Case Study: Macy’s Private Label

1 Macy s current hodgepodge of brands, products and spokespeople is no coincidence. The backbone of the retail giant has always been bringing together the best selection of goods and services through partnerships and collaborations, starting in 1929 with Fred Lazarus, the puppeteer behind F&R Lazarus and the John Shillito Company (which was the oldest department store at the time). Fred famously arranged a meeting with Walter Rothschild (of Brooklyn-based Abraham & Straus), Louis Kirstein (of Filene s) and Samuel Bloomingdale (head of namesake company Manhattan's Bloomingdale's) and decided to merge their stores into one.

2 Rothschild, and Kirstein quickly agreed on the spot, and Bloomingdale joined the next year. 1 The company s headquarter location was set up in Cincinnati in 1945 and over the next thirty years additional locations popped up in major cities across the The Federated company continued to purchase department stores over time, but it was not until the 90 s that the company bought 50% of the existing Macy s debt, setting the company up for acquisition within the next two first Macy s store opened in Manhattan in 1858 by a gentleman named Rowland Macy.

3 Forty years later after the death of Rowland, Macy s was bought by the Strauses, who expanded the retail empire across the Unfortunately after taking the company Private in the late eighties, the retailer suffered from high debt and filed for bankruptcy in 1992. By 1995 Federated had purchased the company and renamed its own stores Macy s, expanding the brand s empire. In 2005 the company added May Department Stores to its roster, which brought on financial distress pre-recession. In attempts to boost sales while focusing on strengthening the department store s point of difference, the retailer launched My Macy s which focused on localized initiatives for target markets.

4 In addition to the new marketing incentive, Macy s consolidated its offices down to 69 geographic districts, which made up eight regions, which saves the company around $400 million every Macy s and Bloomingdale s encompass 850 stores in 45 states, generating $25 billion in annual sales from men's, women's, and children's apparel accessories, cosmetics, and home furnishings. With twelve Private Label brands, exclusive partnerships with fellow powerhouse brands such as Tommy Hilfiger, Martha Stewart, Elle Tahari, Oscar De La Renta and Donald Trump, it s more than evident that Macy s has an audience and knows exactly what they want, and when they want it.

5 So who exactly is grabbing a piece of Macy s retail pie? Kantar retail explains that the retailer is aiming to target an affluent and younger demographic, with the hopes of catching the attention of upper middle-class shoppers. According to their research, the current Macy s shopper is around 46 years of age, Caucasian and has a household income of $82,570. Overall, Macy s target customers are primarily older parents or working older couples who are college educated 2. While these metrics are important for understanding the core Macy s shopper, Macy s also focuses on understanding the individual target market for each of its Private Label brands, which generate 19% of the company s revenue 3.

6 The below section explores the target customer for Macy s Private Label (s). 1 Macy s2 Kantar retail , Macy s3 SupmanMerchandise Strategies case study : Macy s Private LabelAlfani Alfani customers are as diverse as they are style conscious explains Nancy Slavin, senior vice president of marketing for Macy s Merchandising Group. As the top selling menswear line at Macy s it is easy to get the impression that the brand satisfies both sexes adequately 4. The average shopper is between 25 50 years of age, is college educated, predominantly Caucasian (followed by Asian and African American) and is career oriented.

7 Alfani shoppers earn an average of $70,000 annually and live both in metropolitan and suburban cities. Furthermore, the Alfani customer is made up of young families who look for staple pieces that are versatile vs. trendy. Charter ClubCharter Club targets the All American woman who appreciates comfort and style in one. The Private Label offers sportswear, intimates, accessories, jewelry, bedding and bath, deepening the customer loyalty throughout multiple categories 5. The Charter Club woman is between the ages of 30-60, Caucasian and married with a family.

8 In addition, she is college educated, lives in a suburban setting, and earns an average income of $60,000 annually. She is a bit more traditional and conservative in how she dresses but enjoys the leisure of shopping for herself and her family. INCOn the opposite end of the Charter Club spectrum is the INC shopper, which consists of females between the ages of 20 40 looking for affordable, trendy items. INC shoppers are technologically savvy, college educated, and work in creativity-based jobs such as marketing and advertising.

9 Racially diverse, INC shoppers dwell in major metropolitan cities earning around $80,000 annually and are young couples or young families. Hotel CollectionHotel Collection targets a very sleek, modern customer who has a high regard for design and architecture. These folks consist of men and women between the ages of 35 60, are predominantly Caucasian and live in major metropolitan cities or large suburban neighborhoods. Earning roughly $90,000 annually, Hotel Collection devotees are older families who are eco-friendly and college and/or graduate school educated.

10 American RagSeeking after Macy s younger demographic, American Rag is a fashion-forward Label consisting of men, women, and juniors denim and separates. The typical junior shopper is between 13 19 years of age (earning below $20,000 annually) where the men and women s shopper is between 20 30 years of age (earning around $50,000 annually). Ethnically diverse, American Rag shoppers live in urban and suburban cities, are mostly singles or young couples and are college educated. Example customers are technologically adept, inspired by celebrity styling and early adapters to seasonal trends.