Macy's Makeover


    Macy's makeover

    CEO Terry Lundgren talks to Fortune about the department store giant's troubled buyout of May, speculation of widespread store closings and plans to bolster sales.

    By Suzanne Kapner, writer

    [​IMG]Macy's needs a strong holiday season after same-store sales have disappointed.

    (Fortune) -- It was considered a retailing masterstroke - the $11 billion acquisition of the May Department Store Company by Federated Department Stores to form what is now known as Macy's. The 2005 merger created the first national department store chain and gave Macy's unprecedented clout with suppliers. Macy's Chief Executive Terry Lundgren, considered the merger's architect, was initially lauded as a visionary. Then the trouble started.
    Shoppers groused about a decision to replace former May stores, names such as Filene's, Foley's and Marshall Field's, which were beloved in their communities, with the largely unknown Macy's brand. A reduction in the level of promotions - those 20 percent off coupons that have become a fixture in department store retailing - further angered deal-hungry customers. Sales stagnated and Macy's (Charts, Fortune 500) stock took a hit. Shares are down 15 percent since the takeover closed.
    Macy's has since made some adjustments to its strategy in the hopes of winning back shoppers that fled to rivals such as J.C. Penney (Charts, Fortune 500) and Kohl's (Charts, Fortune 500). Lundgren talked to Fortune about the acquisition, the mistakes and the future for Macy's, including the all-important holiday shopping season.
    Fortune: What is the biggest lesson you learned from the acquisition of the May Company?
    Lundgren: We thought by reducing the number of coupons we'd be giving our customers more everyday value. What we learned is that many customers had become accustomed to shopping with coupons. In retrospect, I would have phased out the coupons more gradually, rather than try to change customers' buying habits overnight.
    Q: Following the merger, you closed dozens of overlapping stores. Now some analysts are talking about the possibility for further store closures. Can you comment?
    A: We always go through the normal process of pruning our real estate portfolio, but there are no plans for a wide-scale closure of stores.
    Q: What's your view of this holiday shopping season? Does it seem more promotional than past years?
    A: Every holiday season is highly promotional. I don't think this year is any worse than prior years.
    Q: What do you consider your greatest accomplishment of the past year?
    A: Our home business, which had been a weak spot, has turned around. We didn't have enough differentiated product. The product we were selling you could get at a lot of stores. But with the addition of Martha Stewart and some other lines, business has picked up. That's especially true in terms of big-ticket items. I've got furniture and mattress suppliers telling me that our business is outperforming the industry.
    Q: What has been your biggest disappointment?
    A: Our same-store sales have not been strong and that has been very disappointing. Our complete focus is on getting our sales to move in the right direction. Despite the economy, consumers will still spend. The goal is to get them to spend more with us versus our competitors. What we are trying to do is win market share.
    Q: How do you do that?
    A: By making Macy's known as the place to go for brands.
    Q: You recently signed a deal to be the exclusive retailer of Tommy Hilfiger merchandise. Are you looking for more deals like that and would you be interested in buying a brand outright?
    A: I would be interested in buying a brand, but it can't be just a name. It needs to have good management and design talent and also have the potential to expand into other categories. As for more exclusives, if I can find more ideas like Martha Stewart and Tommy Hilfiger, I'd sign them in a minute.
  2. I remember when Marshall Field's was bought out - Macy's went in and changed so many things. It went from being a luxury department store to a bargain-basement store (with a few exceptions). The items sold at Macy's under the store labels might be "everyday values" but, at the cheap prices, customers perceive them to be of cheaper quality. And they are. Marshall Field's had some higher prices, but with the coupon deals they had, it was like getting a "great deal" on more expensive (and perceived higher quality) merchandise. Pricing is so important when it comes to marketing.

    I believe that is part of the reason they started losing customers. Marshall Field's compared to Nordstrom, now Macy's competitors are Kohl's and JC Penney. Definite difference there.
  3. So true. After the Marshell Field's takeover, I've vowed to boycott Macy's. And I have!
  4. ^^^ Totally agree here too. They promised us when Marshall Fields became Macy's that there would be no changes. Bullcrap. SA's are rude, uninformed about the merchandise, and they are usually nowhere to be found! (The shoe dept is just one example -- there was ONE SA working one Thursday evening during a major shoe sale, plus they no longer call other stores to locate a shoe for you.) They no longer carry several brands that I love, and it appears their own brand junk (I.N.C., etc.) is taking over the store. They place their own stuff in the front, by the walkways, then cram brand names like Michael Kors, Juicy, Theory, way in the back against the wall where no one can find them. :cursing: I'd boycott but I'm in Wisconsin and I honestly don't have any alternative! I have been buying more online through Saks and Neimans -- no tax that way too. ;)
  5. Before I read that you were in Wisconsin, I thought you might have been at my local Macy's 2 weeks ago. Exact same situation with me!
  6. The only Macy's worth going to is the one on 34th St in NYC. They even have LV there which I have never seen at any other one. All other ones are more like a Kohls dept store.
  7. ^^ That's where I bought my first piece.
  8. THe one in my area doesn't even carry Juicy or Theory. And honestly, it's the best there is in my area. I try not to buy clothes there...unless something trendy for 80% off or something.

    Macy's generally is a gross store...clothes strewn's just UGH

    I want Nordies LOL
  9. The Minneapolis Macy's also has a LV store.
  10. I went to Macy's for the first (and last time) a couple of months ago. It was so average. Not the kind of place where I'm comfortable. I like to be taken care of and waited on.

    It seems like every other day I see huge ads in the paper for gigantic sales at Macy's. It almost seems like a discount store. KWIM?
  11. Former Chicagoan here and I agree with everything that's been said about Field's v. Macy's. Chicago told Macy's it wasn't going to work, and Macy's didn't believe them. Now they know.

    Last week in Charlotte at SouthPark Mall, I was in Macy's and was so utterly disappointed in their (lack of) stock. Wanted to buy some Frangoes and they had only a few pitiful boxes, cheap jewelry, ugh. It makes me so sad thinking of what the State Street store used to offer and this place in Charlotte thinks it replaces all those previous hometown department stores.

    I've lived in Minneapolis and Michigan so I remember Dayton's and Hudson's, too. The glory days of department stores.
  12. My local Macy's has the worse selection, but the one in Oak Brook Center mall in Oak Brook, IL has Louis Vuitton and some other high-end brands. Of course, the mall has a Nordstrom and Neiman Marcus, so if you want luxury you'll probably go to a different store than Macy's.

    I really miss the State Street Marshall Field's. I went to it last year when had already turned to Macy's and about the only thing that was the same is the restaurant and the really big Christmas Tree.

    Macy's needs to bring back the things that made Field's so special...customers don't "everyday values." If you want that, you'll go to a low-end department store.

    I'm glad I'm not the only one who feels this way about Macy's!
  13. :yes::yes:

    I went for the first time is years Saturday and was shocked:wtf::tdown:
    It was horrible!
  14. As a former Chicagoan, I loved Marshall Field's. The old Marshall Field's that I remember as a kid (in the 60's) and unfortunately changed for the worse in later years. It was, in my mind, the iconic department store. I have no love for Macy's. The store nearest me always seems messy and overcrowded with clothes. And what's up with Macy's and their coupons? Do they really need to put out a constant slew of coupons every week. It seems crazy, to me.
  15. I loved Marshall Field's too, I miss it. Macy's is just an average store, the one close to me has an okay collection of shoes, handbags(coach and dooney), and good perfume/makeup variety, but that's about it that I'm interested in. Macy's kind of reminds me of JC Penney or Carson's.