(A Case Study on Macy's, in which I have to talk about a little of the macy's history and pick one of their private label brands such as alfani and talk about its history, what kind of merchandise they carry, and detailed assortments. Then choose a different type of merchandise that they dont already carry such as sports gear or kitchen supplies etc that can help their label expansion and bring more business. With detailed new assortments, prices, small pictures and include target market as well as benefits.With a works cited page in double soaced MLA format. I will attach the given example!under the directions here)
MACY’S PRIVATE LABELS
A RETAIL BUYING FOCUS
One of the most successful department store organizations in the world is Macy’s, the largest member of Macy’s Inc. organization, with stores spread throughout the leading retail centers of the United States, especially with the acquisition of Robinson-May stores. They distribute a number of catalogs for both fashion positioning and promotional efforts, not to mention their internet web-site that also reaches a wealth of households.
Macy’s has kept pace and often outdistanced competitors by paying attention to customer needs and providing them with what they have demanded. Its merchandise mix has long included the top names in wearable fashions and furnishings for the home. Apparel, accessories, cosmetics, home products, furniture and other merchandise classifications regularly feature the names of the industry leaders. In fashion merchandise, it offers established leaders such as Ralph Lauren, Donna Karen, Calvin Klein, Marc Jacobs, and Coach. For home products such as dinnerware and glassware, signatures such as Waterford, Lenox and Orrefors grace their shelves.
The store’s product mix however, is not limited to the lines that are available at other companies throughout the country. It has invested heavily in collections that are Macy’s alone and markets them under a variety of private labels. It is generally conceded that in the retail industry, Macy’s is the leading department store merchant of private label goods. The names that have become popular include Alfani, Charter Club, INC, Hotel Collection, American Rag, Green Dog, Tools of the Trade as well as many others.
To the typical customer, these and many other private labels are goods that carry a well known branded label. This is certainly not the case since Macy’s designs and produces the merchandise for exclusive use in their stores. What accounts for the success of these labels are their names and the way they visually merchandise many of them. Charter Club, for example is reminiscent of many Ralph Lauren products. Its position on the selling floor is often in close proximity to Ralph Lauren merchandise and is displayed in a similar manner. The same can be said for Hotel Collection and Calvin Klein in the domestics/bedding department. This brings the shopper who wants a price point lower than the national/manufacturer brand to consider the comparable private label items. For those who still want the marquee label, it is there to be purchased.
With so many consumers enthralled by the designer labels that abound in retailing, Macy’s has created labels that often make the shopper believe that these are designer signatures. With the Alfani private collection, the name given to the clothing seems to deliver the message of “Italian made.” With Italy being such an excellent resource for fine men’s clothing, the customer feels that this is an Italian line of merchandise. Close inspection of the Alfani label often shows that the item was not manufactured in Italy, but rather from other countries where Macy’s sources products. Through the aggressive advertising of the INC label, the average customer absolutely believes that INC is in fact yet another designer versus a private label.
None of these are deceptive techniques but are the creations of astute marketers. As long as the products are at the quality and price points desired by the company’s clientele, they are sure to be profitable entries in the store’s overall merchandising mix. In fact, to the degree that Macy’s can successfully differentiate themselves from their competitors, they will have a greater opportunity for success in today’s competitive market. The department store as a viable channel for the future has had very mixed results with the consumer voting more frequently for the upper as well as discount ends of the business. With that having been said, what should Macy’s strategy look like for future investment into private label as a merchandise strategy?
Macy’s Case Study:
Every year for as long as I can remember I have always started my Thanksgiving Day watching the Macy’s Thanksgiving Day Parade with my family. This tradition will always be with me, I identify with Macy’s because of this bond, and they have effectively cultivated the relationships between customer and company for 155 years. They have really created a very iconic image of an all-American retailer that many consumers trust and love. Macy’s does this not only by hosting events like the parade or their many other events that create an experience for the customer, but also by providing a comprehensive merchandise assortment that fits the needs of their customers. Which is why Macy’s has been so successful, their customers have their niches within the Macy’s umbrella of national and private brands making them feel understood by this retailer.
Articulating what the customer wants and providing it has been an integral part of the company since its founding in 1858, in New York City, by R.H. Macy. It started as a fancy dry goods store, with first day sales totaling $11.06 and first year earnings of almost $90,000. Since R.H. Macy had previous retail failures he insisted that no merchandise would be bought on credit, but due to the financial success it was not necessary to do so until the late 1950’s, which was very different from most other retailers at the time who had to buy on credit. By 1877 R.H. Macy & Co. had become a full-fledged department store. In 1902 R.H. Macy & Co. was moved to its iconic location on Broadway and 34th Street in New York City, becoming the world’s biggest store with over 1 million square feet of retail space. This store became immortalized in the movie Miracle on 34th Street as the location for the Christmas story. After a period of many acquisitions the company was able to expand and gain new locations and customers. In 1994 Federated Department Stores, Inc. bought R.H. Macy & Co. and converted their stores to Macy’s, furthering the company’s expansion and later changing their name to Macy’s Inc. which includes not only Macy’s but also Bloomingdales. Today Macy’s has 840 Stores in 45 states, as well as the District of Columbia, Guam and Puerto Rico. Macy’s Inc. is a publically traded company, they went public in 1922. And according to Hoovers.com, their current stock price is $42.08 while their earnings estimate is expected to grow almost 300% in the next two years under the leadership of CEO Terry Lundgren. Macy’s main competitors, according to Hoovers, are Dillard’s, J.C. Penney, and Saks.
Macy’s has been a pioneer retailer with their private-label brands which are designed to pursue a specific target market. In 2011 43% of merchandise sold at Macy’s was from a private-label brand and accounted for 20% of sales. A private-label brand, as stated by Levy and Weitz in Retailing Management, are products developed and marketed by a retailer and only available for sale by that retailer. Having these private-label brands are beneficial to retailers because they have much more control over garment design, quality of fabrication, and marketing for product while delivering a higher profit margin. Private-label brands, also known as Store Brands, are usually priced lower than National Brands. For Macy’s it is very beneficial because having this control helps them to design these private-label brands to specifically target different customers, appealing to their different lifestyles while keeping costs low. This has been very successful for Macy’s due in part to their visual merchandising strategy of marketing their private-label brands similarly to the national brands marketing, presenting them similarly in stores, and placing them close to each other on the sales floor. Taken from the article “Macy’s Private Labels: A Retail Buying Focus”, “This brings the shopper who wants a price point lower than the national/manufacturer brand to consider the comparable private label items. For those who still want the marquee label, it is there to be purchased.” In doing this Macy’s is able to develop a broader customer base due to the options available.
Macy’s serves such a broad range of customers due to its large assortment of merchandise, but their private-label brands are created to cater to a particular group of its core customers. Each label having its own distinct customer with merchandise to fit their lifestyle. But, Macy’s states on their website (MacysInc.com) that they are going to start focusing their merchandise planning on the millennial generation (ages 13-30). Through refining their product assortment for them as well as gearing the marketing to this generation. In the article “Macy’s going after Millennials with new, expanded brands” written by staff at The Business Courier, stated that this generation is the largest and most diverse age demographic with an estimated spending of $65 Billion a year. CEO, Terry Lundgren stated at the annual meeting last May that “We just think we deserve to get a bigger share of that market,” and he spoke of how Macy’s was going to capitalize on this market. Their plan is to expand their portfolio of already successful private-label brands, in addition to developing two departments. These departments, MyStyleLab and Impulse Dept., will be created for two different age groups in the Millennial generation. MyStyleLab will be for ages 13-22 while Impulse Department will be for ages 19-30.
Following Macy’s strategy of targeting the Millennial generation, I believe they have an incredible opportunity to expand their private-label brands to include another home goods private-label called Starting Out. It would be a private-label that is designed for a customer who is male or female, ages 17-25, they are going to college, getting their first apartments, and living in urban areas where space is limited and organization is necessary. Thus the name, Starting Out, this merchandise assortment would be quality home goods at an affordable price for those who are just “starting out” in life. Our customers would be Caucasian, Asian, African American, and Hispanic, with a lower level income, and are attending school. They certainly do not associate very strongly with Martha Stewart and cannot identify strongly with her brand, which is very much for an older person who is more established in life and ready to make more of an investment with their home goods purchases. Our customers are living busy lifestyles, between work and school, they have active social lives that includes having friends over to entertain spontaneously, and they want their space to accommodate that. But above all, they want to have the “cool apartment”. The products will be fun, bright, and practical. Currently on Macy’s online store there is a section marked “College Lifestyle” which is an eclectic mix of products from various private and national brands. But with the growing market share of these Millennials I think it would be beneficial to create a private-label brand that is specifically designed for this need. By doing that you will have a consistent pricing strategy for the goods and an image that this market can identify with. Since this private-label is designed for this target market of young adults who live in apartments or dorms that are usually small and space is a valuable commodity, the merchandise mix will focus on this and have products that are also creative space savers. Starting Out would incorporate soft line staples like bedding, towels, and small rugs. Also, including a hard line of small appliances, kitchenware, lamps, and some furniture. All of the things that one would need when they are getting their own (or shared with roommates) space for the first time.
An example of the how this merchandise mix for this private-label brand would look is as follows:
Since this is meant for college age customers, this line would offer local college team themed sheets. For twin, double, and queen sizes. Set of sheets and two pillow cases for $25-$35.
Bold colors and patterns would be a staple in this collection.
Bed in a Bag type sets that include comforter, sheet set, pillow cases, and pillow sham. For twin, double, and queen sizes. Priced from $45-$65.
Again, bright colors bring a dorm or small apartment to life!
Towels ranging from small to large, prices starting at $10-$25.
Area Rugs/Floor mats:
Small area rugs to help protect the carpet in our customers rented apartment or dorm room, protecting it from all the social gatherings and possible spills that may occur. 3’x5’ for $30.
Essential cook ware that is affordable and for the amateur chief. Measuring Cups $5, Spinning Utensil holder with utensils $8, mixing bowls sold separately prices starting at $5-$12.
Various sizes of pans, starting at $5-$20. And a set of pots for $50.
Affordable fun dish sets priced at $25.
In addition to the dish sets there will also be dishware sold separately. Coming in 3 colors, red, blue, and green. Prices ranging from $3-$7.
Dish towels, sold separately, priced at $3 each.
Novelty knife holder, priced at $15.
Colorful French Press, $12
Small hand-held blender in assorted colors, $35.
Small toaster oven, $25.
Small rice cooker, $15.
One cup coffee maker, $12.
Octopus shower caddy, $9.
Laundry baskets, $7.
Affordable clothing storage. 3-draws $10, 4-draws $12, 5-draws $15.
iPhone/iPod dock and desk lamp, $30.
And desk lamps for $7.
Floor Lamps, $12.
Bean Bag chairs for entertaining guests. Comes in three colors, priced at $50.
The marketing for this private-label brand would target the ideal customer with a strong visual presentation in the store highlighting the value of the brand as well as the practicality of the products. The visuals for this private-label brand would show design ideas that incorporate the products with fun tips, design ideas, and product knowledge. Pushing heavy promotions around back-to-school time.
Macy’s has always been a trusted retailer to have the merchandise you need and at great prices. Constantly adapting to meet its customers changing needs is what has made Macy’s the iconic retailer it is today. It is my belief that by developing this private-label brand it would fill the need for this market segment that is currently not represented with their current product offering. By attracting these customers at this stage of their life you are able to turn them into lifelong customers who will be loyal to the retailor and grow with their private brands. Ensuring not only profitability but building another bond between customers and company that Macy’s is famous for.
Hoovers.com, online database, 3/10/13
Levy, M., and B. Weitz. Retailing Management. 8. New Nork, NY: McGraw-Hill/Irwin, 2010. Print.
MacysInc.com, Online, 3/10/13
“Macy’s going after Millennials with new, expanded brands”, Staff, Business Courier, 10/18/2012, online, 3/12/13.
“Macy’s Private Labels a Retail Buying Focus”, author unknown, resource made available for this project.
|Due By (Pacific Time)||12/10/2013 09:00 pm|
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