Expansion Of MyMacy’s Puts Promise Of Localized Assortments To The Test

By Amanda Ferrante
Macy’s recent announcement that they will be expanding the MyMacy’s initiative across the U.S. is shaping up as a high profile litmus test of whether offering store and merchandise assortments based on local customer needs and preferences can differentiate the department store enough to grab market share and increase sales.

Originally piloted in 20 selected geographic markets starting in spring 2008, Macy’s now plans to roll out nationally to new local markets. “My Macy's is primarily about tailoring merchandise assortments in each store to the customer who shops there -- making sure each Macy's store has the sizes, colors, brands, fabric weights, home goods, etc. that are right for the local customer,” says Jim Sluzewski, spokesperson for Macy’s. “It also applies to visual merchandising that supports the merchandise and enhances the customer's shopping experience.”

While positive customer feedback and positive same-store sales within the pilot were key to accelerating the expansion of the MyMacy’s program, Sluzewski pointed out that the company has been preparing to offered tailored assortments for some time. “My Macy's is possible because our company over the past few years built several new proprietary systems for allocating assortments and assorting stores more robustly by location. These systems are now fully in place and provide a platform for My Macy's,” he said.

In order to concentrate more management talent in local markets, all Macy's stores nationwide will be grouped into 69 geographic districts that will average 10-12 stores each, effective in the second quarter. Of those, 49 will be newly created districts. The other 20 districts (in the Midwest, Upper Midwest and Pacific Northwest) were created as pilots in spring 2008 and will remain in place.

The 69 Macy's districts will be grouped into eight regions that will be based in the Chicago, Houston, Miami, Los Angeles, New York, Pittsburgh, San Francisco and Washington, D.C. areas. Each region will include an organization of 35 to 40 executives to oversee merchandising, planning and various support operations. Special events and marketing public relations staffs also will be located regionally around the country.

In all, a total of approximately 1,200 new district and regional positions will be created in 2009 as the My Macy's model is rolled out to the 49 new districts nationwide.

Beyond the geographic assortments, Sluzewski added that a cross-channel strategy is also critical to Macy’s strategy moving forward. “Shopping across channels is a core strategy at Macy's and Bloomingdale's.The stores and Internet are very closely aligned,” he said. “For example, a customer going to macys.com can see if a particular item is currently in stock in their nearby stores. This feature is called ‘Find It In Store.’ We also have a feature called ‘Search and Send’ in which store associates can access macys.com from the POS registers and have merchandise shipped directly to the customer, if it's not available or in-stock in that particular store location.”

Macy’s anticipates the nationwide district structure to enable the company to develop and implement more effective strategies for identifying and serving specific consumer needs location by location. This is consistent with ongoing development of customer-centric business initiatives to leverage knowledge of customer segments to drive same-store sales, profitability and customer loyalty. Macy's is working in partnership with consumer insight firm dunnhumbyUSA on these initiatives under an exclusive arrangement announced in 2008.

In each of the 49 new districts, an average of about 23 new positions - primarily in district merchandising and planning - will be created at the local city level to help central planning and buying executives to understand and act on the needs of local customers. In addition, district-based executives, including a district vice president, district merchants, district planners and individual store managers, will be empowered to make more and better decisions for their local customers.

Loyalty Lab Branches Into CPG

By John Gaffney

Loyalty Lab is stretching out into the consumer packaged goods business. After bringing on-demand loyalty programs to retailers, the company announced this week that Loyalty Lab Link will provide a "substantial" update of its existing code management capabilities. Loyalty Lab generates unique codes to be distributed with products or at events. These codes allow marketers to link transactions or activities with customers down to the SKU and channel level.

For CPG companies it provides an acid test to measure the "bounce" that quick hit promotions or trade efforts give a product. It's a win for retailers, too. Instead of relying on trade promotion management systems, or anecdotal sales figures, the codes provide a common ground for CPG companies and retailers. So when that FSI drops on Sunday, sales on Monday won't be a mystery.

Oh yeah. There's this little matter of the economy, too.

"With the current state of the economy, the long-standing relationships between marketers, their channels and consumers have fundamentally changed." notes Loyalty Lab President Matt Howland. "Campaigns are pretty ineffective at creating long-term customer value, so our solutions let strong brands have a real stake in the consumer relationship. Our job is to make that happen swiftly and economically."

Strategies To Drive Spending, Customer Loyalty Take Center Stage At Marketing Conference

By Amanda Ferrante

Strategies to drive spending and increase customer loyalty took center stage at the recent Retail Advertising and Marketing Association (RAMA) 2009 conference in Las Vegas.

Go-forward strategies are clearly impacted by trends from the recent shopping season. In the session “Secrets of Driving Customer Response in a Challenging Market,” Robert Gordman, president of The Gordman Group, shared results of a recent National Shopping Behavior Study, which showed 50% of consumers gave more practical gifts; 30% gave more cash and 54% shopped closer to home. The study, which drew on insights from 815 consumers shared telephone interviews, showed that for the first time in the nine year history of the study, price became more important than selection as the reason why consumer shifted share of wallet to a different store.

Looking ahead to spending patterns this year, Gordman shared the results from a separate Shopping Intention Study, which indicated that 69% of all consumers plan to spend less in 2009. This drop in planned spending is expected despite the fact that 63% of consumers expect the economy to improve by the fourth quarter of 2009.

In another session at the conference titled “Boom and Bust: CRM as the Primary Tactic in Down Markets,” Amy Stevenson, AVP, customer marketing, Victoria’s Secret Stores, offered three key strategies Victoria’s Secret is employing now to optimize CRM and business during the recession, including:

1. Growing the database—this is the time to increase your share of voice (SOV). Stevenson suggested investing in building the customer file and adding new communication channels to garner more contacts. Victoria’s Secret is adding cell phone matching capabilities to identify more customers at POS.
2. Consider Alternative (less expensive) channels of delivery—Victoria’s Secret is planning to test inserts of their direct mail piece as FSIs in newspaper deliveries, as well as using concierges to deliver the CRM piece to high tourist areas. The retailer is also increasing the number of email contacts. to target high quantities of existing customers, including those not captured in the current CRM database.
3. Reward loyalty—For those customers who continue to be loyal and maintain their spending and trip frequency, it’s important to reward that behavior. Victoria’s Secret offered branded gifts valued at $40 each during the holiday season and saw significant increase in a 12 month period.