Misinformation on 34th street
Have you heard that the death of the American department store is imminent and that poor old Macy’s is about to be history?
Have you heard the one about the three buyers who walk into a bar and…?
Before anyone gets their planograms all bunched up in a wad, let’s do a little realty check. Maybe, just maybe, some of these reports are just stories chasing headlines. Fake news, anybody?
1. Like virtually every other retail business that gets the vast majority of its sales from physical stores, department stores – Macy’s included – are having a tough time dealing with rapidly changing consumer shopping patterns. They are for the most part handling it no better – or worse – than any other in-store retailing format.
2. And while like virtually every other retailer, Macy’s and its department store brethren will be the first to admit it has too many stores, the fact is that there are matters of degree here. Good A doors are doing well, B stores are holding their own and C doors…well, they are becoming albatrosses at a remarkably rapidly rate. That goes for every retailing corporation in America.
3. Of course it’s e-commerce that is driving most of this change, but anybody who paints Macy’s in the same corner as some other physical-based retailers hasn’t been paying attention. Macy’s has one of the best online operations – and businesses – of anybody outside of a handful of pure plays and is to be admired for how aggressive it’s been in building its digital division.
4. A lot of the blame game out there has focused on the Macy’s one-brand strategy that Terry Lundgren championed, consolidating around a single national nameplate instead of numerous local brands. If only they had stuck with the original names none of this would be happening, they say. Which is utter nonsense. Whatever the name over the front door, the changing demographics would be the same and, if anything, the singular focus at Macy’s has allowed it to be a better competitor on a national scale with both online and in-store players.
5. Those same second guessers say Macy’s has gotten too promotional. Remember when Lundgren first took over and tried to scale back promotions? Remember how badly that worked that out? Anybody remember a guy named Ron Johnson who tried to cut back promotions? Isn’t Amazon the most promotional retailer in the universe? Promotions are a fact of life in retailing today and they aren’t going to go away anytime soon…if ever.
6. What about the Hudson’s Bay rumors? If you’ve really looked at the HBC model, it revolves around monetizing real estate assets for the benefit of shareholders. It has much less to do with finding a viable and sustainable retailing strategy. Richard Baker buying Macy’s is a terrible idea.
None of this is to suggest Macy’s and every other department store in the country don’t have real problems. Nor that management at these companies has figured out the answers. Far from it.
But it’s not going to take a miracle to save Macy’s. Just some smart decisions, a bit of time and a lot of hard work.