Macy's Goes Local

Macy's Goes Local - April 21, 2008 DOW JONES REPRINTS...

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April 21, 2008 DOW JONES REPRINTS Reversing Field, Macy's Goes Local By VANESSA O'CONNELL April 21, 2008; Page B1 Chicago The sprawling Macy's on State Street building here was once the home to the premier name in Chicago retailing, Marshall Field's. But about a year and a half ago, Macy's forged one chain with one name and one much-ballyhooed national strategy out of Marshall Field's, Robinsons- May, Kaufmann's and other local icons it owned across the country. Now, after Macy Inc.'s same-store sales dropped 1.3% in 2007 from the previous year, Chief Executive Officer Terry Lundgren is changing course. He is ditching the nationwide cookie- cutter approach in favor of tailoring merchandise at the world's largest department-store chain by sales to local tastes. "What the consumer wants in the Galleria of St. Louis is different from what the consumer wants in State Street Chicago, or what the consumer wants in Portland, Oregon," Mr. Lundgren says. He now wants 15% of the merchandise in stores to reflect local preferences.
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Over the next several months, Macy's on State Street will begin stocking more brightly colored clothes and men's all-white suits that store manager Linda Piepho noticed were favored by her store's urban clientele. In cosmetics, she's also planning to add greater variety of makeup shades to attract trendier shoppers, while adding larger 3.4-oz. bottles of perfume to go after the thriftier ones. The localization strategy, called "My Macy's," is a dramatic reversal for Macy's and Mr. Lundgren, who set out to end the decades-long slide of department- store retailers by creating a huge national chain that had more clout with vendors and stronger marketing, with fewer expensive local TV and print ads and more national ones. After purchasing rival May Department Stores in 2005 for $11.5 billion, Mr. Lundgren dropped 11 venerable names to create a cohesive national identity of more than 800 stores under the Macy's nameplate. In some ways the plan worked -- Macy's was able to woo lifestyle maven Martha Stewart to create a line of products exclusively for the chain because of its immense reach -- but pressures on Mr. Lundgren are growing as the economic slowdown worsens. In his annual shareholder letter, sent Thursday, he said 2007 results were "softer than we had originally anticipated" due to a weaker economy but added that Macy's "outperformed most of its
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This note was uploaded on 01/22/2011 for the course MSOM 303 taught by Professor Philpot during the Winter '10 term at George Mason.

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Macy's Goes Local - April 21, 2008 DOW JONES REPRINTS...

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