out an equally impressive space for the Martha/Wedgwood product.  

My concern is that like anything that seems to be working, stores often find a way to beat it to death. In this case by devoting potentially too much space and crowding out and marginalizing other options. 

The whole idea of “exclusive” in aspirational product includes some level of scarcity.  No scarcity here – you and your entire neighborhood can have the same products in your kitchen (and bath and more).  The mass customer doesn’t mind as much, but the aspirational customers (which Macy’s is trying to court) do care.  They want to feel like what they buy for their homes is a signature of their taste and personality.  Make it look too huge, and this customer will look elsewhere for her kitchen gadget, saucepan, bedding, or china.

A second point particular to the housewares product was that the brand image presented here through packaging, signing and presentation clearly screamed “gift”.  This might help explain the size of the presentation in December, but it makes me concerned for February and beyond.  This gift-oriented packaging and presentation will not play well to customers wanting to pick up a new sauce pan for themselves.

Please, Macy’s.  As you score more of these incredible exclusive deals (i.e. the recent Tommy Hilfiger coup), keep your aspirational customer in mind.  We want the products – but we want them to feel special.  Don’t overdo the presentation or the marketing. 

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!