February 7, 2008

Hello Macy's! All Sales are Local


In today’s WSJ, Vanessa O'Connel writes about Macy’s CEO’s admission that its national strategy was flawed.

With January same store sales down over 7% that would seem to be an understatement.

Management’s response: fire 2,500 people and consolidate back office operations. No mention of reductions in management compensation…

It is axiomatic in retail marketing that “all sales are local”. Ignoring that fundamental precept of retailing, Macy’s CEO Terry Lundren cut back on local ads and poured tens of millions of dollars into “splashy national TV ads.”

Brick and mortar retailing requires

· Weekly sales circulars to bring the regular customer in more frequently,

· Regular sales promotions in newspapers and on local radio.

· TV can work on top of this base but given TV production costs is often not cost effective for local features.

If affordable after funding priority local efforts such as these, a relatively small continuity base in cheap daytime cable television could support a branding effort. I’d prefer local outdoor around each store location: billboards, mall posters, etc.



Note: Please credit clairegeordio for the photo above.

2 comments:

David Reich said...

"Management’s response: fire 2,500 people and consolidate back office operations. No mention of reductions in management compensation…"

Isn't that typical? Instead of trying to really fix the problem (in this case, it could be a combination of what they're selling (or trying to sell) and how they're promoting it), they take the quick fix -- cut staff, even if much of that staff is necessary. Consider a pay cut or get rid of the people at the top whose poor judgement or bad management got Macy's there in the first place? That would make sense, but don't hold your breath.

Same thing happened several years ago when banks got burned with bad investments in Latin America. Fire the guys who okayed those loans? No, get rid of hundreds of tellers, creating longer lines for customers. The same scenario plays out industry after industry.

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