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Macy's Department Store Repositioning
Transcript of Macy's Department Store Repositioning
Repositioning Summary Background Repositioning Predictions for
Macy's Future Develop Macy's as national brand
Capitalized on pre-existing recognition
Consolidated other stores allowed for maintaining business rather than starting from scratch
Strong management Dept stores created for “one-stop shopping”
Market share of traditional dept store: 30% in 1950s 7% in 2010
2010—ROE at 9%; desirable at 15%
Women primary customer base, ages 25 to 55
Focused on conservative, traditional fashion
National brands Federated Department Stores (Federated) looking to develop Macy's as national brand
Consolidated 810 dept stores from 15 different chains across US
Allowed for national advertising and national brand
Lowered cost structure Macy's doing well, but maybe other dept stores will catch up
Has huge advantage, but can be overcome in following years by others Consolidation = Lower Cost
“America's Department Store”
Affordable—above mid-level dept store, below higher end
Fashion vs demographic
“Everyday value” Strategy After consolidation, bought mass amounts from same buyers—higher power
Created own brands; became their own suppliers Suppliers Little bargaining power of customers
Broad customer base; no one buyer influential enough
Already had everyday value
Customers Less conservative/traditional in clothing
Targeted at the “fashionable”
Self-made fashion brands
Remodeled for more pleasant shopping experience
Lower prices Substitute
Products Positioned in upper middle level segment
Fashion at lower price
Targeted interest group rather than demographic Rivalry Self-made fashion lines
Developed national brand
Already had lower production costs Threat of
New Entrants Weaknesses... Changes resisted ...and Overcoming Them Quality and service same at Macy's; unique advantages of new Macy's Some found new prices higher than stores consolidated from Closed stores in unprofitable areas, opened in more upscale areas Standardized merchandising strategy a problem Tailoring merch selection to local taste - "My Macy's" "Everyday Value" a problem Concept abandoned Most recently: new strategy
Focus on "affordable luxury"
Continuing to develop private labels
Upping national advertising 2011 Donald Trump, Usher, Jessica Simpson, Martha Stewart “One of the biggest mistakes a manager can make is to assume the best results come from competing to be the best. Competing to be unique is a much more effective strategy.” - Michael Porter How has Macy's been unique? Macy's repositioned themselves as an upper-middle level store
“America's department store”
Focused on less traditional and conservative
Produced own brands in conjunction with nationally-advertised brands
Consolidating brands, cut costs Macy's Efforts to be Unique But how well will this work? Macy's repositioning as an upper-middle level store is easily imitable. Efficacy of Macy's
Unique Value Proposition Macy's attempt to become “America's department store” is something that other, smaller department stores cannot imitate. Macy's effort to be “less traditional and conservative” than other department stores is a flawed value proposition, but not a bad one.
Consolidating their brand to allow for lower prices is a good way to be unique. What do you think the future holds for Macy's? We want your opinion.