Gennette, Greiner Spearhead Macy’s Localization

New chief merchandising officer for Macy’s is unearthing important information that will reveal the choicest growth opportunities for the $25 billion company.

Julie Greiner and Jeff Gennette

Jeff Gennette is clairvoyant. Thanks to some sophisticated new tools, the recently installed chief merchandising officer for Macy’s Inc. is unearthing important information that will reveal the choicest growth opportunities for the $25 billion company.

This story first appeared in the July 1, 2009 issue of WWD.  Subscribe Today.

Working in tandem with his counterpart, Julie Greiner, chief merchandise planning officer, the two executives have been charged with implementing the corporation’s My Macy’s localization strategy at its more than 800 stores across the country. My Macy’s, which was rolled out nationally last month, provides the company with detailed sales information which can then be exploited. It’s the strategy the company turned to when it centralized operations earlier this year, and it also addresses vendor complaints the retailer was unwieldy and not a good partner.

In their first interview since the completion of the restructuring, which resulted in the elimination of Macy’s four operating divisions, Gennette and Greiner said they’re encouraged by what they see in their crystal ball.

“We are the curators,” Gennette explained. “We set the national strategy in terms of vendors, trends and classifications. We see the future and then [our colleagues] in the field get that information and shape it to the local level.”

My Macy’s employs 1,600 people across eight regions and 69 districts. The district planners are the “analytical engine,” while the district merchants are the merchandising and execution arm of the company. Adding the merchants and planners “work in tandem,” Gennette said the New York-based team decides how the floors should be merchandised as well as their adjacencies — information that is then adapted to each community.

Greiner said it’s a lot like “the old days” of retail, when merchants in their local communities knew their customers and the sales associates. “We’re really going back to that intimate knowledge,” Greiner said. “Then we’re leveraging technology as a communication tool.”

The way it works, she said, is a merchant in a particular store or district will make a request — for example, more woven shirts in Florida. They must provide reasons for the request and the anticipated outcome. “If the dress business is hot, a buyer will say, ‘We want to increase our assortment by X percent so I need more breadth or depth,’” she said. During the pilot, the company received 13,000 requests from the field and nearly all were approved.

“We’ve made a commitment to say ‘yes’ 95 percent of the time,” Greiner added.

All told, between 10 and 15 percent of the assortment throughout the company is localized, she said. “Color, print, weight and flow are all local so even if it’s not a different assortment, it might be different timing or different product from the same vendor.”

Although the process has the potential to be cumbersome within such a large company, proprietary software developed for My Macy’s actually eliminates confusion and allows for merchandising down to a micro level. During the pilot, for instance, Betsy Ann Chocolates, a local candy vendor in Pittsburgh, went out of the retail business and the district planner and merchandiser in that city decided to add the line to 10 local stores. “It’s a small thing for the company, but big for that community,” Greiner said, “and it’s working.”

Gennette added: “There’s great passion within the local communities and My Macy’s is the tool that gives us the chance to [seize] the opportunities and gain market share.”

Macy’s also retained some key “outpost merchant groups in the field,” Gennette said, including those in Southern California, the action sports mecca, and Hawaii.

“The vast majority of the merchants are in New York,” Gennette said, “but where we felt it was important, we retained people.” And these merchants are using their skills to “work on the broader strategy” for the corporation as a whole, both in terms of national brands as well as private label. “They’re working with the vendor and private-label teams to develop product, timing and flow of receipts,” he said.

Gennette said in the past, Macy’s was widely criticized by vendors “who said we were not an easy partner. We heard that we were slow or not on the same page. So one year ago, we took seven vendors and worked through our issues.”

One of the vendors that has been at the forefront of the My Macy’s initiative is Polo Ralph Lauren Corp.





In a recent conference call with analysts, Roger Farah, president and chief operating officer, called the company’s relationship with Macy’s “intimate. We have strategized with Macy’s on a very, very close level. I think the centralization and the My Macy’s efforts are really going to make an extraordinary difference in how Macy’s runs their business on a national basis and we are fully lined up and aggressively supporting that. We’re in close partnership; we have aggressive plans to launch new product with them, including the Olympics coming up. They will be our key partner. [We have] married our organizational structure up with some of the changes they’ve made to better support them. So we’re encouraged by their steps and what we’re doing to partner growth initiatives.”

Colleen Kelly, president of U.S. wholesale at Tommy Hilfiger, a line that is exclusive to Macy’s at the department store level, agreed. “We have completely realigned our planning, sales and field organization to match the new Macy’s structure so that the communication flow is seamless and accountabilities are clearly defined. Our field team knows who to contact in each Macy’s door for visual and product assortment needs.”

Kelly said this constant flow of information has eliminated the need for the “traditional market week.” Instead, “the Macy’s buyer and planner are in our offices working with their sales and planning counterpart on a much more regular basis based on our product development calendar.”

She said Hilfiger is “already receiving field intelligence” from Macy’s “that is affecting the way we assort product and helping us to identify why a door over- or underperforms. We also have access to Macy’s information site from which we can pull weekly, monthly and seasonal data quickly. While there may be modifications along the way, we’re confident that My Macy’s will help us perform better and consequently achieve better regular-price sell-throughs as a result.”

Greiner explained that, under the new initiative, manufacturers are given a “vendor portal to allow them to see information on sales, markdowns, stock levels down to the local level and take action [on a real-time basis].”

This is in sharp contrast to the way it used to be when decision-makers were strung out across the nation.

“We sit across from the table from our vendors now, and we’re it,” Gennette said. “In the past, there were four divisions and MMG [Macy’s Merchandising Group].” Now, if the retailer gets behind something, a decision can be swift. Gennette said after one division planner reported strong results from Levi’s Red Tab product in juniors, the decision was made in 24 hours to roll the brand out nationally. “We have candid conversations to see where the opportunities are,” he said. In the past, decisions like these could have taken months — or not happened at all.

The idea today, he said, is to identify “the low-lying fruit” and move quickly to take advantage of it.

Many of the opportunities, Gennette said, involve products that are exclusive to Macy’s. “When we see a lifestyle void, we work with the vendors on exclusive product.” He singled out Rachel Rachel Roy, a line of better contemporary women’s sportswear that will hit stores in August. “We’re very excited about that,” he said. “We’re working on congruency in accessories.”

“We want to be the place to launch,” Gennette said. “We’re all about fashion and affordable luxury and we want to be the incubator.”

Right now, exclusive or limited-distribution product accounts for over 20 percent of sales and private brands are 19 percent. “We think there are more opportunities for true exclusives and private brands,” Gennette said.

Looking at the retail climate — Macy’s recently reported an $88 million loss in the first quarter on a 9 percent comp-store decline and is expecting a comp-store sales drop of 6 to 8 percent for the year — Gennette said the women’s business is “starting to get a little better.” In men’s, classification sportswear is doing well and Macy’s continues to emphasize its “dominance” in tailored clothing, dress shirts and neckwear. Suit separates are doing better than nested suits. Greiner also pointed to “opportunities within home — housewares are terrific.”

Private brands are also a bright spot. After a redesign and a “hunkering down, Alfani sportswear [for both genders] is seeing a real resurgence,” Gennette said. The Karen Scott opening price point moderate women’s classification merchandise has been a “great success,” and the men’s INC has been “a home run.” Women’s INC, which was recently tweaked, is also gaining some traction. In fact, the company said, all of the women’s private brands are improving.

Gennette said: “We continue to push on being trend-relevant.” To continue that course, the retailer “beefed up its fashion director teams” with separate executives spearheading men’s, women’s, accessories and home.

Although Macy’s still continues to view itself as a fashion store, Gennette said the company’s “everyday value” products are “growing as a percentage of sales.” That makes sense in light of the economy. But if that changes, Macy’s will be ready to react.

“We have a lot of intellectual horsepower,” Gennette said. “And I believe we’re onto something very meaningful — something that will help us to gain market share.”