Macy’s Still Has Work to Do to Restore Lost Brand Loyalty

Despite Macy’s holiday season numbers for November/December, it appears the venerable retailer has much to do to restore its once iconic legacy and widespread brand loyalty.

Last week Macy’s announced that its comparable sales on an owned basis increased 1.0 percent in the months of November and December 2017 combined, compared to the same period last year.

“Macy’s had a solid holiday shopping season, and we are pleased that our November/December performance resulted in positive comp sales for the period, setting us up for a positive fourth quarter,” Macys CEO Jeff Gennette said in a company release. “We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms. Customers also responded well to our new loyalty program. We intend to close the fourth quarter in a good position and head into 2018 with momentum.”

Macy’s new Star Rewards loyalty program, which launched in October, is meant to help the company overcome sinking sales and profits and plunging net income and same-store sales that have shadowed the venerable retailer in recent years.

Macy’s new Star Rewards makes it simple for customers to receive benefits with every Macy’s purchase. Based on annual spend, customers with a Macy’s credit card will be automatically enrolled into one of three levels: Silver, Gold or Platinum. Rewards are tiered by level, with Macy’s best customers receiving benefits that include free shipping, additional savings and earned points on every purchase. Additionally, cardholders are automatically upgraded to the next tier when annual spend reaches the new level. The program was developed with the customer in mind, based on a careful analysis of evolving shopping behaviors and consumer preferences.

Macy’s, Inc. saw improved holiday sales across Macy’s, Macy’s Backstage, Bloomingdale’s, Bloomingdale’s The Outlet, and Bluemercury, with exclusive gifts showing strong performance. Active apparel, shoes, dresses, coats, fine jewelry, men’s tailored clothing, children’s and home were all top performers.

Genette added that the company’s primary focus in 2017 had been to continue the strong growth of digital and mobile, stabilize the brick-and-mortar business, and set the foundation for future growth.

“We’ve made good progress on each, including encouraging trend improvements in our brick-and-mortar business,” Gennette said. “A healthy store base combined with robust digital capabilities is Macy’s recipe for success.

Macy’s restructuring activities include:

Staffing adjustments across the stores organization with reductions in some stores and increases in others;
Further streamlining in some non-store functions; and, Closure of 11 stores in early 2018.

The company expects annual expense savings of $300 million from these actions beginning in fiscal-year 2018, which it intends to reinvest in the business.

Evan Magliocca, brand marketing manager for Baseman Insights & Marketing, told Loyalty360 that Macy’s raising its earnings guidance seems to have little to do with changes they’ve made and more to do with macro trends in tax reform, and overall strong retail sales for the holiday season. 

“One positive is that they continue to relieve pressure on stores with an over-extended footprint by closing 11 more,” Magliocca explained. “It’s positive to see that they’re planning on reinvesting the $300 million in cost savings back into the business. They still have projects that need support to catch up to industry leaders.”

 Stellar Loyalty CMO Narina Sippy also believes there is considerable work left for Macy’s.

“Macy’s key strategy changes in 2017, including the introduction of its new Star Rewards program, paid off in the form of higher holiday sales,” Sippy explained to Loyalty360. “However, Macy’s still has a lot of work to do to solidly turn the corner. The retailer’s modest growth of 1 percent pales in comparison to industry reports of overall holiday sales growth of 4.9 percent this year. From here, Macy’s needs to build on its upward momentum, tapping into the current state of strong consumer confidence, and increasing its customer share of wallet through its newly designed rewards and loyalty program.”

Russ Haswell, VP, Retail, Medallia, told Loyalty360 that Macy’s in on an upward trajectory due to the improved holiday sales in November and December.

“By being strategic about the in-store experience, focusing on high potential product lines and stores, Macy’s is reaping the benefits of a strategic commitment to the customer experience, what many retailers are aiming for during what was a highly competitive holiday season,” Haswell explained.

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