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Macy’s Janet Grove on Private Brands

The recently retired vice chairman discusses what makes Macy’s private brands tick and what may lie ahead for the retailer.

Janet E. Grove, a Macy’s Inc. vice chairman and key architect of the store’s $5 billion stable of in-house brands, retired this summer.

Under her watch, private brand penetration as a percentage of Macy’s overall volume doubled from about 10 percent to just less than 20 percent, and Macy’s women’s private brands — including I.N.C., Style & Co. and Alfani — blossomed, bringing balance to a business that had been more developed in men’s, home and intimate apparel.

Grove rose from a trainee in 1973 to chairman and chief executive of Macy’s Merchandising Group from 1999 to 2009, overseeing the conceptualizing, designing, sourcing and marketing of private brands found just about all through the store, in women’s and men’s apparel and accessories, children’s, footwear, lingerie, large sizes, home textiles and housewares. She also oversaw the buyers shopping the market for brands, as part of MMG. She’s considered the driving force behind Hotel, Macy’s best-selling private home brand, and was instrumental in launching the Martha Stewart Collection and Tommy Hilfiger sportswear exclusives. There’s some irony in the timing of her departure, considering Grove, at age 60, is taking early retirement just when Macy’s proprietary products are at a performance high. “I was with Macy’s for 38 years. It was time,” she said. Her decision to leave is also based on her interests in traveling, golf, tennis, hiking, museums, not-for-profits and concerns that promote women. She’s on the boards of Safeway and KSL, a private equity firm that owns Mikasa, ski resorts and hospitality businesses.

For the last two years, Grove wore a different corporate hat, exploring the international potential for Macy’s and Bloomingdale’s, and assisting in the transition of her successor, Timothy Adams, who has the title of chief private brand officer. In the following Q&A, Grove discusses what makes Macy’s private brands tick and what may lie ahead for the retailer.

WWD: What’s behind the success of Macy’s proprietary brands?
Janet Grove:
We felt it was critically important not only to design and develop the product but to also surround it with marketing and an environment that matched what name brands did. We didn’t do private label. We built private brands. We seized what was a void in the market, understood who the customer was and we put in a lot of speed-to-market initiatives.

WWD: Will private brands continue to grow as a percentage of Macy’s business?
J.G.:
In all apparel areas — women’s, kid’s and men’s — it continues to have high potential. They’re already seeing uptrending, like in contemporary sportswear. It relates to growing the margins of the business. You need to expand margins if you are to continue to expand service and expand marketing. Private brands feed that. However, remember, 80 percent of our business is still market brands. Market brands and exclusive market brands are critical.

WWD: Does Macy’s do knockoffs?
J.G.:
I think knockoffs is a bad word. Everybody is inspired from somebody. It’s having an eye, a sense for what is right for the customers, smart design and merchandising. Macy’s folks spend a lot of time watching people on the streets, shopping stores, fashion centers like London, Tokyo, Paris and New York. Customers think our products are pretty original because they’re buying them. They’re also buying because it has value, which doesn’t have anything to do with cheap. It has to do with its look, styling, quality and price. What matters is knowing they can trust the brand and that the sizing and quality will be the same and will be right for them. They need to know there’s continuity in the brand.

WWD: Will celebrity tie-ins continue to be important?
J.G.:
This is going to continue. A lot of celebrities have a terrific and original sense of style, but success always comes down to the finished product. It has to be wearable, have good quality and value, and the fit has to be consistent.

WWD: Some stores like Lord & Taylor and Saks Fifth Avenue put their names on certain products. Could that work for Macy’s?
J.G.:
I don’t see it. I think the idea is to build and develop brands within the brand. That’s what we have done. Our quest was always to build brands and not just a label. We’ve done it in food, in some candy products, particularly around holiday time, when there’s a bigger food business. It’s not been a big part of the business but that doesn’t mean it might not change. When you build a brand, you have a [certain] customer in mind for that brand. It has a sensibility, a lifestyle about it, and Macy’s is made up of an enormous number of lifestyles. If you put the Macy’s name on it, it could be almost generic.

WWD: With the recent pop-up store for Bar III, there’s been speculation that Macy’s could open a specialty store chain for a private brand. Is that in the cards?
J.G.:
Obviously Julian Geiger was very successful with Aéropostale [originally a Macy’s private brand]. It could happen, but I don’t think there are plans to do that.

WWD: In your latest assignment, you traveled abroad, examining the potential for Macy’s and Bloomingdale’s to go international, and there is a Bloomingdale’s in Dubai. Will this be more of a reality?
J.G.:
Terry [Lundgren, Macy’s chairman and ceo] is very interested in international retailing. He’s putting the money and people behind studying the potential, to understand where the opportunities are, the competition, the risks and advantages of different kinds of [operating] models. If we were exploring China, what cities would be appropriate? This will be in Macy’s future down the road.

WWD: Your shift in responsibilities and eventual retirement was lumped in a 2009 announcement that Macy’s was centralizing, giving the impression you were being eased out as Macy’s cut costs. What happened?
J.G.:
My retirement really had nothing to do with the consolidation at all. I told Terry I was looking at retiring within the next few years, well before the strategic plan.

WWD: You have a skill set that other retailers would covet. Any chance you return to retailing?
J.G.:
No. I wouldn’t have left Macy’s or Terry. I’m very close to him. This is about having more personal freedom and new ways of spending my time, and really exploring, traveling, visiting museums. I really don’t see myself getting back in retail full time.