Macy’s picking the bones of fallen retailers


Other’s Loss is Macy’s Gain 5/14/09


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

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

Go to the full discussion at


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