Macy’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
I 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.
Times 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.