Macy’s Details Revamp, Eyes Brazil Promotion

Renovation was described as an comprehensive top-to-bottom plan that includes restoring facade, remaking selling floors and improving infrastructure.

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For Macy’s merchants, it’s not business as usual.

This story first appeared in the November 2, 2011 issue of WWD.  Subscribe Today.

The retailer’s merchants will meet over the next few weeks with scores of vendors and designers to map out their place in the renovation of the Herald Square flagship. “This is like a chief merchant’s dream,” said Jeff Gennette, chief merchandising officer of Macy’s Inc., during a press conference on the $400 million, four-year remodel, first disclosed by WWD on Tuesday.

But in another break from the routine, WWD has learned that Macy’s is planning a Brazil promotion, to capitalize on the country’s growing economy and emerging fashion industry and the store’s large Hispanic clientele. It’s a strategy recalling import promotions at such stores as Bloomingdale’s, Neiman Marcus and J.C. Penney in the Seventies through the early Nineties, and raises speculation Macy’s could stage a string of import promotions tapping other countries, such as China, Italy or France. This would add exclusivity to the merchandising, introduce design talent and brands to the store, and help the chain go international, which officials have set as a goal for the future.

Macy’s on Tuesday had no information on the planned promotion of Brazil, which is known for its swimsuits, and spirited, colorful and sexy styles, but was effusive on the flagship renovation. It was described as an unprecedented comprehensive top-to-bottom plan, restoring the facade, remaking the selling floors and improving the infrastructure, compared to the usual practice of renovating piecemeal. “We wanted one vision for the entire store,” said Terry J. Lundgren, chairman, chief executive officer and president of Macy’s Inc. “That gets your vendors very excited about it.”

Gennette said upcoming meetings with vendors will involve those that already sell the store and others Macy’s hopes will. Outlining major elements of the renovation, he cited an “mstylelab” presentation of juniors and young men’s on the lower level; a “street of luxury” on the Broadway side of the main floor, and “state of the art shops across all of the vendors.”

In addition, Macy’s Herald Square, the largest store in the world currently with 2.2 million gross square feet including 1.1 million for selling, will add 100,000 of additional selling space, for shoes, men’s and other categories. “That’s like building a new Bloomingdale’s store in Santa Monica,” said Lundgren, referring to the Bloomingdale’s opening there last year.

Lundgren said the company didn’t raise its annual $800 million capital budget for the renovation and noted that other major projects are winding down, such as a 1.3 million-square-foot fulfillment center for macys.com, enabling the Herald Square ramp-up. “We’re not raising our capital,” he said. “This store is about the single best investment we make with any capital.”

Asked if the remodel, with its updated look and evolving merchandise mix, will cast an impression that Macy’s prices are rising, Lundgren replied, “That’s for the customers to decide.” But he noted that Herald Square can support a broader range, given its wide appeal to different demographics and huge tourist base, which accounts for 25 to 30 percent of the traffic. “We’ve been thinking this renovation through for several years,” Lundgren said, adding that he’s visited Harrods, Galeries Lafayette, Selfridges and Takashimaya, among other major stores worldwide. “Many of them have gone through various levels of renovation. We have captured what works and what doesn’t work. We did plenty of research.”

Amy Hanson, executive vice president, property development, credit and customer services, said the renovation strategy was framed by three principles: maintaining the heritage of the 110-year-old flagship, customer centricity and elevating the shopping experience. She said the facade will be restored, windows now covered will be unveiled, and entrances, some of which are underutilized, will become more inviting. Also, the shoe floor, which will be the world’s largest at 69,000 square feet (39,000 for selling), will be merchandised by lifestyle so it’s not too daunting. Ultimately, throughout the flagship “a customer standing on one end can see all across the store,” Hanson said. “That’s really a miss today.”

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