October 29, 2007
Macy’s Moves Closer to Exclusive Brand Goal
Last week’s announcement that Macy’s will become the exclusive retailer of Tommy Hilfiger sportswear beginning next fall is another step in the chain’s strategy of differentiating by selling brands exclusive to its stores.
“We will bring our customers an increasing level of compelling and distinctive fashions that are consistent with their aspirations and lifestyles. Strong and well-established brands like Tommy Hilfiger set Macy’s apart. So offering this brand on a much more exclusive basis is another powerful reason for customers to choose to shop at Macy’s,” Terry Lundgren, chairman, president and chief executive officer of Macy’s, said in a press release to announce the deal.
Macy’s estimates have exclusive and store labels representing roughly 35 percent of company sales at present. With Hilfiger and the addition of new lines such as Martha Stewart’s, the company is obviously looking to push that percentage higher.
From the Hilfiger vantage point, this move comes at a time when the brand has been seeing shelf space reduced in many stores. Even so, a number of retailers including Bon-Ton, Dillard’s and Boscov’s will be looking to replace Hilfiger products that remain popular even if not to the degree as in the past. Hilfiger’s men’s and women’s sportswear lines are estimated to generate roughly $200 million in annual sales.
Macy’s and Apax Partners, which owns the Hilfiger brand, are anticipating the brand will do the same sales if not more under a single retail banner than it did being sold in various outlets.
“We have the scale to make the math work for a brand like Tommy Hilfiger,” Mr. Lundgren told The New York Times.
Mr. Lundgren said that the company was working on a number of other exclusive agreements, but they represented “a big commitment” and it takes time.
“You shake your hand and all of a sudden the line does not look good the next season and you have to buy it,” he said. “The vendor is not going anywhere else. That is why it hasn’t gone as fast as we’d like.”
Discussion Questions: Is Macy’s on the right track with its exclusive and store brand strategy? Do deals with Hilfiger, Stewart and others provide Macy’s with the clear point of differentiation it seeks? Are there any missing elements that Macy’s needs to piece together to fulfill its goal of becoming a national retailing force?
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Hey, it works for Target….
Macy’s use of exclusive brands may help them achieve better margins. The strategy would be a real home run if it gave Macy’s a standout assortment. What’s the difference? If the clothes and home furnishings are viewed without the brand labels attached, will they be similar to merchandise at competitive stores? Abercrombie & Fitch doesn’t just have its own labels, it has a standout assortment. If Abercrombie & Fitch had its own labels on an assortment that looked like 200 other chains, it might have decent margins, but the financial performance (and shopper franchise) would be considerably more mediocre.
On paper, it sounds like a good idea…but in reality it’s only compelling to consumers if the assortment is so special that it is unduplicatable in an environment with a better shopping experience. If the assortment fuels the experience then it’s a potential winner. If there’s still no experience (or a negative one) then the exclusivity isn’t going to trump a better experience.
Like most other department stores, there is an overwhelming selection of apparel for sale at Macy’s and it’s easy for consumers to feel overwhelmed and therefore unaware of the exclusive nature of certain offerings.
To help with this, many apparel retailers are successfully using in-store digital signage as a way to promote both brands and new lines that are being introduced. This can be a powerful communication medium in several ways.
• Since it is narrowcasting content down to a specific store, to a specific screen at a specific time of day, it can easily match promotional messaging with a specific demographic and take even take into consideration stock availability.
• It is moving video and appealing audio that captures the shopper’s attention.
• And since apparel is a “fashion forward” industry, it can promote the upcoming line in visually exciting ways that help encourage consumers to come back and increase shopper loyalty.
Another great opportunity is for virtual fashion shows. For example, Target is scheduled to present its fall and winter collections using holograms, or two-dimensional moving figures that give the illusion of having three dimensions, as opposed to real-life models and clothes. This is scheduled to take place in Grand Central Station in New York City for two days next week, repeating every 10 minutes.
While I think that “Tommy” is no longer a super brand, I do think that others like Martha Stewart will be important. Shopping at Macy’s is not just about designer brands, but about the experience/ambiance too. Many of the above comments were made by men who seem to miss a point.
We women, the majority of customers, shop at Macy’s as much for the experience as we do the brands. In my opinion, Macy’s has brought back the tradition of department store shopping that no one else has. To compare the name Macy’s in the same sentence as JC Penney, Kohl’s and Target is nuts! That’s like comparing McDonald’s to Starbucks, or Barnes & Noble to Costco.
Yes, exclusive deals are always the right move. Department stores are having a hard time finding ways to create a unique place in the retail food-chain so it makes sense. The key will be for them to not eliminate the critical element of customer service which for many of the old Field’s, Bon, etc. customers has all but gone away with the name change.
Exclusivity has its pros and cons. It is a coup for Macy’s in the sense that it they capture a hot brand that you can only purchase at Macy’s. What it means for the customer is a different story. My observations suggest that customers end up paying more when purchasing from exclusives.
The other questions that linger are, can Macy’s do the exclusive brand justice on the sales floor? Are associates being trained to exploit the exclusive nature of the brand? How does the customer react to this sort of thing? And is the brand selling themselves short by going exclusive with a chain that is not in 100 percent of the market?
Many of Terry Lundgren’s moves of late seem to be directed at keeping his shareholders and Board of Directors at bay rather than necessarily being good merchandising strategy. Count me as one of the head scratchers over this marketing agreement between Macy’s and Hilfiger. Most shoppers go to a department store to buy a shirt or a dress or a pair of pants that fit their needs and fit their bodies. Hilfiger, the brand, no longer has the buzz and cachet it once did and it is unlikely to draw shoppers specifically to Macy’s. Macy’s heavy handed approach (buying and killing off rival department stores and signing exclusivity agreements to freeze brands out of the few remaining other department store nameplates) in an effort to FORCE people to shop at Macy’s does not sit well with many folks who prefer to make shopping decisions using other criteria.
Hilfiger products already have a big presence in the discounter outlets such as Marshalls, TJ Maxx and on eBay, etc. I predict more will end up there after passing through Macy’s.
The exclusive arrangement that Macy’s will have with Hilfiger is definitely a good strategy. The contingencies on its success will be how well Hilfiger continues to market its name, image, and its products, and how “exclusive” the agreement holds up in the medium and long term and how well both partners respect and uphold the arrangement.
If you’re Hilfiger, how does this initiative with Macy’s build brand cachet? Is selling units, at the expense of cachet, all Macy’s can do?
If you’re Macy’s, you might like to think that Hilfiger’s brand cachet might transfer to you, but in the end this is really about driving volume.
All I can see coming from this is Hilfiger and Macy’s being out on the slippery slope together, one promotion following inevitably after another, trying to drive volume, and sacrificing margin and brand equity in the race to the bottom.
As was stated above, it works for Target…if Macy’s wants to be Target, and Hilfiger wants to go along for the ride.
I think this is precisely what Macy’s should be doing, if not more aggressively. Collaboration in terms of advertising, in-store events, promotions, etc. will determine, however, if these efforts bear fruit.
We have already seen some retailers use exclusive distribution rights to create a differentiated position in the areas of cosmetics, high-end watches, and toys so the Macy’s effort makes a lot of sense to me. The Martha Stewart effort confuses me a little versus the past Kmart efforts, but the advertising campaign Macy’s used during the recent Emmy Awards telecast leads me to believe they can use this strategy to set themselves apart and build loyalty to their brand. I also assume there will be additional announcements of this nature as this effort gains momentum.
First of all, Tommy Hilfiger is no longer the fashion setter it was in the past. Secondly, Macy’s already carried a fairly good assortment of the Tommy Hilfiger label. So, unless their are a lot of loyal Tommy shoppers who will follow the label to Macy’s, they are unlikely to build store traffic this way.
This is another example of Macy’s trying to control the consumer choice by forcing shoppers to buy their own labels on which they have high margins. They have failed to create any real equity in their own label, so they are seeking brand partners to control.
Unfortunately, I fear this might result in more of a negative effect on Tommy Hilfiger than a positive effect for Macy’s.
Macy’s has been overly focused since its May Company acquisition on exclusive private labels like Alfani and INC. These need to be part of the mix, but the biggest traditional department store left standing (not counting rivals like JCPenney and Kohl’s with different concepts) needs core national brands too. So the Tommy move is long-overdue and welcome, as long as the brand itself regains its footing and its identity. The faster Macy’s can move in this direction the better chance it has to regain some lost sales momentum.
Macy’s store brand strategy, coupled with their exclusives such as the recently announced Hilfiger deal, seems on the surface to be brilliant. It will enable Macy’s to finally free itself from the paralyzing sameness that has plagued department stores for decades.
But I suspected that the strategy is adding more confusion at store level and adding challenges to the already thin ranks of the sales associates.
To find out, my wife and I dropped by on Saturday at the famed Short Hills Mall in New Jersey to see first hand how the shoppers were responding. My wife was looking for a particular type of dress. She wanted fit, price, and a classic look. The designer was way down her list of criterion.
The Macy’s people were nice, but after we couldn’t find anything in the thinly assorted Dress Department, associates kept her bouncing from designer department to designer department. Despite being slow, there was no effort on the part of associates to attach themselves to her. They seemed tethered to their departments.
In the end she tried on 12 dresses from four different designer departments. None worked. There were no attempts on the part of sales people to fulfill her very clearly defined needs.
The good news is that the wife noticed a pair of Lauren classic jeans on sale that were left in the dressing room by a previous shopper. She brought the jeans to a sales clerk and asked her to find her size. The associate had great difficulty finding where they were on display. Finally, the associate appeared with several jeans. Joyously, one of them fit.
At the POS, my wife submitted a 20% off coupon a friend had given her, opened a Macy’s account for an additional 15% off. The $99.50 jeans, marked down 60% to $49.75, were sold for a final price of $27.86. By the way, the POS couldn’t handle the multiple discounts and the wonderfully patient associate did a fancy override.
The wife was very happy about the jeans. But her needs were completely unfulfilled despite encountering at least six sales associates over an hour period, none of whom were busy. What should have been a $500 sale ended up being a margin-less $27.66.
How is the strategy working? A frustrated mother of two was heard mumbling to herself as she headed to Talbot’s with no bag in her hand: “TOO MUCH, TOO CONFUSING.”
If Macy’s wants their strategy to succeed, they need to execute much better on the sales floor. Shopping can’t seem like work, selection can’t seem daunting, and the sales associates need to be made available for real help.
Academically, the answer to the question “do exclusive label deals such as Hilfiger provide Macy’s a point of differentiation?” is–yes. However, as others have alluded, that really isn’t the correct question. The right question is whether this provides a significant and compelling point of differentiation which supports key success factors and enhances the overall brand positioning.
Viewed against those metrics, the deal becomes not quite so clear cut. Macy’s management has clearly indicated they feel exclusive labels are integral to achieving key success factors of margin and destination loyalty. To the extent that Hilfiger has brand cachet–and it still does–the association with Macy’s is valuable, offset substantially by the ability and intention of licensees to continue selling to other players in the market. As a result, the “exclusivity” created is watered down, and any marketing expenses incurred by Macy’s to publicize the apparel brand will have free tag-along benefits to the retailers carrying the licensed product assortment.
The primary concern will be the impact on creating a compelling point of difference, as opposed to simply a point of difference. I agree with comments that Macy’s already had a significant Hilfiger assortment, and also question that there are hordes of Hilfiger loyalists who will abandon the remaining department stores currently carrying the label. So who is this move a competitive advantage with? The only observation I can see is with Target, JCP and Kohl’s…which I find both amusing and of concern. Macy’s should not be making brand deals as defensive moves against lower market competitors.
In a recent shopping trip to the mall, I had two distinctly different experiences, one in Macy’s and another one quite unexpectedly at JC Penney. While neither was bad, I was disturbed by the openly negative commentary from their salespeople when asked how they liked the Macy’s approach. Needless to say, they didn’t. I was quite surprised.
On the surface, the store looked good, their service was exceptional and I did actually purchase more than I expected. I continued my inquiry with each sales clerk, and the response was curiously the same. Each made that same comment almost as if it was scripted, but its hard to conceive that it was. They each indicated that “We don’t have what the customer wants anymore.” Pursuing it further, I was unable to put a finger on what exactly that was.
After a Starbucks and a walk to the opposite end of the mall to JC Penney, I found out what it was. They had what I wanted, they had better service than I had seen in years and prices that were, well, unbelievable. My intent of purchasing one item led to purchasing six. It was, in fact, what I wanted, it was of exceptional quality, and the service was reminiscent of years past. In a word, unexpected.
I’ve had Hilfiger. I didn’t like it. I don’t want it, nor do I want the same poor quality by comparison of Polo. What I got was the unexpected updated product that I had loved in years past. A sales person that knew about it, was excited about it, and was interested in selling it.
From my view, they’d have had a better result by some marketing arrangement with Carhardt than Hilfiger. At least that would have been unexpected and exciting. I really want one of those barn coats! Instead, they might have just as well gotten an exclusive on Jordache Jeans. I’m not interested in those either. I’ve moved on. I’ve got a pretty good guess that so has everyone else.
Maybe I’m in the minority, but I don’t see how this benefits Macy’s at all. How many people sit at home at say “I need to purchase a Tommy Hilfiger product”? I can’t imagine the number is too large. So Macy’s has taken a once proud brand that is now tired, and they have an exclusive to sell this brand. How will this drive traffic into Macy’s stores? I just don’t see it. First FAO Schwartz and now Hilfiger. Does Macy’s want to be known as the retailer who has exclusive deals with once popular brands? I see this as a strategy that will not produce any real ROI.
Good deal for Tommy…not so good for Macy’s
There’s really not much new with this. Macy’s already carried TH and to a large degree (as stated above), TH isn’t exactly the hottest ticket anymore.
What Macy’s should be focused on is strengthening their own brands, which are currently very weak or non-existent (can yo name one?). It would be a good idea for them to consort with grocers, like Safeway, who’ve done a great job increasing revenues and margins while completely controlling their own destiny with their own brands. Grocers have done this in hot product categories like organic and natural to boot.
This is just another attempt at avoiding the inevitable; the demise of the ‘old’ department store model (Macy’s) and the rise of the ‘new’ one (Kohl’s).
This is what I was hoping for in the master Macy’s strategy. Only Macy’s can pull off a deal like this, as an aspirational brand isn’t going to surrender itself to still-more downscale Kohl’s or Penney until it’s almost over…(and the other department stores don’t have the clout).
This will impact the other department stores (Stage, BonTon, Gottalhks, etc.) as it’s the brands they feature in their advertising. If Macy’s grabs one big one every six months, it gets interesting….
“Tommy Hilfiger is no longer the fashion setter it was in the past.”…..That being said, it is good for Macy’s to identify with a successful brand that can move it forward. Its private labels like Alfani and INC can only carry it so far, and Martha Stewart only invites a certain segment of the Macy’s shopper. In the world of menswear, brand identity does have its place, but I think Macy’s could do better than aligning itself with Hilfiger.
If Macy’s really wanted to make an impact, it would get control of a “hot, new brand” – something large and growing, that could appeal to both sexes – think Tommy Bahama, a Ralph Lauren line, Lacoste, Diesel, Seven Jeans, etc. To take in a brand on a decline shows why department stores began to decline – too much of something old too long. As a matter of fact, one of the reasons some department stores were failing in the past were that they built their stores out committing large departments to brands like Tommy Hilfiger. They weren’t able to change fast enough and lost customers to fashion forward retailers like Gap, Limited, and today to the newer retailers like H & M, Forever 21, etc.
This move may be good for Macy’s but bad for Tommy Hilfiger. I was taught in marketing to “not limit your sales.” Why sell your product in one store when it can be sold in ten stores?
And as a consumer I have often felt that “exclusive” equates with “higher priced.” That may work with some of your customers, but not all.
Regardless of the popularity of my brand, I would be slow to give exclusivity to Macy’s until such time as they begin giving customers the attention that they deserve. At the Ala Moana Macy’s in Honolulu it is much harder to find a sales associate than it is to find merchandise. I have walked out frustrated too many times.
On one occasion I managed to get to the register with a belt and the “clerk” advised me to come another day with a discount coupon I should have received in the mail. He made me feel as though I would be stupid to buy it today. I wouldn’t want that to be my brand.
Has Martha Stewart helped turn Macy’s around? No.
How about Donald Trump suits? No.
Well, how about Jessica Simpson shoes? No, again.
So why would anyone think Tommy H. is going to help? This brand is way off the fashion radar. What’s next? Perhaps Britannica jeans and Members-Only jackets? By the way, wasn’t Wal-Mart trying to land a Tommy H. deal?
The stores in the Macy North region are failing. Why shop there? Kohl’s and JC Penney do a much better job.
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Hey, it works for Target….
Macy’s use of exclusive brands may help them achieve better margins. The strategy would be a real home run if it gave Macy’s a standout assortment. What’s the difference? If the clothes and home furnishings are viewed without the brand labels attached, will they be similar to merchandise at competitive stores? Abercrombie & Fitch doesn’t just have its own labels, it has a standout assortment. If Abercrombie & Fitch had its own labels on an assortment that looked like 200 other chains, it might have decent margins, but the financial performance (and shopper franchise) would be considerably more mediocre.
On paper, it sounds like a good idea…but in reality it’s only compelling to consumers if the assortment is so special that it is unduplicatable in an environment with a better shopping experience. If the assortment fuels the experience then it’s a potential winner. If there’s still no experience (or a negative one) then the exclusivity isn’t going to trump a better experience.
Like most other department stores, there is an overwhelming selection of apparel for sale at Macy’s and it’s easy for consumers to feel overwhelmed and therefore unaware of the exclusive nature of certain offerings.
To help with this, many apparel retailers are successfully using in-store digital signage as a way to promote both brands and new lines that are being introduced. This can be a powerful communication medium in several ways.
• Since it is narrowcasting content down to a specific store, to a specific screen at a specific time of day, it can easily match promotional messaging with a specific demographic and take even take into consideration stock availability.
• It is moving video and appealing audio that captures the shopper’s attention.
• And since apparel is a “fashion forward” industry, it can promote the upcoming line in visually exciting ways that help encourage consumers to come back and increase shopper loyalty.
Another great opportunity is for virtual fashion shows. For example, Target is scheduled to present its fall and winter collections using holograms, or two-dimensional moving figures that give the illusion of having three dimensions, as opposed to real-life models and clothes. This is scheduled to take place in Grand Central Station in New York City for two days next week, repeating every 10 minutes.
While I think that “Tommy” is no longer a super brand, I do think that others like Martha Stewart will be important. Shopping at Macy’s is not just about designer brands, but about the experience/ambiance too. Many of the above comments were made by men who seem to miss a point.
We women, the majority of customers, shop at Macy’s as much for the experience as we do the brands. In my opinion, Macy’s has brought back the tradition of department store shopping that no one else has. To compare the name Macy’s in the same sentence as JC Penney, Kohl’s and Target is nuts! That’s like comparing McDonald’s to Starbucks, or Barnes & Noble to Costco.
Yes, exclusive deals are always the right move. Department stores are having a hard time finding ways to create a unique place in the retail food-chain so it makes sense. The key will be for them to not eliminate the critical element of customer service which for many of the old Field’s, Bon, etc. customers has all but gone away with the name change.
Exclusivity has its pros and cons. It is a coup for Macy’s in the sense that it they capture a hot brand that you can only purchase at Macy’s. What it means for the customer is a different story. My observations suggest that customers end up paying more when purchasing from exclusives.
The other questions that linger are, can Macy’s do the exclusive brand justice on the sales floor? Are associates being trained to exploit the exclusive nature of the brand? How does the customer react to this sort of thing? And is the brand selling themselves short by going exclusive with a chain that is not in 100 percent of the market?
Many of Terry Lundgren’s moves of late seem to be directed at keeping his shareholders and Board of Directors at bay rather than necessarily being good merchandising strategy. Count me as one of the head scratchers over this marketing agreement between Macy’s and Hilfiger. Most shoppers go to a department store to buy a shirt or a dress or a pair of pants that fit their needs and fit their bodies. Hilfiger, the brand, no longer has the buzz and cachet it once did and it is unlikely to draw shoppers specifically to Macy’s. Macy’s heavy handed approach (buying and killing off rival department stores and signing exclusivity agreements to freeze brands out of the few remaining other department store nameplates) in an effort to FORCE people to shop at Macy’s does not sit well with many folks who prefer to make shopping decisions using other criteria.
Hilfiger products already have a big presence in the discounter outlets such as Marshalls, TJ Maxx and on eBay, etc. I predict more will end up there after passing through Macy’s.
The exclusive arrangement that Macy’s will have with Hilfiger is definitely a good strategy. The contingencies on its success will be how well Hilfiger continues to market its name, image, and its products, and how “exclusive” the agreement holds up in the medium and long term and how well both partners respect and uphold the arrangement.
If you’re Hilfiger, how does this initiative with Macy’s build brand cachet? Is selling units, at the expense of cachet, all Macy’s can do?
If you’re Macy’s, you might like to think that Hilfiger’s brand cachet might transfer to you, but in the end this is really about driving volume.
All I can see coming from this is Hilfiger and Macy’s being out on the slippery slope together, one promotion following inevitably after another, trying to drive volume, and sacrificing margin and brand equity in the race to the bottom.
As was stated above, it works for Target…if Macy’s wants to be Target, and Hilfiger wants to go along for the ride.
I think this is precisely what Macy’s should be doing, if not more aggressively. Collaboration in terms of advertising, in-store events, promotions, etc. will determine, however, if these efforts bear fruit.
We have already seen some retailers use exclusive distribution rights to create a differentiated position in the areas of cosmetics, high-end watches, and toys so the Macy’s effort makes a lot of sense to me. The Martha Stewart effort confuses me a little versus the past Kmart efforts, but the advertising campaign Macy’s used during the recent Emmy Awards telecast leads me to believe they can use this strategy to set themselves apart and build loyalty to their brand. I also assume there will be additional announcements of this nature as this effort gains momentum.
First of all, Tommy Hilfiger is no longer the fashion setter it was in the past. Secondly, Macy’s already carried a fairly good assortment of the Tommy Hilfiger label. So, unless their are a lot of loyal Tommy shoppers who will follow the label to Macy’s, they are unlikely to build store traffic this way.
This is another example of Macy’s trying to control the consumer choice by forcing shoppers to buy their own labels on which they have high margins. They have failed to create any real equity in their own label, so they are seeking brand partners to control.
Unfortunately, I fear this might result in more of a negative effect on Tommy Hilfiger than a positive effect for Macy’s.
Macy’s has been overly focused since its May Company acquisition on exclusive private labels like Alfani and INC. These need to be part of the mix, but the biggest traditional department store left standing (not counting rivals like JCPenney and Kohl’s with different concepts) needs core national brands too. So the Tommy move is long-overdue and welcome, as long as the brand itself regains its footing and its identity. The faster Macy’s can move in this direction the better chance it has to regain some lost sales momentum.
Macy’s store brand strategy, coupled with their exclusives such as the recently announced Hilfiger deal, seems on the surface to be brilliant. It will enable Macy’s to finally free itself from the paralyzing sameness that has plagued department stores for decades.
But I suspected that the strategy is adding more confusion at store level and adding challenges to the already thin ranks of the sales associates.
To find out, my wife and I dropped by on Saturday at the famed Short Hills Mall in New Jersey to see first hand how the shoppers were responding. My wife was looking for a particular type of dress. She wanted fit, price, and a classic look. The designer was way down her list of criterion.
The Macy’s people were nice, but after we couldn’t find anything in the thinly assorted Dress Department, associates kept her bouncing from designer department to designer department. Despite being slow, there was no effort on the part of associates to attach themselves to her. They seemed tethered to their departments.
In the end she tried on 12 dresses from four different designer departments. None worked. There were no attempts on the part of sales people to fulfill her very clearly defined needs.
The good news is that the wife noticed a pair of Lauren classic jeans on sale that were left in the dressing room by a previous shopper. She brought the jeans to a sales clerk and asked her to find her size. The associate had great difficulty finding where they were on display. Finally, the associate appeared with several jeans. Joyously, one of them fit.
At the POS, my wife submitted a 20% off coupon a friend had given her, opened a Macy’s account for an additional 15% off. The $99.50 jeans, marked down 60% to $49.75, were sold for a final price of $27.86. By the way, the POS couldn’t handle the multiple discounts and the wonderfully patient associate did a fancy override.
The wife was very happy about the jeans. But her needs were completely unfulfilled despite encountering at least six sales associates over an hour period, none of whom were busy. What should have been a $500 sale ended up being a margin-less $27.66.
How is the strategy working? A frustrated mother of two was heard mumbling to herself as she headed to Talbot’s with no bag in her hand: “TOO MUCH, TOO CONFUSING.”
If Macy’s wants their strategy to succeed, they need to execute much better on the sales floor. Shopping can’t seem like work, selection can’t seem daunting, and the sales associates need to be made available for real help.
Academically, the answer to the question “do exclusive label deals such as Hilfiger provide Macy’s a point of differentiation?” is–yes. However, as others have alluded, that really isn’t the correct question. The right question is whether this provides a significant and compelling point of differentiation which supports key success factors and enhances the overall brand positioning.
Viewed against those metrics, the deal becomes not quite so clear cut. Macy’s management has clearly indicated they feel exclusive labels are integral to achieving key success factors of margin and destination loyalty. To the extent that Hilfiger has brand cachet–and it still does–the association with Macy’s is valuable, offset substantially by the ability and intention of licensees to continue selling to other players in the market. As a result, the “exclusivity” created is watered down, and any marketing expenses incurred by Macy’s to publicize the apparel brand will have free tag-along benefits to the retailers carrying the licensed product assortment.
The primary concern will be the impact on creating a compelling point of difference, as opposed to simply a point of difference. I agree with comments that Macy’s already had a significant Hilfiger assortment, and also question that there are hordes of Hilfiger loyalists who will abandon the remaining department stores currently carrying the label. So who is this move a competitive advantage with? The only observation I can see is with Target, JCP and Kohl’s…which I find both amusing and of concern. Macy’s should not be making brand deals as defensive moves against lower market competitors.
In a recent shopping trip to the mall, I had two distinctly different experiences, one in Macy’s and another one quite unexpectedly at JC Penney. While neither was bad, I was disturbed by the openly negative commentary from their salespeople when asked how they liked the Macy’s approach. Needless to say, they didn’t. I was quite surprised.
On the surface, the store looked good, their service was exceptional and I did actually purchase more than I expected. I continued my inquiry with each sales clerk, and the response was curiously the same. Each made that same comment almost as if it was scripted, but its hard to conceive that it was. They each indicated that “We don’t have what the customer wants anymore.” Pursuing it further, I was unable to put a finger on what exactly that was.
After a Starbucks and a walk to the opposite end of the mall to JC Penney, I found out what it was. They had what I wanted, they had better service than I had seen in years and prices that were, well, unbelievable. My intent of purchasing one item led to purchasing six. It was, in fact, what I wanted, it was of exceptional quality, and the service was reminiscent of years past. In a word, unexpected.
I’ve had Hilfiger. I didn’t like it. I don’t want it, nor do I want the same poor quality by comparison of Polo. What I got was the unexpected updated product that I had loved in years past. A sales person that knew about it, was excited about it, and was interested in selling it.
From my view, they’d have had a better result by some marketing arrangement with Carhardt than Hilfiger. At least that would have been unexpected and exciting. I really want one of those barn coats! Instead, they might have just as well gotten an exclusive on Jordache Jeans. I’m not interested in those either. I’ve moved on. I’ve got a pretty good guess that so has everyone else.
Maybe I’m in the minority, but I don’t see how this benefits Macy’s at all. How many people sit at home at say “I need to purchase a Tommy Hilfiger product”? I can’t imagine the number is too large. So Macy’s has taken a once proud brand that is now tired, and they have an exclusive to sell this brand. How will this drive traffic into Macy’s stores? I just don’t see it. First FAO Schwartz and now Hilfiger. Does Macy’s want to be known as the retailer who has exclusive deals with once popular brands? I see this as a strategy that will not produce any real ROI.
Good deal for Tommy…not so good for Macy’s
There’s really not much new with this. Macy’s already carried TH and to a large degree (as stated above), TH isn’t exactly the hottest ticket anymore.
What Macy’s should be focused on is strengthening their own brands, which are currently very weak or non-existent (can yo name one?). It would be a good idea for them to consort with grocers, like Safeway, who’ve done a great job increasing revenues and margins while completely controlling their own destiny with their own brands. Grocers have done this in hot product categories like organic and natural to boot.
This is just another attempt at avoiding the inevitable; the demise of the ‘old’ department store model (Macy’s) and the rise of the ‘new’ one (Kohl’s).
This is what I was hoping for in the master Macy’s strategy. Only Macy’s can pull off a deal like this, as an aspirational brand isn’t going to surrender itself to still-more downscale Kohl’s or Penney until it’s almost over…(and the other department stores don’t have the clout).
This will impact the other department stores (Stage, BonTon, Gottalhks, etc.) as it’s the brands they feature in their advertising. If Macy’s grabs one big one every six months, it gets interesting….
“Tommy Hilfiger is no longer the fashion setter it was in the past.”…..That being said, it is good for Macy’s to identify with a successful brand that can move it forward. Its private labels like Alfani and INC can only carry it so far, and Martha Stewart only invites a certain segment of the Macy’s shopper. In the world of menswear, brand identity does have its place, but I think Macy’s could do better than aligning itself with Hilfiger.
If Macy’s really wanted to make an impact, it would get control of a “hot, new brand” – something large and growing, that could appeal to both sexes – think Tommy Bahama, a Ralph Lauren line, Lacoste, Diesel, Seven Jeans, etc. To take in a brand on a decline shows why department stores began to decline – too much of something old too long. As a matter of fact, one of the reasons some department stores were failing in the past were that they built their stores out committing large departments to brands like Tommy Hilfiger. They weren’t able to change fast enough and lost customers to fashion forward retailers like Gap, Limited, and today to the newer retailers like H & M, Forever 21, etc.
This move may be good for Macy’s but bad for Tommy Hilfiger. I was taught in marketing to “not limit your sales.” Why sell your product in one store when it can be sold in ten stores?
And as a consumer I have often felt that “exclusive” equates with “higher priced.” That may work with some of your customers, but not all.
Regardless of the popularity of my brand, I would be slow to give exclusivity to Macy’s until such time as they begin giving customers the attention that they deserve. At the Ala Moana Macy’s in Honolulu it is much harder to find a sales associate than it is to find merchandise. I have walked out frustrated too many times.
On one occasion I managed to get to the register with a belt and the “clerk” advised me to come another day with a discount coupon I should have received in the mail. He made me feel as though I would be stupid to buy it today. I wouldn’t want that to be my brand.
Has Martha Stewart helped turn Macy’s around? No.
How about Donald Trump suits? No.
Well, how about Jessica Simpson shoes? No, again.
So why would anyone think Tommy H. is going to help? This brand is way off the fashion radar. What’s next? Perhaps Britannica jeans and Members-Only jackets? By the way, wasn’t Wal-Mart trying to land a Tommy H. deal?
The stores in the Macy North region are failing. Why shop there? Kohl’s and JC Penney do a much better job.