Macy’s declines in importance. Tip of the iceberg.

MACY’s declinesMacy’s declines in market share and revenue because department stores are holding onto a model of the market that no longer meets the needs of shoppers. Competition is everywhere and shoppers have more choices than ever. All too often, these choices seem better than the traditional department store model.(Read a market study of the retail market here)

Many of the brands that stores like Macy’s rely on for magnetism (attracting shoppers into the store) have recognized that the worm has turned and are pulling their brands form the retailers. Like Coach, for example. Even Michael Kors has decided not to play the game anymore and has asked retailers to stop couponing and discounting their products.

Macy’s declines can be predicted by looking at the world of magazines

MACY’s declinesI think you can see a corollary to Macy’s declines in the periodical market back in the late 60s. All businesses naturally seek economies and the broad-based and horizontal magazines like Look and Life found it increasingly difficult to attract advertising dollars. Advertisers learned that it was more effective to spend their dollars in vertical publications that mined the exact consumer they hoped to influence.

The magazine world learned a lesson in focus and these once heralded magazines folded up and went away. Meanwhile, there was a rise in vertical publication advertising because, if you wanted to sell bird seed, it was smarter to buy a small add in Bird Lover magazine then spend for greater subscription numbers in Life magazine.

Today’s world is about focus.

It was all about focus. It still is.

Today’s shopper is accustomed to laser-like focus. Some retailers even specialize in clothing of a particular color or style. Others specialize in a demographic segment or price point. At the end of the day, shoppers are placing a premium on their time. Wondering through a department store to locate only what you are looking for seems like a fool’s errand.

MACY’s declinesTimes are different and the desire for greater focus will remain for quite some time… until a broad nostalgia for the experience of bygone times surfaces. Macy’s declines and Belks’ failures can’t wait that long. My suggestion is to split off the departments as separate brands and run them independently. It’s how you retain value for your shareholders but asks for great pain from the traditional department stores in the transition.

Those retailers won’t do it. They will stick their heads in the sand and maybe invite a new branding initiative. (Like Belks did. It got a new logo with no new meaning and no new customers from the effort.) That initiative will be confusing and without new and improved brand meaning.

Another retail casualty: the CEO of Stein Mart

The retail industry is under siege, if you haven’t already noticed. Stores are closing, CEOs are leaving (being either fired or retired) and few know what to do in the battle against Amazon.

I have written plenty about this issue, maybe even more than you know. I am a regular contributor to RetailWire, which you can read about here. The single biggest question asked is, “Where do retailers go from here?”

Stein Mart
The resignation of the Stein Mart CEO is another demonstration that retail is dying.

The latest shoe to drop is the resignation of Stein Mart CEO Dawn Robertson, who left after same-stores sales declined 4% this past quarter. You sense a trend here. Office Depot and Staples, once thought to be merger partners, are looking for new CEOs. Macy’s is closing stores even though it promoted a national holiday hiring day.

It’s a mess out there for retailers.

The problems facing Stein Mart and others

The problems are two-fold for retailers, such as Stein Mart. First, they have never gotten the basic strategies of creating preference right. Secondly, they are behind the curve when it comes to online retailing.

Retailers were once powerful, thriving during the days when malls took over the marketplace. Malls were a community of stores, aping a downtown marketplace. Shopping at a mall was efficient and easy for buyers. Retailers reaped the rewards of shoppers buying more than they intended. (Think the Sam’s Club model. You go for a great deal, but stroll up to the checkout counter with loads of merchandise.)

In good times, brands often get lazy. They live off their success, thinking that there’s nothing they need to do to prepare for change. So few, if any, actually built brand preference. Instead, retailers fought over price, some adopting the Walmart model of always having a low price with others holding sales every week (that’s what has gotten Stein Mart in trouble). When you do that, you teach audiences to shop on price because you haven’t given them any other reason to choose.

So shoppers choose Amazon.

That second issue, failing to be a strong presence online, caught retailers with their pants down. They were slow to prepare and any preference they did have disappeared. In essence, retailers have reaped what they sowed.

What do retailers do now? They have to go back to the basics. Build a brand that actually stands for something, one that is different and better. That better part is difficult, but the different part is what has befuddled them. The retail choices all look, sound and, frankly, are the same. There’s not a squat of difference between Stein Mart and Kohl’s from the point of view of the customer.

No wonder we all shop on Amazon. At least we know what’s different there.

Macy’s national holiday hiring day is disingenuous

Troubled retailer Macy’s is creating yet another made up holiday – national holiday hiring day. The holiday will be on September 30th when Macy’s plans on hiring 83,000 seasonal workers to fill holiday positions in their call centers, distribution centers and fulfillment centers.

The move reeks of terrible PR and feels incredibly disingenuous.

national holiday hiring day
Macy’s national holiday hiring day is a joke.

Earlier this year, Macy’s announced that it was closing about 15% of its stores. This came amid six straight quarters of sales declines that were blamed on an increasing number of consumers moving to online purchasing – because as we all know, no one saw Amazon coming.

We have written a lot about the soft brick and mortar retail environment as well as the problems with Macy’s. Too many stores were built too fast with no vision of the future. Isn’t that the real reason?

National holiday hiring day should be laughable.

Now Macy’s is touting national holiday hiring day. I get the need to hire temporary people during this time of year. However, Macy’s bragging about creating the first national hiring day is simply a bad idea. It’s a naked attempt to get people to forget it is shuttering 15% of its stores and firing the countless people affected by those closings.

Have you ever watched a bad movie for a little longer than you should have just to see how bad it was going to get? Macy’s is much like that bad movie, getting a little worse with each passing minute. This blatant PR move once again demonstrates just how far Macy’s has fallen. Its brand is in decline, stores are closing, sales are declining and yet it is touting a national holiday hiring day. It’s a major disconnect and a failure of the Macy’s brand.

Will the holiday work? Of course it will, but not because of Macy’s. People need jobs and others need a second job to make their children’s Christmas special. Most people won’t be bothered by it, save the ones who are getting laid off in the store closings.

But Macy’s has lost its way and this is yet another example.

Retailer Troubles. Who will survive?

Retailer problems seem to mount and grow

Retailer. Just like Macy's
The problems at Macy’s are systematic of the retail space.

All (or almost all) brick and mortar retailers are in trouble. Macy’s is just one of the bigger retailer examples. Sports Authority, JC Penney and Sears would make the list. And even Walmart is closing some locations to better position the bottom line.

What’s really wrong with the retail industry? Are the troubles in which retailers find themselves due to online competition? Is the category of department stores doomed?

It all depends on if the retailers start to learn from their failures and change. Based upon past performance in adaptation to change, success in the category is highly unlikely. Retailers are the last to embrace change and the most stubborn in adapting to newer market conditions. Most of this is due to a lack of vision by leadership and a tenacious gripping on the model in which they have invested.

Macy’s leads the pack…in headlining the troubles

The trouble with these retailers (Macy’s closed close to 40 stores in 2015 and it looks like the blood-letting will continue in 2016) is not the rise in online retail sales. It is the inability to understand the WHY behind consumer changes. Online retail is NOT the problem. It is a symptom of the problem. Department stores like Sears, JC Penney, Macy’s, and Kmart are simply failing the needs and expectations of the mercurial consumer.

The prescription for this malady is to regroup under the wing of so-called industry experts. In other words, they look for answers in the same old places.

What it’s like to be a retailer?

It reminds me of a story I heard years ago. It goes something like this… A man and his wife leave a bar in the evening. As they head up the sidewalk, they pass by an alley and the gentleman notices that there appears to be a man crawling on all fours in the alley. He pauses for a moment, asks his wife to wait for a moment and he heads down the alley to see what the problem is and if he can help.

Reflection of a retailerAs he approaches the frantic crawling man he notices the strong smell of alcohol. Despite this, he asks the poor fellow if he can help with anything? The drunk man tells our hero that he has lost his wallet and is trying desperately to find it. So the gentleman agrees to help him and begins a careful search of the wallet in the alley. After 10 minutes or so, neither have any luck finding the wallet. Exasperated, the helpful gentleman asks, “Are you sure you lost it here?”

“Oh no,” says the drunk, “I lost it down there…”  and he points to the far end of the alley.

“Why on earth are you looking here then,” the man asks.

“Simple” he says. “There is no light down there.”

If Macy’s wants to survive as a dominant retailer, let alone win, they need to look outside the category for answers. But, they all seem to always look where the light is.

The UCLA Under Armour deal is hypocritical

UCLA and Under Armour just announced a shoe and apparel deal worth about $280 million over the next 15 years. The deal covers all sports at UCLA and is the largest shoe deal in the history of the NCAA, eclipsing last year’s $252 million deal between Nike and Ohio State.

The UCLA Under Armour deal raises this truth: colleges and universities continue to make money on the backs of student athletes who play and attend school but receive nothing.

Looking at the UCLA Under Armour more closely.

Sure, people will argue that student athletes receive a free education but even that is misleading. Did you know that the NCAA only has six so-called head count scholarships? Men’s football and basketball with 85 and 13 scholarships respectively and women’s basketball, tennis, gymnastics and volleyball (15, 8, 12, and 12, respectively) are the only ones on that list.

UCLA Under Armour
The UCLA Under Armour deal exposes the hypocrisy of the NCAA.

In these sports, the scholarships are full-ride scholarships, although they never cover the total cost of attendance. In all other sports, NCAA only allows equivalency scholarships which means the value of a full ride can be split up among a number of players.

So, you have a whole host of student athletes that are not getting full ride scholarships yet are required to wear Under Armour gear. Because of the UCLA Under Armour deal, they are required to be good ambassadors for the Under Armour brand even though they are not even being compensated – not even with a full scholarship in many cases.

The school is making money on the deal at the expense of the student-athlete.

The NCAA brand has failed in its brand mission and has failed to live up to its core values. It has made a whole string of decisions that were meant to be for the student-athlete but only make the universities more money, making the large programs larger and the smaller programs less competitive.

If it’s all about the money, NCAA, then pay the athletes. If it’s about maintaining what you purportedly say you believe, then don’t let universities profit on the backs of their student-athletes.