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Macy's Marketing Plan
- 1. Vivek Lulla & Melissa Rivero
- 2. Agenda ● Company Overview ● Marketing Plan Overview ● Situation Analysis ● Environmental Analysis ● Marketing Research ● Marketing Strategy & Implementation ● Budget Allocation ● Evaluation, Risks & Controls
- 3. Macy’s History and Overview ● Rowland H. Macy opens R. H. Macy & Co. in 1858, as a dry goods store in New York City ● In 1861, the red star first appeared next to the Macy's logo, which was a replica of a tattoo Roland Hussey Macy had on his forearm when he was a Nantucket sailor in his teenage years ● In 1902, Macy's became the nation's first building to have modern escalators—made of wood—installed ● In 1912, Isidor and Ida Straus, the former co-owners of Macy's, died in the sinking of the Titanic (today, a plaque in their honor hangs inside the memorial entrance on the main floor) ● Since 1924, the Macy’s Thanksgiving Day Parade has been a tradition in New York City ● In 2008, Macy’s consolidated three divisions - Macy's North into Macy's East, Macy's Northwest into Macy's West; and Macy's Midwest into Macy's South ● In 2017, Macy’s net sales were $25.78 billion. However, same-store sales fell 4.6 percent, more than the forecasted 2.7 percent drop.
- 5. Source: Macy’s Coast to Coast
- 6. Marketing Plan Overview ● Macy’s stores profitability and revenues have been steadily declining every quarter, as compared to previous years for the past 3 years. ○ Operating expenses have not decreased at the same rate, which has been eating into Macy’s net profit. ○ This has forced Macy’s to close many stores. Most recently they have announced an additional 100 store closures during January 2017. ○ These declines signal a paradigm shift in the world of retail from physical to digital. ● Short-term Goals: Enhance Store Look and Feel; Invest more into Off-Price Model ● Long-term Goals: Lead in the Omni-Channel Retail Space & BOPS; Revamp In-House Lines
- 7. Situation Analysis 4 P’s of Marketing, SWOT Analysis, Financials 2013-2017
- 8. PRODUCT ● Provide a wide array of apparel for women, men and children ● Provide goods for the home ● Provides beauty, hair, fragrances and cosmetic products for men and women ● Gives customers the option to consult with professional personal stylists/shoppers • Provide apparel, cosmetics, and homegoods at affordable prices • Constant sales, coupons and special offers • Allows for additional savings through loyalty programs PRICE PLACE ● 728 stores across the USA ● Macys.com E-commerce ● Fulfillment centers ● International shipping available in over 100 countries PROMOTION ● TV ads ● Radio ads ● Magazine ads ● Store catalogs/mailers
- 9. SWOT ANALYSIS WeaknessesStrengths Opportunities Threats • Loyal and steady customer base • Supply Chain • Strong retail presence -728 stores • Strong Internet presence and sales • Integrates private labels • Easy online/pickup ordering system • Environmentally conscious/charitable • The Parent Company only has two lines of business (Macy’s and Bloomingdale's) • Not enough revenue generation • Limited global brand recognition • High overheads associated with scale • Immersive AR/VR Omni Technology • International expansion • Domestic Discount-Model Expansion • Additional Private Label integration • Product Extension • Competition from other department stores and ecommerce (Lord & Taylor, Saks, Amazon etc) • Post-Economic crisis has people spending less money towards clothing and more towards technology and experiences
- 11. Environmental Analysis Porter’s 5 Forces
- 12. Porter’s 5 Forces ;;jk Threat of SubstituteThreat of New Entry Supplier Power Buyer Power Competitive Rivalry Low- It is Challenging for a New Market Entrant to enter the Department Store Retailing Industry with the size and economies of scale achieved by Macy’s High- Niche and Specialized, exclusively e- commerce retailers as well as Amazon are already driving business away from Macy’s High- There are already many players in the Department Store and Specialized Apparel Retailer Industry who sell many of the same brands that Macy’s does Low- The are many upstream suppliers for Macy’s which can be switched if needed (with the exception very few brands, i.e. Ralph Lauren Polo) Medium- Customers have lots of access to information and are sensitive to Macy’s prices. In contrast, Macy’s is the largest Department Store in the U.S. and each customer is infinitesimal in relation to their customer base.
- 13. Primary Market Research Survey (Macy’s vs. Macys.com)
- 14. Primary Research (Survey) Questions: ● Do people prefer online shopping for clothing? If so, why? ● Do shoppers prefer shopping online at other retailers over Macys.com because they offer free shipping & free returns? ● Do Macy’s loyal customers prefer shopping online at Macys.com over in-store at because they are able to find what they want easier? ● Are recent store closings and competitors leaving malls making the general department store retail concept less desirable? Hypothesis: ● Customers shop online at Macy’s online over shopping in-store to save time. Accept or reject? ● Customers prefer to shop online at retailers that offer free shipping & free returns over e-retailers who do not? Accept or reject?
- 17. Findings
- 18. Findings (cont.)
- 19. Secondary Market Research Department Store Retailing Trends(Mintel), E- commerce Infographic(Emarketer)
- 20. Environmental Analysis Department Store Retailing Trend Source: Mintel
- 21. E-commerce Retailing Trend Source: Emarketer 2016
- 24. What are Customers Asking For?
- 25. Marketing Strategy Marketing Strategy, Marketing Objectives, Target Market, Positioning Statement, Value Proposition, Marketing Mix
- 26. Marketing Strategy ●Macy’s should reposition to change and re-emerge as the leading and most profitable legacy retailer in the U.S. market. ○ This includes apparel, cosmetics, and home goods retail; working to systematically eliminate the pain points in both customer experiences. ○ Offer the best prices and service through BOPS ■ (Buy Online, Pickup In-store) ■ Immersive Retail Experience
- 27. Marketing Objectives ● Differentiate Macy’s experience in a retail landscape from competition. ● Position Macy’s as the dominant retail and entertainment giant; delivering on convenience, innovation, valued selection and magical experiences. (Between Macy’s and Macy’s Backstage) ● Find the right mix of category growth, new service extensions, and entertainment platforms. ● Continue focus on the following brand characteristics: Magical, Service, Convenient and Inspiring ● Revamp some of Macy’s In-House brands and remove others
- 28. Target Market ●Macy’s should continue catering to all segments of the market as they have from the beginning. Customers should be affording enough(middle class and upper middle class) and seeking to benefits from a seamless omni- channel retail experience(early adopters). ●Macy’s can concentrate on specific customers through the revamped in- house labels.
- 30. Positioning Statement & Value Proposition ● Macy’s should position itself to become the market leader in omni-channel retail. ● “Shop Wherever. Smarter.”
- 31. Marketing Mix ● Price: Prices should be aligned and responsive to Amazon and other Department Stores. o (Do away with heavy discounting model- Win on BOPS model avoiding “last mile” issue”) ● Place: Items should be displayed with strong visuals on mobile and desktop stores. In-store, mobile devices should be responsive to display inventory and best price available and “talk” to beacons. ● Promotion: Digital Video Ads displaying product and enhanced in-store technology. (Build awareness and engagement through social media.) ● Product: The in-house labels should be heavily focused around personas and each one should cater to very specific segment/customer type.
- 33. AR & VR Technology
- 35. Macy’s Backstage- Winning Off-Price Model
- 36. Implementation ● Outfit Stores with Leading Omni-Channel Technology ○ Responsive Beacons ○ Smart-Mirrors ○ Seamless BOPS(Buy Online, Pickup In-store experience) ○ AR/VR Technology ● Open more Macy’s Backstage Stores ○ Within select operating Macy’s ○ Standalone Locations ● Invest in Digital Promotional Content and Social Media Management
- 38. Budget Allocation Budget and Financials, Budget Breakdown
- 39. Budget Allocation ● Outfit Stores with Leading Omni-Channel Technology ~15% ○ $1.5B over 3 years ●Invest in Digital Technology ~15% ○ $500MM per years for 3 years ● Open more Macy’s Backstage Stores ~25% ○ $5-7MM per location for select existing Macy’s ○ $15MM per location for Standalone Locations ● Revamp In-House Labels ○ $20MM per label - 1 year investment ~10% of investment
- 40. Evaluation, Risks, and Contingencies Evaluation of Plan Execution, Risks and Contingencies
- 41. Evaluation of Plan Execution ● Evaluation Techniques: ○ Quarterly & Annual Audits of Spend vs. ROI ○ Surveys and Interviews - In-store and Online ● If Expectations not met <10% ○ Rebalance budget to more digital and less omni spending ● If Expectations not met >10% ○ Sit down and create new marketing plan ○ Consider selling off non performing assets ○ Seek PE/Activist Investors
- 42. Risks and Contingencies • If the trend away from Brick-and-Mortar Retail continues • Consider selling off non performing assets • Invest in Amazon/Kiva-like fulfillment systems • Customer Data is Compromised • Customers will avert digitally enrolling them in Store CRM Systems • Partner with leading data privacy firms • Retail Technology diverts from Omni due to cost and maintenance • If brick-and-mortar is still being pursued, devise ways for customers to spend more time in-store(third place. i.e., coffee bars, nails salon, fast casual dining options)