Macy’s Needs to Address Relevancy to Ignite Brand Loyalty

Sinking sales and profits, plunging net income and same-store sales, and evolving customer shopping preferences and patterns have, unfortunately, shadowed venerable retailer Macy’s during the past couple of years.

This week company officials announced a series of actions to streamline its store portfolio, intensify cost efficiency efforts, and execute its real estate strategy (including the closure of 69 stores and the reorganization of the field structure that supports the remaining stores, reinforcing the strategy of fewer stores with better customer experience.)

Macy’s officials said while they are pleased with the strong performance of their highly developed online business, as well as the progress we have made on selling and visual presentation programs and expense reduction initiatives in 2016, they continue to experience declining traffic in their stores.

Is Macy’s doing the right things to regain brand loyalty and spark increased customer engagement?

“Macy’s and the other large department store chains have been struggling with brick-and-mortar sales growth for several years now,” Martin Mehalchin, partner and head of the consumer experience practice for Lenati, told Loyalty360. “Macy’s and Nordstrom have at least responded by investing in smart omnichannel capabilities. These investments are necessary and should continue, but they are not sufficient to fix the underlying problem.”

What is the underlying problem?

“The underlying problem is that the department store shopping experience has not really changed in 30-plus years, so it’s becoming increasingly irrelevant to today’s consumer,” Mehalchin added. “Most department stores are still organized around categories that look like the organization chart of the retailer’s merchandising team. This makes them inconvenient to shop for most consumers and leaves the retailer dependent on margin-eroding promotions to drive sales.”

Augeo Marketing CMO Ken Greer offered Loyalty360 an unequivocal response to the following question: “Do you think Macy’s is on the right path to regain brand loyalty since it has fallen on hard times in recent years?”
“In a word, NO!” Greer said. “Don’t count on Macy’s or any current competitor to be inventive enough to bring us the next generation of “department store” retailing. YES! Closing stores, streamlining operations, choosing locations more carefully, increasing accountability for performance, are all good economically-driven decisions. We hope the outcome is better results for the shareholders, but nothing we have heard so far indicates Macy’s will lead the charge into the new area of retailing.”

From recent comments regarding restructuring, Macy’s executives have noted enhancing the brand by offering more exclusive products, increasing the customer experience, and blending online and in-store shopping, Greer said.

“All good ideas, but about 10-15 years too late,” Greer said. “Consumers expect these things or they won’t bother to visit. And that is increasingly what is happening. Each year, fewer people are interested in Macy’s. The retailer is becoming less relevant. This is really the crux of the problem: Relevancy.”

Retailers who will succeed in the future will not think of blending distinctive online and offline experiences, or trying to create protective walls by offering exclusive products, Greer noted.

“The future lies in creating a new, unified and improved experience,” Greer explained. “Every aspect is integrated, the brand values are reinforced at every touch point, and every interaction capitalizes on opportunities to surprise and delight. Relevance is about ‘What will you do for me right now?’ not ‘What have you done for me lately.’ Not what do you promise, but what do you deliver. And most importantly, Macy’s needs to figure out how to answer the most basic consumer question: Why should I care?”

Any advice for Macy’s officials?

“If I were advising Macy’s, I would work night and day on discovering what customers want,” Greer said. “Today’s best merchants understand the power of big data, the value of consumer insight, and most importantly, have been able to translate that knowledge into disruptive innovations that transform the marketplace. Disruptive and desirable: A winning combination.”

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