Macy’s is buying holiday shoppers in the New York metropolitan area extra time.
This story first appeared in the December 14, 2007 issue of WWD. Subscribe Today.
Beginning 7 a.m. Friday, Dec. 21, seven Macy’s stores, including the Herald Square flagship, will be open 24 hours daily until 6 p.m. on Christmas Eve. The other six stores are: Kings Plaza in Brooklyn, Cross County shopping center in Yonkers, the Staten Island mall on Staten Island, Roosevelt Field on Long Island, Newport Center in Jersey City and the Willowbrook mall in Wayne, N.J.
In addition, Macy’s at Queens Center mall on Queens Boulevard will begin operating around the clock starting 7 a.m. Thursday.
Amid macroeconomic challenges and a highly promotional holiday season for retailers, Christine Augustine, retail analyst at Bear Stearns, differed from some competitors and consultants who suggested that the move announced Thursday was intended to offset weak holiday sales. .
“It’s ‘so far, so good’ for Macy’s,” she said. “November was very strong. The outlook for comps in December is down, but that’s as planned. So far, Macy’s is tracking as planned for the quarter as far as sales. Macy’s, in my opinion, has done a much better job of controlling their inventory and protecting their margins. Their competitors are a lot more desperate and doing a lot more couponing.”
If the retailer “were [operating 24-7] at all of it 850 stores, I would be more concerned they were worried about the season,” Augustine said. “But you know this is also New York — the city that never sleeps. So why not stay open 24 hours?”
Macy’s countered speculation that the policy was motivated by disappointing sales. “This is not a last-minute decision,” said Elina Kazan, a Macy’s East spokeswoman. “Something like this you just can’t pull together at the last minute.” The eight stores designated for round-the-clock shopping are all “extremely high-traffic” units, she added.
As for being hard on employees, Kazan said many associates volunteered to work the overnight shift.
Last year, Macy’s in Queens Center operated round-the-clock a few days before Christmas. “That was a test for us,” Kazan said. “It was a success. We decided to expand upon it.
“There is a lot that goes into going 24 hours,” she continued. “It’s not only about the staffing. It’s about getting merchandise on the floor, housekeeping, rearranging schedules, making sure cash registers are functioning.”
And for customers, “Who wouldn’t want the extra time to shop, so you can feel less rushed, less harried,” Kazan said. “This gives consumers the opportunity to shop at their convenience.”
A former department store executive familiar with Macy’s observed: “One could say that Macy’s is providing a customer convenience and that there is a need for it. In New York, there are a lot of people working different shifts,” including hospital and city workers. “In this economy, people are working two jobs a day, so to get extra time to shop is a benefit. I don’t think this is desperation [by Macy’s], but there is no doubt they would not be doing this if the business was fabulous. They are looking for every angle to get a plus to the business,” most of which he expects will come from main floor categories, including cosmetics, men’s, handbags and jewelry. They tend to pick up as Christmas nears, said the former executive, who asked not to be identified, adding, “This is not a bad move, as long as you don’t force sales associates to do it.”
Isaac Lagnado, president of Tactical Retail Solutions, said Macy’s, as one of the larger mall tenants with stores typically in the 250,000- to 350,000-square-foot range, has “dominant operations” that can readily adopt to extraordinary hours. The Herald Square flagship is already a 24-hour operation in terms of receiving, restocking the selling floors, housekeeping, security and other functions.
“I think there is anxiety, and my sense is that Macy’s had this plan on the shelf as a contingency for a long time,” Lagnado said.
At Wal-Mart, operating 24 hours is a year-round fact for a majority of the 2,435 Supercenters and 979 other Wal-Mart stores. Some don’t because of local ordinances.
“For a place like Wal-Mart, having a skeletal sales staff into the graveyard shift, as a percentage of the total operating budget, is quite small,” Lagnado said. “The heating, air-conditioning, lights, maintenance crews and computer systems that run POS and inventory systems are on regardless. The incremental costs of adding sales staff are so small that basically any incremental sales can be a boon to the bottom line.
“Macy’s stores are not the same as a typical Wal-Mart Superstore, but enough of the plant is the same,” he said. “There’s a good rationale about incremental revenue versus the incremental cost.”
Lagnado also said operating 24 hours is a way to level the playing field against Internet competition. He characterized Macy’s as being at the forefront of the department store industry in terms of distribution centers and stockrooms. “They’re quite good at leading the pack in operations.”
The extended hours will affect the competition immediately, Lagnado predicted. “Everybody from J.C. Penney [which also has a store in the Queens Center] to other traditional department stores will have to adjust. It’s like price cutting. When a department store chooses to take a very visible markdown on a very visible line, the competition really has to match it. Macy’s new hours will be widely advertised. It’s a very, very muscular move that the competition has to react to probably by this weekend.”