NEW YORK--Despite bankruptcy, management upheavals, declining morale among workers and some merchandising holes, Macy's still pulls the customers in.
Ranking second to J.C. Penney in WWD's popularity poll, Macy's hits the mark with The Cellar, its strong cosmetics and gift departments and some nicely styled private labels, particularly in men's and children's.
Macy's broad assortments overall have established it as much a family store as Penney's or Sears, Roebuck, but with a more upscale element in home and fashions. Sales of $204 per square foot, higher than most of the direct competition, bear evidence that shoppers haven't totally defected to other stores on more stable footing. As Donna Karan explains it, "There's a tradition there. It's the Fourth of July fireworks. The Thanksgiving Day parade."
The ace in the hole is the Herald Square flagship, still considered the world's largest store, and a mecca for tourists.
"They have the largest selection to choose from," said one woman in the survey. In fact, 71 percent of the respondents identified selection and variety of merchandise as the leading reason to shop the store. However, in the retail war for market share, Macy's has come up short by trying to be all things to all people. It's missed out on much of the moderate and contemporary markets that other department stores have grabbed, and sales of designer collections have not met expectations.
Macy's executives say they have been working to catch up in the last two years, and that currently, denims, wovens, separates sweaters and active sportswear are spurring growth in moderates. For the past two years, "sportswear has been terrific," said Joel Sneider, the former Macy's merchandising president over moderate sportswear, Clubhouse better sportswear, Expressions and Impulse contemporary areas. However, he acknowledged, "There's still plenty of growth ahead for us." The designer business has improved this year with a sharper focus on traditional and more structured looks. Total sales gains, however, have not kept pace with the industry, making profits elusive. In addition, pricing is not perceived as being that sharp. Only about one out of five respondents in the survey chose Macy's because of sales or discounts, and only 13 percent selected Macy's on the basis of price.
The merger of Macy's into Federated Department Stores should help Macy's, particularly in moderate sportswear. Federated's Abraham & Straus division is being consolidated into Macy's East, and A&S is stronger in moderate. Federated brings to Macy's new management and a more centralized approach to merchandising. Terry Lundgren, chairman and chief executive officer of Federated Merchandising, is said to calling more of the merchandising decisions. The process will permeate Macy's, along with the Federated divisions, with the exception of Bloomingdale's. Federated's roster combines the administrative skills of Lundgren, and his visionary mentor/boss, Allen I. Questrom, Federated's chairman, with the shrewd merchandising skills of Macy's East ceo Hal Kahn and Macy's West ceo Michael Steinberg. In a shift from the Eighties, when Macy's was driven by "power merchants," the Nineties has been a period of systems upgrading to better track sales and shortages, as well as cost-cutting measures, including massive staff reductions and store closings. The chain is operating more effectively, though its performance still lags way behind Penney's, and other department stores. Most of those surveyed preferred Penney's selection of women's suits, dresses, career sportswear, swimwear and accessories, but not those with household incomes exceeding $70,000. They're likely to shop Macy's first, particularly for better brands.

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