Macy’s last earnings call (August 2024) showed a second-quarter adjusted earnings of 53 cents. Analysts’ estimates were only 30 cents. That beat did not positively affect Macy’s stock price. Macy’s concerns about “ discriminating” consumers soured the analyst community and Wall Street denizens, according to financial newspaper, Barron’s.
It is true that Macy’s is – and has been – struggling against the powers of “e-commerce giants, big-box retailers and direct-to-consumer brands.” Broad, general retail, such as Macy’s, has suffered for some time. For a while, it seemed that Macy’s was actually making progress in a difficult retail environment. In fact, prior to the pandemic, Macy’s was implementing a turnaround strategy, an initial part of which was a specific focus on the 10% of loyalists who account for close to 50% of Macy’s sales.
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To be fair, Macy’s is not the only mall retailer having difficulties. The Wall Street Journal observes that Abercrombie & Fitch, Foot Locker, Kohl’s and Nordstrom are struggling with mixed performances. Retailers say that cautious shoppers seeking lower prices are the main reason for dimmer guidance for the near future.
Clearly, Macy’s problems are not mere brand problems. The operations and fiscal issues are overwhelming. Macy’s has focused on cost-cutting including closing underperforming stores. Having said this, even if Macy’s figured out its operational and financial problems, Macy’s would still have cloudy future guidance. Macy’s executives say that the brand is improving its brand experience by increasing marketing spend and reimaging its displays. Nice. But, displays and marketing need a basis, a brand brief for these changes. Macy’s needs to figure out what the Macy’s brand means to its target customers.
Macy’s needs a brand promise.
A brand promise is the relevant, differentiated, expected total brand experience. Brand promise is not a generic statement. A brand promise articulates who is the brand’s target audience in terms of their personal values? What it is that these customers seek – the emotional and social rewards of using the brand? What is the personality of the brand that is so attractive to these customers? And, what is it that the brand Macy’s does so well, the brand’s functional benefits? Only when these questions are addressed can Macy’s identify the brand features that support the articulated expected experience.
The current Macy CEO believes that Macy’s offers quiet luxury. Quiet luxury is apparently associated with the purchase of handbags and shoes. Luxury is a difficult level to achieve. Macy’s heritage has never been one of a luxury experience no matter how quiet. Furthermore, attempting to reach a luxury proposition is a challenge for a brand that is not really perceived as luxury. Just ask Burberry, a brand that has spent a few years trying to reposition itself as luxury and not succeeding. Assigning more staff and having more varieties of shoes and handbags, as Macy’s is now implementing, is not particularly relevant and differentiated. Just ask Nordstrom.
Macy’s has a storied history. And, it once had a galvanizing, appealing brand promise.
Macy’s has always been one of those brands that satisfied a paradox promise by offering both high-end products along with mass products and services. The high-end products provided an aura of quality and style to the Macy’s brand. The mass products provided accessibility and affordability for the majority of their customers. The optimization of these two conflicting benefits made Macy’s a powerful brand with a promise of affordable glamour.
In its heyday, women flocked to Macy’s because of this brand promise. Buying something from Macy’s gave even the cash strapped buyer a sense of style. Women also shopped at Macy’s because it was a very comfortable and friendly place to be. Macy’s treated women well, whether you were a customer or an employee. Brands need to deliver on more than just functional benefits: brands must deliver on emotional and social benefits as well as personal values. And, brands today, must deliver to customer and employees.
Macy’s did this.
Macy’s was a training ground for, and a promoter of, women in business. This distinctive heritage is timely and relevant today. Even though the majority of Macy’s most profitable customers are women, it is important to recognize that Macy’s was also serious about employing women and promoting them.
In the 1940’s, R. H. Macy & Co. established an Executive Training Squad. In 1947, it hired a young woman with a law degree from Columbia University – one of only 6 females in Columbia’s law class. At the time, law firms did not see a reason to hire female lawyers, so this young woman thought Macy’s program would be a good fit as the store employed a disproportionate number of women.
Instead of being at a law firm, this woman thought she might become an executive where she could use her legal training and law degree. Soon after joining the Squad, the young woman became the assistant to Macy’s labor-relations director. Fifteen years later, she was vice president for employee personnel. By 1970, she was Macy’s senior vice president of Macy’s New York division for labor and consumer relations, the only woman in the division with this title. She spent her hours negotiating with the Teamsters and other unions on behalf of Macy’s 20,000 employees, most of whom were women. She also became a Director in 1970.
During her career at Macy’s, she was a mentor to many women forging careers and looking to work in management in or out of retail. She loved seeing these women advance to leadership positions. She knew hundreds of rank-and-file Macy’s employees, many of whom she helped in numerous ways and who were incredibly loyal to her over the decades. All along the way, Macy’s supported her, promoted her while supporting and promoting other women into executive ranks.
This woman, G. G. Michelson (Gertrude Geraldine), stayed at Macy’s for her entire career. But, over the years, she also joined the Boards of many other companies such as General Electric, Goodyear Tire & Rubber, Quaker Oats, Chubb Insurance, Spellman College, The RAND Corporation, The Stanley Works, Irving Trust and Harper & Row. She was often the only female on these Boards. In her obituary in 2015, The New York Times stated that she was the “Macy’s Executive Who Broke the Glass Ceiling.” And she did. She was able to do this because Macy’s provided an environment where her skills and drive were able to flourish. Her gender was not an issue. Her abilities did not scare off Macy’s other executives. She won over people who were skeptical of and unaccustomed to work with women executives.
Recently, Molly Ball observed in The Wall Street Journal that women are increasingly wielding power in politics. Without being political, Macy’s might reconsider recognizing its powerful promised experience by updating or modernizing its provenance. As Macy’s seeks to revitalize and turn around the brand, Macy’s should not forget that its brand promise of providing a shopping venue for affordable glamour should also include its history of fostering employment and opportunity for women.
Contributed to Branding Strategy Insider by: Joan Kiddon, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
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