By  on September 6, 2008

With the acquisition of May Co. over the last three years, Macy's Inc. has built a massive, national beauty business that dwarfs the competition. Now the chain is embarking on a campaign to sweeten the shopping experience and lure more consumers with the power of the personal touch.

As reported, Macy’s plans to offer more customized assortments and personalized service with new stores in lifestyle centers such as in the Shops at Wiregrass mall in Tampa, Fla., and in doors targeted by the My Macy’s program. Perhaps one of the most intriguing aspects of the customer service drive is a plan to foster cross-selling within the planned Macy’s stores in lifestyle centers. That would mean a sales associate could sell products from competing brands.

While such a degree of service has been offered in topend specialty stores, it has not been a fact of life in the typical department store, where highly competitive vendors covet every square inch of selling space and war over prime locations.

The cross-selling experiment is part of a drive by Macy’s to improve customer service. Cross-selling and other added services might be construed as part of a broader attempt to ameliorate problems compounded by the rapid industrywide turnover rate of beauty advisers, which ranks as the number-one concern of many beauty executives, both retailers and manufacturers alike.

The moves being pondered by Macy’s are significant simply because of the size of the business. With beauty sales estimated by industry sources at more than $3.5 billion, excluding Bloomingdale’s, the Macy’s chain is clearly the largest retailer of prestige beauty in the U.S. Macy’s cosmetics division reportedly has been outpacing sales at the overall store.

Much of the new thinking at Macy’s will be on display in October with the opening of the 140,000-square-foot store in Tampa’s Shops at Wiregrass lifestyle center.

“Our goal is really to train all of our associates so that we can cross-sell, which we hope will offer better services for the customer,” says Debbie Murtha, senior vice president of cosmetics for Macy’s Merchandising Group.

Murtha says that vendors have been “very responsive to the [cross-selling] concept. We will still have people that are line-assigned, but we’re going to cross-train to cross-sell so that we can provide the best possible service to the customer.”

In general, service has been on the front burner of corporate planning in dealing with every aspect of the store, not just beauty. “It’s definitely a focal point of the corporation,” she says, adding, “cosmetics is really the poster child.”

When he was chairman and chief executive officer of the Macy’s West division, Robert Mettler tackled the training issue while improving the sales performance of the stores’ fragrance bars. He has since become president of special projects for Macy’s Inc., now engaged in a global investigation to formulate a method of rejuvenating the chain’s beauty business. His report is being eagerly awaited both inside the industry and on Wall Street.

But for now, the fundamental challenges still loom. One top cosmetics manufacturer, who requested anonymity, says Macy’s—as well as the rest of the department store world—must plug the performance gap on the selling fl oor. “They really need to figure out how to get people excited about working there and make it a happy experience,” says the executive, who counts Macy’s as a top account. “We spend all this money on demonstration and we still can’t make the customer happy. They need to get better people, keep them longer and keep them happy.”

Another manufacturer, also speaking not for attribution, adds, “For me, the number-one challenge is the turnover of beauty advisers.” He suggests Macy’s “can do something by creating a clear career path, providing incentives such as enhanced education and increased pay, or offer a schedule of midterm inducements to stay on the job.”

The lifestyle stores clearly will be used as laboratories to fi nd ways to make shopping a pleasurable, more productive experience. Macy’s has plans for four more lifestyle units in malls in California and Texas, according to Murtha, who estimates the corporation could open 100 lifestyle stores over the next fi ve years.

Wiregrass will be the first showpiece. “Cosmetics will be one of the areas of the store that will be distorted,” Murtha says, noting that “we’ll probably have a couple thousand square feet more than we would normally have for a store this size.” In a store the size of Wiregrass, the cosmetics department would normally warrant a 5,000-square-foot space. But in this case, the department will command 7,500 square feet to allow space for customer-friendly touches that have not even been contemplated in the past.

“In terms of the department layout, it has a very different feel relative to other stores, in that it’s much more open, overall,” Murtha points out.

“It’s almost like a boulevard,” suggests Carole Hughes, merchandise manager for color and treatment at the Macy’s Merchandising Group.

“In terms of the fragrance environment, it is very lifestyle-driven, which is different from what we’ve historically done in terms of how we merchandise,” Murtha observes. “Lifestyle in the sense that as opposed to potentially merchandising, let’s say hypothetically all the Ralph Lauren brands together—because they’re not all of the same lifestyle—we will merchandise it in a way that will speak to different groups.

“We know we have different types of shoppers that are coming into the store, so we think that this environment will again lend itself to something that the customer hasn’t experienced in our other stores,” she continues.

The linchpin of the entire vision is the ability to equip and motivate the staff. “Training will be a huge part of this whole process as we move forward, not just from the onset, but on an ongoing basis,” Murtha says. “We think that’s a critical element to this store.”

Perhaps the reason is that the whole proposition is meant to be much more inviting. “Even the way the department is merchandised,” Murtha adds, “it’s much more open, much more accessible to the customer. It’s designed to be much more experiential, designed to be much more interactive than has previously been [the case].”

Asked if this signifies a retreat from the open-sell philosophy and back to fl at-out selling assistance, Murtha replies, “It’s a combination of service but it also offers the customer the opportunity—because she does want to experiment, she does want it to be more interactive. So it’s an environment that allows her to do that without feeling either, for lack of a better word, confined or pressured in any way.”

Hughes adds, “It’s an accessible environment with a supportive service, essentially.”

In terms of merchandising, Macy’s is experimenting with some new niche brands and branching into new territory. “We’re going to be doing organics in this environment, which will have its own green [area],” Murtha says, adding Smashbox and Laura Geller are two niche brands that are being added on “a more abbreviated basis.”

Murtha points out this plan will allow the organization to “test some of these concepts and then evaluate their scalability. We’re hoping that some of the learnings that we get from the lifestyle stores will enable us to make them scalable.” She adds the organics concept will not be limited to a test in the lifestyle stores. Departments will also be built in existing units.

The lifestyle stores are one leg of a dual approach to localize and customize assortments to cater to specific geographic tastes, while the chain functions as a coast-to-coast national platform. The other leg of this balancing act is the My Macy’s program, in which assortments can be tailored to satisfy local tastes.

“But really the strategy, in terms of My Macy’s, is to be able to customize and localize activities and events that are specific to that city or that marketplace,” says Murtha, “and so that you’re able to continue to maintain strong relationships and ties with those customers by catering to their merchandising needs above and beyond our national platform.

“It works well in beauty in that it enables us to develop events, which is obviously a critical element right now to driving our business within the local area, so that [manufacturers] can really deal with their makeup artist,” she adds. “We actually do fashion cosmetics, specific fashion events. So if there are new color stories, we’re able to drive them home, we’re able to tie in with a local organization, we’re able to tie in with the consumer there and really talk to her, whether it’s a venue in that area, or a charitable organization that we connect with in that marketplace. It gives us a lot of flexibility to respond to that consumer. Clearly, there are brands that may do better in the Northwest than in Florida. So I think that you have to have that ability to respond to that consumer demographically, from a diversity standpoint, which certainly we’re very committed to.

“It’s sort of the best of both worlds because you get to leverage the Macy’s name on a national basis, but yet you’re able to continue to maintain those local relationships, which are so important,” Murtha says. “I don’t think you can minimize a relationship on a local basis.”

Consultant Wendy Liebmann, founder and ceo of WSL Strategic Retail, says, “My overall point of view is that the drive to make it a national Macy’s without any subtle understanding of local emotional connection puts them in a confrontational position with shoppers’ wishes around the country.” In pointing to the inclusion of niche brands like Carol’s Daughter, Philosophy and Lush, plus the My Macy’s program and other moves, Liebmann tips her hat: “To their credit, they’re stepping back and saying, ‘How can we make it softer and gentler?’”

Referring to the inclusion of niche brands, she adds: “It sort of gives people permission to shop at another level— smaller, hipper, more intimate and more affordable brands.”

She maintains that Macy’s needs to foster a more intimate relationship with its clientele. “People do need to feel some ownership,” she says. By adding the celebrity business in beauty and devising the Hilfiger exclusive, there is an attempt to foster the idea that “it’s an OK place to shop.”

The new Macy’s will be driven home with a TV campaign promoting the store’s beauty identity that will run between Sept. 27 and Oct. 4, coinciding with the store’s 150th anniversary. It will differ sharply from the celebrity-filled spots the chain ran previously. The new ads will key on qualitative issues and products.

Each of the eight commercials will be 15 seconds in length, and will feature key beauty vendors pushing either new products or their iconic stalwarts.

Murtha explains that each spot will open with the message that Macy’s is a beauty destination, then shift into a brand message.

“The beginning of the commercial would speak to Macy’s as a destination for beauty and speak to the breadth of our assortment,” she says. “Then we would break into a separate commercial for each vendor and then, obviously, close it with the magic of Macy’s.”

Asked why the spots are so short, she laughs while acknowledging, “It’s a lot to get in there. But you don’t want to overpromise and underdeliver. You want to talk about the service aspect and, as I said, that we have the experts and then we have the latest and newest fashion. My favorite expression is ‘make new friends and keep the old.'

“A lot of the times, people really don’t know,” she continues. “I think that’s one thing that the celebrity commercials have really helped to drive. Through [them] there are a lot of brands that people didn’t know we carried as a corporation. It has really helped leverage us as a national institution.”

Asked for a progress report on turning the plan for a national platform into a reality, she notes, “We have utilized the platform to nationalize our gift-with-purchase dates so we have national gift dates with Lancôme, Estée Lauder and Clinique and Elizabeth Arden. And so that absolutely has come to pass, which then gives us the capability of advertising nationally to drive these events.”

Asked about vendor complaints in the past that the retailer was dragging its feet in creating a national image and presence, she reports, “This solves that. Also, as we move into the fall season, we’re using national Macy’s vehicles to promote the gift-with-purchase [programs].”

In response to a follow-up question, she points to direct mail circulars as an example.

Asked about another complaint—that the national platform is actually composed of divisions that have to be sold on local newspaper advertising and merchandising plans— Murtha replies, “In terms of these national dates, everybody has the same [ones]. We all do. The visuals are done corporately. So it is soup to nuts. Now where the My Macy’s strategy comes in was really on a sub-basis, so that if there are opportunities for them on a local level to be able to drive these events, then that still continues. But we are able to utilize national sales promotion vehicles to get the gift message across.”

Dan Brestle, vice chairman and president of Estée Lauder Cos. North America, declares, “I continue to be a very strong advocate of a need for a national department store” to allow prestige brands to compete with the Targets of the world. He admits that Macy’s and the industry were overly optimistic in their expectations of how smooth the integration of a national platform would be, since the industry has seen other retail companies hit the exact same “speed bumps” while absorbing acquired stores. “We will get there, but it will take time.”

On the other hand, Brestle applauds Macy’s for putting necessary programs in place and being much more fl exible and open to suggestion than ever before. “I am dealing with a much more cooperative Macy’s group than I ever have in my life,” he says. As for the complaints of some other vendors, who say they must deal with the four different divisions in putting through plans for local newspaper advertising and merchandising programs, Brestle says it is not as much of a factor in cosmetics, compared with the fashion business, where assortments are sharply tailored from store to store. In cosmetics, the vendors adjust their regional offerings— more brown lipsticks in California and more reds in Texas—on their own. The same is true for local adjustment in promotions.

He agrees retention of beauty advisers is the number-one issue for the industry as a whole, but for him, “it’s foot traffic — getting people in the stores.”

One major manufacturer participating in the TV campaign will be Dior with its four-year-old Dior Show mascara, which ranks third, as measured by The NPD Group, in the prestige market with $25 million in retail sales. Terry Darland, general manager of Parfums Christian Dior, North America, says the company also is launching its fourth mascara, a curling product called Iconic, and as an event, offering a trio of mascaras in a Dior makeup bag for a reduced price of $69. Darland notes that she and president Pamela Baxter reinvigorated the brand by refocusing from fragrance to beauty and concentrating on in-store training, in-store events with backstage beauty events and putting some dazzle in the design of new counters.

Darland underscored the importance of Macy’s by noting that of Dior’s 10 top-grossing flagships in the U.S., four are Macy’s. “The conclusion is that Macy’s is an extremely important partner in the growth and health of the Dior franchise. Four years ago, we closed the May Co. in order to focus our efforts on Macy’s and boy, it has really paid off. Here we are with a much bigger business today. It has doubled.”

Murtha, meanwhile, says management is focused on developing all the product categories to their fullest, but that some are growing faster than others. “Skin care is probably the strongest business right now,” she says. “But I think for fall, you’ll see a lot of focus on color.”

One category where Macy’s is prominent, probably the most conspicuous in the nation, is celebrity fragrance. Regarding market reports that the category has softened considerably, she replies, “No, I don’t think so—it’s still very viable. The country is still very celebrity-oriented and I think if the brand is right and the connection makes sense, then the customer is going to buy into it. I think if you have a disconnect in terms of who the celebrity is and the brand, then I think you’re going to be challenged.

“But when you think about [Jennifer Lopez], for example, that was really one of the first celebrity brands out there. And [licensee Coty] continues to have iterations of the brand that appeal to the consumer.”

She also cites Harajuku Lovers by Gwen Stefani, which are five fragrances modeled on the star and her four backup singers.

“First of all, it is associated with Gwen Stefani and is consistent with who Gwen Stefani is—so it’s not an artificial connection,” says Murtha. “I think also the innovation of the project should really generate a lot of excitement at the store level. I think the way they’ve done it, you really have a broad spectrum of consumer that you potentially are going to appeal to. That is great.”

Celebrity mania is still kicking at Macy’s, judging from the fact that it will figure in fall fragrance launches from two of the biggest guns in the department, Estée Lauder and L’Oréal’s Lancôme, Murtha adds. “Lauder’s Sensuous campaign has four of their top spokeswomen— Gwyneth Paltrow, Elizabeth Hurley, Carolyn Murphy and Hilary Rhoda. And then there is Anne Hathaway with Lancôme’s Magnifi que. For the launch, Lancôme will do national TV and Lauder will do the same for holiday.”

Hughes concludes, “It will create a lot of excitement and animation at beauty counters.”

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