Macy’s Battles Slump with Surprise CEO Visits, Consumer Data

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It’s not the same kind of drama he created on the witness stand in the Macy’s suit against JCPenney and Martha Stewart last spring. But Macy’s CEO Terry Lundgren can still generate some anxiety when he calls store managers from his car as little as 10 minutes before conducting a surprise visit. “The first five minutes are a little uncomfortable,” he told Bloomberg.

These drop-ins have taken on added urgency for Lundgren and the chain, the publication noted, as Macy’s struggles like many other retail chains with the slow-growth American economy, in which middle-income shoppers particularly are feeling a financial pinch. The iconic department store brand also is trying to do a better job of exploiting its digital database on customers without tripping on privacy issues.

Neither the back-to-school season nor a cool summer across much of the country nor even anticipation of the winter holiday season has helped national department store retailers regain the mojo that they last possessed before the Great Recession. The largest US department store chain, Macy’s last month reported second-quarter profits that missed estimates and lowered its forecast.[more]

Macy’s annual sales growth has continued to outstrip that of rivals Kohls and JCPenney, but lately it hasn’t been strong. So Lundgren’s localization strategy—dubbed My Macy’s—is all the more important. It includes leveraging clothing trends that Macy’s associates and managers identify locally for a possible spread across the country and ensuring that national buyers are very open to local requests for differentiated merchandise.

“When you get a request, it may seem unusual to you,” Lundgren has told Macy’s buyers, according to Bloomberg. “But they will know more about what the customer wants in Phoenix, Arizona, than you will ever know here in New York.”

Still, “You are also putting a lot of trust and faith in local managment, so there could be some risk,” Brian Yarbrough, an analyst with Edward Jones & Co., told Bloomberg.

Meanwhile, Macy’s also is trying to better leverage data-driven marketing so that, in the limited-growth environment, they can maximize revenues from the shoppers they do have. This has included working with L’Oreal’s Lancome brand to deliver personalized advertising across e-mail, direct-mail and online-display advertising based on what they buy, said Julie Bernard, Macy’s senior vice president of customer strategy, according to Advertising Age.

Yet converting the data into targeted marketing can be dicey because of privacy concerns, even sometimes unfairly. “The media has spun this story so negative, and it’s really a shame that people in our positions have not taken a more dominant position on speaking on the macro and micro economic benefits of delivering relevancy by responsibly using consumer data,” Bernard told an industry audience recently, the publication said.

She said that caution includes refraining from tracking every phone that comes into Macy’s without letting customers know, although such use of available technology would be very handy for location-based, highly targeted marketing to shoppers while they’re right in the store. Nordstrom recently came under fire for doing just that, before outraged customers demanded they instill an opt-in/opt-out system. 

“Just because you can,” Bernard said, “doesn’t mean you should.”

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