6 useful ways to deepen the relationship with the customer
Having worked with Macy’s for 8 years, often in unconventional buying roles, I’ve grown to understand what the company does well, what it excels at, and where opportunities still lie. Macy’s prides itself for being the biggest department store in the United States. Whether or not this statement in itself is still relevant, Macy’s knowhow rests in its ability to choose new markets wisely, open stores quickly, handle a large workforce, and be a leader in grooming exceptional talent.
So, where are the next opportunities? Prior to my departure as a result of the sales collapse at Macy’s brought on by COVID19, I shared my thoughts with senior management on trends and opportunities that I believe are important to monitor for the Macy’s and Bloomingdales’ group.
Although today’s macro situation is far from ideal, I hope these observations may be useful to other retail companies looking to deepen their relationship with the customer.
1. Connect sales to substance; reinforcing a positive message
The era of “unjustified” sales is over. Giorgio Armani in his open letter to WWD in April 2020, stressed that sales now need to be connected to substance! A marketing campaign can be reinforced with an association to a positive message. Today, Macy’s could emphatically proclaim that it is here to help during difficult times, rather than just slashing prices simply to liquidate unproductive stock. Such actions are easily perceived as being desperate and weak. Macy’s needs rather to concentrate on inspiring the positive sentiment that sales provide support in these difficult times. Having sales before school reopens is a huge opportunity to demonstrate for their cash strapped customers, how much Macy’s values their loyalty, and is here to lend a helping hand. Take the example of Shake Shack, by returning the $10M loan they made headlines nationwide, leaving a positive reassurance in their customers minds as well as getting exceptional PR. PR that would have easily surpassed in cost the amount of the PPP relief.
2. Loyalty becomes a micro-economy
Brands need to start relationships to earn attention. To establish a sense of connection and shared voice with customers, we need to invest in building stronger relationships. Like any relationship, it starts by learning what others are interested in. In developing two-way campaigns at a time of social distancing, the innate human desire to belong can be incorporated into the marketing strategy. Associates need to have better tools to assist their clients and stop just being inventory controllers. Consumption and behavioral data need to be leveraged into gaining more insight into the desires of the consumer. This will translate into a better curated retail experience. We need to more accurately forecast consumer needs. Customer data should be viewed as a fundamental asset, comparable to what Macy’s real estate is to its retail business.
I suggest that this approach should be extended to supporting young brands. Macy’s has hundreds of locations, and even when the company makes a ‘small’ buy, it can make or break a brand. As a major institution Macy’s could benefit more by accepting a certain amount of responsibility for helping develop small brands in these times of uncertainty. This would help create loyalty in relationships.
3. The importance of quality in modern luxury
Over the years Macy’s has invested in its growth doors in an effort to elevate the quality of its retail experience. With these efforts the gap in quality between the products offered by Macy’s and Bloomingdales narrowed. But if Macy’s is Facebook and Bloomingdales is Instagram then their products need to be widely different. Bloomingdales needs to continue to aggressively lift its merchandise more and more into the realm of modern luxury. This can be achieved by heightening its focus on elevated assortments and making its offerings more desirable and limited. Propel quality over quantity.
Think of it this way — if I as a customer go to Macy’s for a specific item and it is no longer available, this will cause a negative reaction and I will likely buy it somewhere else. However, if I go to Bloomingdale’s and the item is sold out (think exclusive line and limited quantities) I will feel I have missed out and will seek something else to buy in Bloomingdales. Consider Macy’s Facebook aka the yellow pages, everyone goes there. Bloomingdale’s is aspirational, its message should aspire younger shoppers to one day be part of the Bloomingdales’ world.
Today, customers are buying less but desire higher quality and focus more on things that last. The COVID19 crisis will eventually come to an end. However, the real worry is the economic crisis that will affect Q4 Holiday sales and onwards. I believe the only market that can mitigate the shortfall in sales is Luxury. Therefore, focusing on elevating customer services and customer retention through raising company standards for higher quality products should be prioritized.
4. Creating regular price value off-mall
Until recently Macy’s had an initiative called Market by Macy’s. This off-mall concept was designed as an experiential, communal, shopping venue in a curated two-sided marketplace. The object was to better service the needs of both customers and brands. Like any new startup, commitment and vision for the long-haul were required. Although a good idea the timing was disastrous. BUT wouldn’t it make sense to open a Bloomingdale’s “boutique” on a smaller scale, making Bloomingdale’s available in higher spending markets, outside of the mall environment? To keep costs affordable the square footage should be smaller than the 20,000 square feet allocated for Market by Macy’s. Similar to an actual boutique the relationship between the store associates and the customer would be more intimate, strengthening the experience and gaining more customer satisfaction.
5. Elevating Private Label
Private label is a huge opportunity for both Macy’s and Bloomingdales’ brands that use other suppliers to produce their own line. Two years ago, I was recruited to develop a millennial department for Macy’s. This experience broadened my horizons in terms of where we source new brands and how to react very quickly to what is going on. At the time I had suggested exploring production in Italy given my knowledge of the market and accessibility to Italian factories. Although China has increased its quality over the years, a product produced in Italy for a similar price is a better product and is perceived by the consumer to have a higher value. What is trending in Italy (prints, colors, etc.) is very often three seasons ahead of the United States. Looking at Italy can provide a forecast of incoming trends and therefore a significant competitive advantage. At the moment given the stronger relationship of the United States with Italy compared to China, and the possible consumer anger with China, now would be a good time to revisit such a private label strategy. Presently, Italy is in a terrible economic decline. Prices are very attractive and in addition significant discounts can be negotiated. I would suggest this approach for Bloomingdales in order to elevate their private labels towards modern luxury. Macy’s Private Label on the other hand can benefit greatly from studying Aqua’s (Bloomingdales’ Private Label) accomplishments, both from its marketing strategy and key resources approach, to find a more successful private label model.
6. Reimagination is trending; circular fashion and the resale market
Younger generations are extremely judgmental towards brands and are particular where they source their wardrobes. Today, there is a heightened sensitivity towards sustainability. Macy’s has always excelled at doing things on a large scale well, but has rarely succeeded in presenting a more curated approach. What is missing is the story of the product. When there is a compelling story (and when it is marketed) not only will customers be more inclined to buy, but will spend more on what aligns with their values.
I do not believe the resale market will go away despite COVID19 concerns. The opportunity will be in finding new ways to make the customer an active participant in a safe resale environment. Mending has become a life skill; upcycled and found objects are mixed together in new ways. “Must have” is passé; it is all about the “must keep”. When Macy’s partnered with ThredUp, before I transferred to Market by Macy’s, I provided monthly trend forecasts for the curated looks that associates should stock.
In the near-term apparel will likely underperform the other businesses such as home, wellness, tech and active, which we know will do better in this new environment. However, there are a lot of exciting trends I am seeing from Fall Winter 2021, that companies should start adopting to align themselves for a better future.
To learn more about the Fall Winter 2021 trends I’m excited about, ask me to develop them further in the comments.
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Amparo Palou Schwartzbaum is an accomplished and award-winning retail merchant with a proven track record in developing original and successful business strategies, identifying high focus growth trends and markets. A decade of retail experience from Max Mara to Macy’s, she most recently helped develop Market by Macy’s, an innovative start-up. Designed as an experiential, communal shopping venue, its objective was to better service the needs of both customers and brands, in a curated two-sided marketplace. She has the ability to stay current and the creative nimbleness to navigate the total transformation of today’s fashion industry.
