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Macy's Adds Rank-and-File Salesmanship

Brent Felgner, James Mammarella -- Home Textiles Today, October 15, 2010

NEW YORK - Unleashing the merchandising savvy at the local level has been the key to recent success at Macy's, and that advantage will now be amplified by 130,000 sales associates, Terry Lundgren, chairman, president and ceo of Macy's Inc. told analysts at the Goldman Sachs 2010 Global Retailing Conference earlier this month.
     "We've never undertaken anything like this before," Lundgren said of the "Magic Selling" training that took place over the summer. He said the Bloomingdale's mode of "engaged selling experience" is the inspiration. At Macy's he said the training-and-scoring system now in place is already providing a level of intensity among associates that should yield results in the fourth quarter.
     On the My Macy's micro-merchandising initiative, Lundgren pointed to the Chicago-based northern regional group - which was among the pilot set of local merchandising districts established in 2007 - as the leader across the company. Formed largely from Macy's buyers previously based in St. Louis, Minneapolis and Seattle, he said, "that was really the pilot group that gave us the confidence... and it continues to outperform the rest." He said this points to a favorable upside for the rest of the nation's My Macy's districts.
     Turning to current sales trends, while apparel sales are on the upswing in a very strong back-to-school showing, Lundgren said the home departments -- lately a source of strength -- may level off. "Big ticket home," he observed, is especially sensitive to the housing sector of the economy, which is once again faltering.
     For the moment, however, he had some positive remarks about soft home goods.
     "My favorite part of home right now is textiles," Lundgren told HTT, noting with pleasure that Macy's private brand Hotel -- it's highest-end, in-house program -- is leading the way. The parallel program at Bloomingdale's, also produced by Macy's Merchandising Group, and offered to shoppers under the Hudson Park label, currently boasts "the best-selling towel on the fl oor," Lundgren added.
     He indicated confidence about 2011, backed up by Macy's capital expenditure plans to ramp up from $550 million this year to $800 next year. A highlight will be infrastructure and marketing outlays in the online and mobile areas. This will include the full rollout of the "Search and Send" service to increase Macy's ability to fulfill shopping wishes of customers who don't find the desired product in the store they are visiting. The company completed the installation of 50,000 point-of-sale devices this year to lay the foundation for this program.
     One headwind in 2011, Lundgren acknowledged, will be cost increases on the supply chain side, based on current and anticipated hikes in material, shipping and labor costs out of Asian production areas. However, he noted that Macy's Inc. has trimmed $500 million from its expense structure that it is "still finding ways" to leverage.

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