Running head: IT’S THE MAGIC OF MACY’S
It’s the Magic of Macy’s
Mercedes Rico, Danielle Perri, Julie Thompson
April 22, 2013
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Running head: IT’S THE MAGIC OF MACY’S
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History
A red star passes over customer’s heads as they walk into a Macy’s store. It is often times
referred to as America’s great department store. However, it didn’t start out on top, Rowland
Macy had to begin somewhere.
Rowland Hussey Macy was born in Nantucket Island, Massachusetts on August 30, 1822
into a family full of Quaker descent (Hower, 1943). His Puritan and Quaker ancestry have the
most influence in his courage, perseverance, and taste for bargains and thrift. These qualities
show how he progressed his Macy’s business over the years. Macy started out with no
knowledge of the retail industry. Rowland was a whaler in the early years of his life. When he
was just 15 years old, he boarded a ship by the name of Emily Morgan and lived there for four
years. The life of a boy, with a whaler family background and Nantucket lifestyle taught him
how to be disciplined but also left him wondering what career to pursue. (Hower, 1943)
He first started out working for a dried goods store with his in-law George W. Houghton
and handled advertising. Later, they opened a small store that specialized in laces and
embroideries. (Hower, 1943) These first retail experiences really helped Macy learn first-hand
about managing a retail store. He later went to California with many Nantuckers and Macy &
Co. was established. Macy and Co., Dry Goods, and the Houghton & Dutton stores all went
down, but Macy managed to return to Massachusetts with $4,000 and considerable experience
(Hower, 1943).
Macy opened his first R.H. Macy’s store in Haverhill, Massachusetts in 1851 (Anderson
& Huso, 2011). Rowland Macy used a different strategy when it came to selling and advertising,
which he perhaps acquired from previous business ventures. Macy emphasized low costs, cash
purchases, and even offered fixed prices (Anderson & Huso, 2011).
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The founding of the Macy’s can be credited to the business venture in Haverhill. Success
started in 1858 when Rowland H. Macy opened the store in New York City on Sixth Avenue and
14th street called R.H. Macy & Co. (The Associated Press, 2013). More specifically the store
opened on October 28, 1858. (Hower, 1943) It is remarkable to see how much Macy’s has
transformed by the leadership of a man who has turned his vision of underselling into a billion
dollar business.
Corporate Information
Macy’s, Incorporated has company head quarters in both Cincinnati and New York.
Macy’s Chief Executive officer, Terry Lundgren, leads one of the United States largest retail
stores. Macy’s Chief financial officer is Karen M. Hoguet, Corporation Executive is Jeffrey
Kantor, and Executive Vice President is Dennis J. Broderick. The Macy’s brand operates about
800 Macy’s department and furniture stores within 45 states in the U.S., the District of
Columbia, Guam and Puerto Rico. ("Mac'ys inc.," ) There is also access to the company via the
internet at macys.com. The Bloomingdale’s brand is made up of 37 department stores and home
stores in 11 states along with seven Bloomingdale’s Outlet stores in five states. Macy’s Inc.’s
diverse workforce includes approximately 171,000 employees. Prior to June 1, 2007, Macy’s,
Inc. was known as Federated Department Stores, Inc. (“Mac’ys inc.,”) The company’s shares and
investments are traded on New York Stock Exchange under the ticker symbol “M”.
According to HFN Lundgren said,
“This is a business that thrives on unrelenting creativity and innovation. Having the right talent
in the right place is vital as we seek to sustain and accelerate our sales growth online, as well as
in the stores. These expansions to macys.com and bloomingdales.com represent investments in
merchandising, marketing, and site development, which complement ongoing improvements in
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systems infrastructure, fulfillment capacity and customer service.” ("Mac'ys to expand," 2011)
Macy’s is mad up of a mainly women driven work force. Their corporate vision is as follows,
“Macy’s, Inc. is a premier national omnichannel retailer with iconic brands that each operate
outstanding stores and dynamic online sites. Both Macy’s and Bloomingdale’s are known
worldwide, and each has its own unique identity and customer focus.” (Sanger & Eby, 2013).
This company is known for wanting to achieve an energetic feel towards customers.
The Company’s subsidiaries include; FDS Bank, Department Stores National Bank,
Macy’s Systems and Technology, Inc., MMG, Bloomingdales, Macy;s Merchandising Group
International, LLC. The subsidiaries provide: credit processing, certain collections, customer
service, credit marketing services, retail operations, operational electronic data processing and
management information services. ("Thomson rueturs," 2013)
Macy’s Inc. contributes a lot in the community. They work specifically with cause related
programs like Go Red For Women, Reading Is Fundamental, Shop For A Cause, Thanks For
Sharing, and Macy’s Passport Presents Glamorama. (Sanger & Eby, 2013)
Target Markets
Department Stores usually have a huge crowd of costumers with a large age range. A
company like Macy’s is constantly trying to sell to the audience of consumers they believe to be
in their target market. This is a solid foundation to start a business and the company should be
able to tailor to the target market. Macy’s has clothes for men, women, and children.
Macy’s has recently been trying to appeal to the college aged demographic. They have
been seen on campuses with vans along with models wearing Macy’s clothing handing out
promotions and give away items. They have visited DePaul University, Loyala University,
Northwestern University, Roosevelt University, the University of Chicago, and the University of
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Illinois. (Elliot, 2011) When many people think of department stores they think of older
wealthier people going to buy clothes. The executive vice president of the Macy’s in New York,
Martine Reardon Macy’s says their original target market was from ages 25 to 49 (Elliot, 2011).
Today Macy’s focus is to reach a target market that starts at age 13. The term used to describe
the range between 13 and 30 is called Millennials. ("Mac'ys going after," 2012)
The millennials is a generation in America that is said to have about $65 billion in
spending power among the population. Macy’s millennial initiative is a strong strategy that will
allow the company to grow into a market that is extremely lucrative. Macy’s is using extensive
research to plan its collections for men and women in the Millennial age group. This excellent
research also will be used internally at the company to shape marketing techniques, store
environments and advertising presentation. ("Mac'ys going after," 2012)
Merchandising Strategy
Macy’s merchandising strategies are one of the top techniques across the country, when it
comes to department stores. Their customers mean the world to them, literally. Seven out of ten
people visit a Macy’s or Macys.com every year. ("Entertainment Close - Up" ) So they try their
hardest to keep their customers satisfied. How do they do that? Well, for starters all Macy’s
across the country are striving for a uniform look. Of course in different locations throughout the
country some Macy’s might be more extravagant than another, because of different price points.
Their floor plans are also starting to look alike to target customers.
Macy’s is very technology savvy; in the future they are investing in virtual mannequins,
these mannequins will hold 35 different outfits on them in each department. They will also have
QR codes on the outfits so when you see it on the mannequin you can simply scan it with your
smartphone and it will locate the outfit for you on the floor or you can just purchase it online
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right then and there. There will be associates with iPods in the women’s shoe department to scan
the shoe for size, availability, color, and ring out the costumer. There will also be iPads in
jewelry, cosmetics, bridal registry, and domestics. It will give information on stock related items,
availability, and knowledge about the product. ("Entertainment Close - Up" ) All of these future
plans are actually all being tested out right now in the Macy’s in Herald Square, New York City.
They also have a share in the ShopKick app on any smartphone, so when you walk into
any Macy’s they have coupons sent to your smartphone. (Walker ) Macy’s is also big on
personalized mail, they sent over 500,000 pieces of anything from catalogs to coupons to
customers last year. Besides in the store they also take part in Fashion Star, where companies
compete to buy very small-unknown designer’s clothes and sell them online or you could only
buy them in Herald Square.
Marketing Strategy
Macy’s marketing strategy includes customer loyalty, desire for customer convenience,
responding to customer complaints, and to lower the price of high cost product development.
Macy’s has developed the M.O.M. strategy and it has become a huge strength. (Klara ) The first
“M” stands for MyMacy’s customizing assortments by store, location, and region. The “O”
stands for Omni-Channel, which means customers, can get merchandise what they want,
whenever they want it. It’s being multiple, the merchandise is offered wherever the customer is.
If the customer wants merchandise that’s not in stock, then the associate can ship and send the
merchandise to the customer. Merchandise is also offered online as well. The last “M” stands for
Magic Selling, where the associate is relating to the customer meaning the customer is never
wrong and they will try and help you out as much as possible.
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One of their bigger marketing strategies that are known to most people is the Macy’s
Thanksgiving Parade, Macy’s Fourth Of July Fireworks Spectacular, and Macy’s Flower Show.
These special events make Macy’s even more well-known because they have been operating for
almost a hundred years. It proves how loyal Macy’s is to its customers. Another huge marketing
strategy is advertising of course. But it’s not just the advertising itself, it’s what you put in the
advertisement. Macy’s brings in the celebrities that have designer brands and lines in their stores
in the advertisements. (Klara ) It makes the customer feel connected with the celebrity when they
see them on television and then yet again inside the stores. We asked a Macy’s employee, who
has been working for over 25 years as an Operations Manager, “Has there ever been a strong
marketing standpoint within the company that has helped Macy's out with skyrocketing sales? If
so what was it?” Her reply was,” I cannot think of just one marketing strategy that helped
skyrocket sales. I do think it was clever how we were able to weave celebrities into our
advertising that we were carrying their designer brands in our stores for customers to identify
their brands with Macys.” (Perri)
The Macy’s famous red star is a huge marketing standpoint for them. It symbolizes who
they are and what they do. The star is put on everywhere and anywhere the “Macy’s” name is.
Which leads into star rewards and back to customer loyalty, star rewards are rewarding the
customer for having a Macy’s Card. By having a Macy’s Card the customer gets special discount
offers that the normal customer would not get. The catch is it’s free to sign up and the longer the
customer has the card the more treatment and discounts and deals it gets. The customer also gets
Friends & Family which is an additional 20 percent off and only happens twice a year. Project
Runway has also been a big marketing strategy for Macy’s. Tim Gunn who is on Project Runway
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also does work for Macy’s and on the show they use Macy’s merchandise for the “accessories
wall”.
Financial Information
Macy’s has been doing well with marketing and advertising and it has shown in the
income. Not only has Macy’s been successful on its own, but it has even done better than
Bloomingdale’s chain and J.C. Penney in the last year. Phil Wahba from Reuters said, “Macy's
reported net income of $181 million, or 43 cents a share, for the quarter that ended April 28, up
38 percent over the profit of $131 million, or 30 cents a share, a year earlier. That was 3 cents
better than what Wall Street analysts were forecasting, according to Thomson Reuters I/B/E/S.”
(Wahba, 2012). Macy’s net income for the year of 2013 was $730 million, and the net income
for 2012 was $745 million. (Macy’s inc).
An employee of Macy’s that has been working with the company for 25 years, Anne
Marie Perri, said that the most successful year for the business financially was late 1998 to 1999.
This is when they merged with federated and expanded their division, saving Macy’s name. This
merge created 70 additional locations and eventually led to the growth of over 840 locations
coast to coast. (Perri). People are using credit cards more often now, and normally for businesses
this is not good for sales and rising prices. But, Macy’s works with CitiBank and allows them to
extend credit to customers. Macy’s has benefited from working with Citibank.
Competitors
One of Macy’s Competitors is J.C. Penney. They are both similar in merchandise and
they are around the same price range for a department store. Macy’s has a lawsuit because of
Martha Stewart and J.C. Penney. Martha Stewart merchandise was not supposed to be sold in
another department store so for Breach of contract she is being sued. She was trying to sell her
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line to both department stores. Martha testified in court trying to defend herself, saying that her
contract with J.C. Penney does not violate her contract with Macy’s. (Newswire) During this
feud with Macy’s and J.C. Penney sales have almost ended in disaster for the company says,
Karen Freifeld (Freifeld, 2013)
After the recession, Macy’s is doing extremely well and beating out the competition. The
little details that they have been paying attention to helped to put them on top. Macy’s has added
celebrity lines and nice brands, but has kept price for consumers in mind. The prices are still
affordable. Anne D’Innocenzio from the Seattle Times, talks about Macy’s competition, and
how they may have trouble keeping up with the success. She states, “They could put more
pressure on competitors like Kohl's Corp. and J.C. Penney Co., both of which cater to shoppers
on tighter budgets and are consequently more vulnerable to escalating costs of household
basics.” (D’Innocenzio 2011)
Future Outlook
Macy’s is known for being very traditional and mainstream when it comes to their
kitchenware and housing elements. They are looking to be more contemporary and appeal to
people on the east coast. Not wanting to lose the loyal costumers that they already have and that
love the traditional look, they plan to keep both styles. (Lindeman, 2006)
Another thing Macy’s is looking to do is build more stores replacing Foley’s. With these
changes, they also plan to eliminate and makeover certain departments in each store. For
example, Children’s shoes and cosmetics will be eliminated or slimmed down. Macy’s wants the
store to be more open so it is easy to move around for shopping, browsing and less cluttered full
of merchandise. Wirkkala says, "We believe we don't need to stick our products in the
customer's face. We don't need to stack it or put it in the aisles and make it harder to get around."
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(Arellano, 2006) If Macy’s continues to operate on their principles and values set fourth by Macy
himself they will continue to be the number one department store in America.
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