What are you doing one week from today? If you’re like millions of Americans, your Thanksgiving Day traditions involve turkey, football, pumpkin pie…and the Macy’s Thanksgiving Day parade. (And if you’re like me, you’ll also spend a few hours of peace and quiet camped out on the couch before mentally preparing yourself for the craziness of Black Friday.)
In advance of the official kick-off of the holidays, we reached out to Terry Lundgren, President, Chairman and CEO of Macy’s, Inc. (as well as the Chairman of NRF’s Board of Directors), to get his perspective on Macy’s annual parade, emerging holiday trends, and the company’s focus on localization. In the Q&A, Lundgren also shares tips for holiday job seekers, discusses his first years in retail, and outlines his post-Christmas plans. His insights are so fascinating, you might end up reading this twice.
Macy’s has been earning rave reviews among shoppers and on Wall Street for its “My Macy’s” strategy, which localizes merchandise by individual markets. How is Macy’s leveraging this strategy during the holiday season, and why do you feel this is the best approach?
My Macy’s localization has really been a big win for us. It allows us to keep each of our stores relevant and tailored to the local customer. So based on human intelligence – 1,600 merchandising professionals we now have living in 69 markets across America – we can adjust sizing, colors, fabric weights, items, categories and brands on a store-by-store basis. At holiday time, that means we have the dexterity in our organization to sell wine country Christmas ornaments in northern California, Elvis ornaments in Tennessee, and Our Lady of Guadalupe ornaments in areas with significant Hispanic populations. For 2010, we have 2,200 different locally themed ornaments and holiday trim items being sold somewhere in the country. It also means we can have the right sweater weights in the right climate zones. And we can be selling larger pots and pans as gifts in Utah, where families are larger, and Scandinavian baking tools in Minnesota. My Macy’s really is a way to drive sales by making sure every store has what the customer wants, rather than what a buyer a thousand miles away guesses might be right.
NRF’s first holiday survey found that department stores are well-positioned this holiday season, particularly among men and young adults 18-24. What can you share about the importance of attracting these two demographics, who may be very different than the traditional female department store shopper?
We have so many great things going on in these areas. What’s important in both men’s and young adults is newness and excitement. That’s what the customer expects and it’s what we’re focusing on. In men’s, we have become the exclusive seller of Kenneth Cole Reaction, Sean John and Armani Jeans sportswear – lots of fresh new looks for guys. We also have a new private brand in men’s called Slade Wilder. In juniors, our exclusive Material Girl from Madonna and her daughter Lourdes is off to a strong start. We are rolling out a new cosmetics concept called Impulse Beauty which allows us to offer smaller niche brands in an open-sell format. And in spring 2011, we will launch a series of “capsule collection” of fast fashion in women’s contemporary categories, with the first group from acclaimed designer Kinder Aggugini. These are the kinds of things that are attracting new fashion-oriented customers to Macy’s.
There is just one week before one of the events your company is most known for: the Macy’s Thanksgiving Day parade. With a front row seat at this annual event, talk about what the parade means to you.
Thanksgiving is my favorite day of the year. I’m always at the parade with my family. There is no event in the world quite like the Macy’s Thanksgiving Day Parade. It’s an iconic American experience that is shared with a worldwide TV audience, plus the millions of people who line the streets of New York. The parade means the arrival of Santa at Herald Square. When you watch the parade, you cannot help but revert to your childhood. There are so many memories attached to the characters, the balloons, the floats, the clowns, the bands, the celebrities. When you see the giant Snoopy balloon turn the corner and come in your direction, you get goose bumps. The parade is so much a part of Macy’s and what we stand for. And of course, the parade is entirely staffed by Macy’s associates and their families who volunteer for the event and give up their own Thanksgiving morning at home. It makes me so proud of our company and of our people.
With Black Friday and Cyber Monday fast approaching, what are you expecting from holiday shoppers and how do you think their behavior will be different than a year ago?
The economy, of course, is still pretty weak. That really hasn’t changed too much from last year. So customers are being very careful about how they spend their money. Our customer is looking for four things – fashion, newness, quality and value. The economy has challenged us to be better retailers. We have to be sure our product is locally relevant, unique and interesting. And it has to be priced right so it represents obvious value to the customer. When money is tight, you want to feel good about what you’re buying. You want to be selective. You want to buy things that you find interesting and unique. After all, shopping (whether it’s in a store or online) is entertainment. It’s a release from your day-to-day stress. This is why we have focused so intensely at Macy’s on bringing new and differentiated product and brands into our store, often on an exclusive basis.
Macy’s Herald Square recently experimented with a “magic mirror,” which allowed customers to virtually try clothes on without having to enter a fitting room. What can you share about the “Find Your Magic” campaign, and can we expect to see more of this in the future?
“Magic” is a word we believe really captures the Macy’s experience. Our iconic events are magic – the parade, the fireworks, the flower shows, the fashion shows, the celebrity appearances, the culinary demonstrations. What other retailer – or what other company in any industry, for that matter – creates so many of these kinds of experiences for its customers nationally and in local communities? We also think there is magic in a great shopping experience. There is magic in assembling exactly the right outfit for a special occasion. There is magic in finding a sales associate who really understands what you need and makes the extra effort to help you find it. There is magic in walking into your favorite Macy’s store knowing that you will find new styles, get new ideas and see new innovations. The “magic mirror,” which allows customers to see what an outfit looks like on their body without actually trying on the clothes, was an example of that. If we do our jobs right, every customer can find his or her magic at Macy’s. And, yes, you can expect to see a lot more magic from Macy’s in the future.
It used to be that shoppers made holiday purchases at stores and through catalogs. Then the Internet came along. Now we have mobile and social media serving as sales channels. Do you see ways retailers can capitalize on all of these different shopping opportunities to increase sales across the board, or are the “new ways” of shopping simply cannibalizing sales from traditional channels?
We talk a lot at Macy’s about “omnichannel” retailing. Our customer is multi-dimensional. She is busy at work and out with friends. She always has her mobile device in her hand. She’s active on Facebook and Twitter and YouTube and a dozen other social media sites. She is smart and demanding. We want that customer to be able to interact with Macy’s no matter where she is or how she shops. It makes no difference to us whether she buys something in our store or online … or whether she is shopping from her desktop computer or her Droid or her iPad. Macy’s best customers are those who shop us in-stores and online. We have a whole series of strategies in place to drive our store customers to the Web, and our online customer to the stores. We strive to have a 360-degree view of the customer. Today’s customer is not monolithic. And that’s the way we are approaching our customer.
In September, Macy’s announced that it was hiring 65,000 seasonal employees during the holiday season. Some of these seasonal hires may hope that their temporary positions become permanent. As someone who spent part of his career as a store manager, what advice would you offer a seasonal employee on ways to stand out to management in the hopes of transitioning from part-time holiday help to full-time company superstar?
There will always be room at Macy’s for someone who is energetic, knowledgeable and focused on the customer. Selling skills are key. Many of the people who start with Macy’s as a seasonal store associate will end up with the company full-time. Some of them have risen through the ranks to be senior executives at Macy’s today. When I was just starting out in the company after college, I received some great advice from the manager who recruited me to the company. He said that to succeed, you need to “bloom where you are planted.” That advice has stayed with me to this day. It means that no matter what your job, do it to the very best of your ability. Really care. Go the extra mile. Show initiative and creativity to achieve your goals and go beyond them. If you really pour 100% of yourself into your job, people will notice. You will create your own opportunities for advancement.
Macy’s is well known for its creative holiday TV ads, which have ranged from humorous to emotional. What’s the strategy behind your holiday ads and marketing for this year?
We have a wonderful TV ad running now called “Backstage.” In this ad, a customer asks to see a shoe in a certain size. When our sales associate goes behind the scenes to the stock room where shoes are stored, he encounters the world of activity associated with Macy’s – the parade, flower shows, product being made, fashion ads being shot. The commercial is full of our celebrities, including Martha Stewart, Tommy Hilfiger, Donald Trump, Jessica Simpson, Sean Combs and Rachel Roy. This ad highlights the many unique aspects that converge to create the “magic of Macy’s.”
Our holiday theme is “Believe,” which transcends product promotion to encourage Americans to join in the spirit of Christmas. We are inviting customers to bring their Santa letters to Macy’s, and for every letter we receive, up to a million, Macy’s will donate $1 to the Make-A-Wish Foundation. Macy’s again this year expects to make a contribution of at least $1 million to Make-A-Wish to help make Christmas special for children across America with life-threatening medical conditions. This is in addition to Macy’s well-established Thanks For Sharing campaign which raises significant funds for organizations such as Make-A-Wish, the American Heart Association, March of Dimes and the Breast Cancer Research Foundation. On Friday, December 10, Macy’s will celebrate National Believe Day with Make-A-Wish granting wishes to seriously ill children across the country. We also will have an animated TV special on CBS on December 17 which tells the story of Virginia, the little girl who wrote the newspaper asking if Santa Claus is real. Virginia also will be featured in our holiday TV commercial. And I should also note that Macy’s keeps local Christmas traditions alive in cities across America with special events that include parades, tree lighting, window unveilings and Christmas caroling.
Tell me something about yourself that most people don’t know.
When I started out in college, I planned to be a veterinarian. Then I learned what a veterinarian does for a living and what it was like to artificially inseminate a cow. So I switched to business. My first exposure to retailing was a high school job delivering clothing from a tailoring shop to local menswear stores in southern California. But I never really aspired to a career in retailing until I graduated college and interviewed with Bullock’s department store in southern California to be an executive trainee in the buying organization. At Bullock’s, I saw what an interesting, fast-paced business retailing was, and what good opportunities there were to advance my career without having to move from one company to another. I went from trainee to CEO of Bullocks Wilshire in 13 years and never stopped learning or loving my job.
Finish this sentence: “On December 26, I…”
That’s an easy one. I will be in our stores, bright and early, before we open the doors on December 26. Then at about 4pm, I will head home to begin a short break so that I can spend some quality time with my family and clear my head. Then I start focusing on what we can do better to serve our customer in the coming year. Macy’s and Bloomingdale’s are companies that believe in testing and experimentation. We are always trying new things. Once the rush of the holiday selling season is behind us, I’m on the hunt for new ideas that will make us a better and more successful company.