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Macy's Home Revamps Circular

New Publication Precedes Regional Stores Name Changes

Carole Sloan -- Home Textiles Today, January 31, 2005

New York — Macy's Home Store launched its first home store circular last week, the first corporate effort since the announcement last February that the company would consolidate home store buying, merchandising and marketing for its five non-Bloomingdale's divisions.

The circular represents a marked change from past circulars that featured some common corporate programs but more regional offerings for the five now-consolidated divisions — the former Macy's East, Macy's West, Burdines. The Bon, and Rich's/Goldsmith's/Lazarus.

These units have been hyphenated with the Macy's name for months, and on March 6 all will change to only the Macy's name.

Furniture has the cover slot and the first 39 pages of the new circular, which Eric Salus, president of Macy's Home Store, said, “defines our strategy, focusing on fashion and affordable luxury for our customer. We are trading up, offering compelling value, differentiation, and exclusivity.”

He added, “The book showcases key items, big ideas, new themes and new trends. We have dramatically reduced assortments and have the store team in place to ensure our merchandise presentation and marketing are seamless.”

An inside front-cover gatefold sets a fashion theme, “On the Riviera,” highlighting blues, yellows and bronze across all home departments, with the feature item a stripe bed from Bay Linens.

The 104-page circular is on heavy coated stock and uses “renew, refresh, refill” as the slogan words throughout. Most of the circular prices are effective from Jan. 21 through Feb. 21, with furniture effective from Jan. 28 to March 20, rug prices from Jan. 28 to Feb. 27 and mattress prices from Jan. 21 to Feb. 21.

Over the weekend, the company followed up the event with a newsprint “reinvent your home sale” using some of the same products with sales from Jan. 28 through Feb. 2, “while supplies last.”

Pointing out the complexity of merging five divisions' merchandising approaches — even with common corporate programs — the new circular appears in several variations to accommodate specific divisions' needs and product offerings as the company moves to create one merchandise direction.

In terms of differentiation, a key element in the game plan, Terry Lundgren, chairman and CEO of Federated Department Stores, parent of Macy's and Bloomingdale's, said earlier this month that the circular features 60 percent of the mix as Macy's exclusive product, up from 5 percent for previous circulars. The in-store differentiation percentage is a bit smaller 20 percent versus the previous 5 percent.

The circular, Lundgren emphasized, represents “a dramatic difference from the past, especially in branding and marketing.”

Lundgren also pointed to the first stores that have been retrofitted under the corporate home store strategy in Aventura, Fla., and Rancho Cucamonga, Calif., as indicators of where the home store strategy will be going at the store level. “The new stores are very exciting, we've made very good progress, and we're not done yet. We're going to make a difference in home furnishings,” he said.

While all stores have home textiles, furniture, mattresses and rugs are carried in 63 full-line department stores as well as 50 free-standing furniture galleries including three recently opened units in Palm Desert, Calif., West Los Angeles and Kenwick, Wash. Looking ahead, Lundgren predicted free-standing furniture galleries in the company's future. “Furniture has to be a destination, it has to be powerful,” Lundgren emphasized.

Overall, he said, “We will gradually trade up the business. But there's also a gigantic opportunity in the moderate price point.”

The Macy's price points will remain below those of Bloomingdale's, which also is moving up the pricing level.

In a presentation discussing the corporate direction for Federated at the National Retail Federation conference here earlier this month, Lundgren pointed to a number priorities that include all merchandise areas.

The first is “being merchants again, defining fashion with the key — editing.” Important in this area is “differentiation, having product that is unique and right.”

Making pricing less complicated is another prime goal.

“We're a promotional department store with high and low pricing,” but he acknowledged that everyday low pricing is important to some degree. In this area, the company will increase its EDLP percentage to 5 percent this year, compared with 3 percent in '04.

Part of the new thinking, he related, is the approach to inventory. “If it doesn't sell in the first two weeks, get rid of it. We don't let inventory age.”

Spring will see the major Macy's marketing push as a national brand, Lundgren explained, with a corporate program. “But there still will be local execution.”

As part of the initial activity, the company will execute a “blackout campaign,” between April and Mother's Day by dominating every major network to eliminate click-off possibilities.

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