By  on September 6, 2008

Jeff Gennette doesn't have his head in the sand.

The chairman and chief executive of Macy’s West is fully aware his part of the country has been among the hardest hit by the foreclosure situation and America’s general economic malaise. But Gennette subscribes to the old adage that, “When the going gets tough, the tough get going.”

Instead of bemoaning the business that could have been, Gennette and his team are making changes both on the selling floor and behind the scenes to retain and increase market share at the 200-plus stores in the region. “There are lots of things in every business that are working,” he says. “So we’re realistic, but aggressive where there are opportunities. There are lots of areas that will have double-digit sales growth. And we’ve identified the businesses that we’re going to win with.”

A case in point is the Impulse department, the company’s reinvention of the premium sportswear area. The concept started successfully in women’s and then rolled out into men’s. “Impulse really took off,” he relates. “It started in 10 doors and is now in over 100. It’s a huge engine for us.”

Gennette says Impulse is premium denim-based and there’s also a collections component. In fact, the shop has been so successful that it is being offered in other Macy’s divisions as well, including Macy’s East. Macy’s West has long been a leader in young men’s and juniors and does well with cut-and-sewn knits, dresses and skinny jeans, which Gennette predicts will be big for girls for back-to-school, along with related separates from XOXO, Rampage and others. “We’re a leader in juniors,” Gennette says, “and we’re constantly making adjustments so we can get in and out of businesses quickly. We spend a lot of time in L.A., because that’s where the tastemakers and vendors are.”

Another area where Macy’s West takes a fashion lead is, appropriately enough, surf. “The whole action sports business is big for us,” Gennette notes.

Like Impulse, other divisions have embraced the action sports area by following Macy’s West. “They learn from what we have done and adapt it to their own stores,” Gennette says.

This sharing of information is one of the hallmarks of Macy’s. Gennette offers that “in the heyday of streetwear, we learned from Central and East. So it goes both ways. Ed Hardy is an example; we’re now in it in a big way in men’s, women’s, shoes and handbags.”

Other categories that are expected to do well for the San Francisco-based division this fall are denim and contemporary. In denim, he says the offerings will range from Levi’s to premium and the company is poised “to capitalize on them.” In contemporary, Gennette says Macy’s will be adding new price points, above juniors but below Impulse, the company’s current contemporary offering, and will focus on brands such as BCBG Generation.

He says other winning pieces are the exclusive additions of Tommy Hilfiger and FAO Schwarz for fall. Macy’s cut a deal with Tommy Hilfiger to become the exclusive department store retailer of Hilfiger’s sportswear in the U.S., beginning in fall 2008. Macy’s will expand Hilfiger assortments in every Macy’s division and on, increase and enhance the location of Hilfiger shops in high-volume Macy’s stores, renovate and upgrade existing Tommy Hilfiger shops and feature Hilfiger collections in Macy’s marketing campaigns. Additionally, the two companies will work closely on new ventures and brand extensions.

“We don’t have Tommy in the women’s side of the business,” Gennette enthuses. “It’s doing well in men’s and we will be expanding that.”

Gennette calls the Hilfiger organization “a smart team” and its association with Macy’s a “strong alliance,” and he’s expecting strong sales as a result.

The FAO Schwarz initiative is also a positive, he believes. This fall, 275 leased shops will open in Macy’s stores, a number that will rise to 685 in two years. The shops will range from 200 to 3,000 square feet and will take space out of the children’s wear departments. Macy’s currently sells toys only for the Christmas season at the Herald Square flagship in Manhattan, and on State Street in Chicago, where an FAO Schwarz shop has been tested for the past two holiday seasons.

Gennette says that traditionally department stores were the place of choice for shoppers searching for toys. But over the years, they lost that position. “This is a good alliance,” he notes of the FAO deal. “It won’t cannibalize anything that we already have, so it’s just plus business.”

In all categories, Macy’s West focuses on offering customers the latest trends as well as fresh receipts—a recipe for surviving tough economic times. “We’ve got to keep the goods flowing,” Gennette says.

If it sounds like Gennette has his finger on the pulse of the merchandise, it’s true. A 25-year Macy’s veteran, Gennette started in the executive training program where he recalls “looking at color wheels.” At that time, Macy’s California, as it was called, had 25 stores.

Over the years, Gennette moved up through the ranks, working at both the store level and as a
buyer. His experience ranges from electronics and home to men’s wear. Among his various roles have been store manager for the company’s Mall of America unit, divisional merchandise manager of men’s collections and designer, general merchandise manager of men’s, director of stores for the Rich’s/Goldsmiths/Lazarus division and chairman and chief executive for the Northwest division in Seattle. He joined Macy’s West in the top post last February, taking over the position formerly held by Robert Mettler, now president of special projects.

His role is not a small one. Macy’s West is a big player, with 234 stores in Arizona, California, Colorado, Guam, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming. In February, the corporation downsized from seven to four regional operations as it works through the challenges related to its acquisition of May Department Stores in 2005. Under the consolidation plan, Macy’s Northwest was folded into Macy’s West.

At the same time, the company revealed a new localization strategy called “My Macy’s.” The program is centered on beefing up local management so the company can stay more on top of community preferencesin terms of assortments, sizes, marketing programs and shopping experiences. “In the past when there was consolidation, we absorbed the central functions, but not in this case,” Gennette says. “We now have a robust field organization that makes decisions by store. It will be in full force by next spring. We’re committed to not dropping any market share.”

Gennette points to his “strong background with the old Macy’s West” along with his experience in the Northwest, as pluses for his new position.

“I understand the stores and the customers as well,” he says.

He also cites the “talent” of the people in San Francisco and Seattle as another positive for
the division.

Over the years, Macy’s West has had the reputation within the corporation as well as outside as a fashion leader, a strength upon which Gennette plans to capitalize. “We’ve always had a strong legacy in fashion,” Gennette agrees. “Our customer responds to it really well.”

To keep abreast of all the trends, Gennette says Macy’s has “good systems and also draws on the expertise of its Macy’s Merchandising Group, the latter of which can dig and make recommendations on vendors, trends and classifi cations.”As head of the company’s men’s wear team, Gennette works closely with Stuart Goldblatt, general merchandise manager of men’s for MMG, whom he calls “a great resource.”

Additionally, he notes, information “rolls up from a granular level” from buyers at the different divisions who “talk to each other all the time.”

In order to stay current, Gennette says the company always holds open-to-buy to spend on the hottest and latest items. “We’re not handcuffed. We have the liquidity to react to anything
that is working.”

On the store front, Gennette reports Macy’s West will add three stores in Arizona, a state that he believes represents “a big opportunity. We’re looking to have 11 doors there by 2010. We’re getting traction there.”

Freestanding furniture stores—a business that is “flying,” he says—are also being added.

In addition, he notes the company is always looking for other potential areas for expansion of its full-line stores in and around its San Francisco home and in the Northwest.

Gennette stresses that retaining business from the former Bon Marché stores in the Pacific Northwest—which were converted to the Macy’s nameplate in 2006—is one of his primary initiatives. “One of the things we’re most conscious of is preserving the tradition in those stores,” he says. “There’s a deep pride and heritage there and I really lived it [when I was
running that division].”

He realizes the stores in that area have a longer winter season and the customers are interested in active, outdoor pursuits, necessitating some merchandising changes. “We have
to be sure we’re addressing those needs,” he says. “We’re committed to not lose what it took so long to build. We don’t want to lose a step.”

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