By Barbara Thau
They say all politics is local; the same may be said of home store retailing.
Now that Macy’s has long digested the consolidation of its multiple buying divisions under the single Macy’s Home Store umbrella, localizing assortments so that bedding patterns in Dadeland, Fla., for example, reflect regional tastes, is the next big push, said Tim Adams, chief executive officer of the division.
The retailer is also focused on massaging its proprietary assortments, including the exclusive Martha Stewart Home Collection, which bowed a year ago and was the biggest home launch in Macy’s history.
After having the dubious distinction of being Macy’s worst-performing business, home is now tracking in line with the total store, Adams said.
For the most recent quarter ended Aug. 2, Macy’s total comparable-store sales slipped 2.1 percent.
Despite the sales dip, the home performance marks a leap forward for the category that had long been Macy’s Achilles’ heel.
The Stewart collection helped “elevate” Macy’s home business, which started to turn a corner in the past six months, Dana Telsey, chief executive officer of Telsey Advisory Group, told HFN.
Macy’s has also done a better job with categories such as furniture, she said.
But there’s more work to be done, particularly in a consolidating retail sector and rattled economy, Adams said.
“Business has become more challenging than two, three, four years ago,” he said. “Times have changed. There is no question we can assort better by store. It’s more about market share than about [generating] 4 percent comps. The market is getting smaller and it’s getting tougher, and you’ve got to be better.”
Local Color
“We want customers that live and shop around every one of our stores to identify with Macy’s as their own store,” Adams said.
That’s the premise behind My Macy’s, the program the retailer outlined this year and is testing in about 20 percent of its markets.
My Macy’s is designed to localize store assortments and improve same-store sales.
The program beefs up management in local markets, 10 stores at a time, to identify the idiosyncratic needs of that region based on lifestyle, demographics and ethnicity.
Macy’s executives were so serious about the idea that last spring, they corralled 750 of their vendors to educate them on My Macy’s.
A cookie-cutter home assortment across an 800-store chain just doesn’t cut it these days, Adams said. It’s been “a one-size-fits-all assortment.”
Dinnerware is one category that is sensitive to regional tastes, said Jeff Siegel, chief executive officer of housewares vendor Lifetime Brands, who attended the supplier meeting last spring.
For example, Pfaltzgraff, the traditional Lifetime brand, “is strong in the middle of the country but not on the coasts,” Siegel said. While Sasaki, “which has a very contemporary look, sells strictly on the coasts.”
My Macy’s calls for vendors to work with their buying staffs to tailor the mix, Siegel said. “It’s not dissimilar to what Wal-Mart does with their ‘store of the community’ program.”
In soft home, Macy’s is looking to craft a more varied mix that would appeal to a diverse customer base that includes Hispanics and blacks, and assort its stores with the color palette it believes those groups gravitate toward.
To that end, Macy’s last month launched Vida, an exclusive home textiles line from Latina actress Eva Mendes, who has starred in movies such as “Training Day” and “Hitch.”
The “easy luxury” collection includes patterns in saturated colors, gold tones and ornate embroidery.
Vida was introduced in Macy’s Dadeland, Fla., and Aventura, Fla., stores, where there is a heavy Latino population, “to great success,” Adams said. It has the potential to extend to other parts of home.
My Macy’s is also about having a well-edited mix.
“Equally important is what you don’t carry in the store,” Adams said.
That includes “maximizing price lines and fine tuning the whole process of editing … which in and of itself is a full-time strategy.”
“We may be carrying luxury merchandise in stores that can’t sell it, and ‘good’ [in the good-better-best equation] price-point merchandise in stores that don’t want it.”
Adams said Macy’s move to localize its assortments does not call into question the benefits of centralizing Macy’s home buying functions. That effort, kicked off in 2004, is “solid and working,” he said. “My Macy’s is a big tweak” to that strategy.
Cultivating Exclusivity
CEO Terry Lundgren’s drive to trade up Macy’s home mix and blow out exclusive collections culminated last year with the launch of the Martha Stewart Collection.
The line has been a win, Adams said.
“We’ve edited what’s not working” and expanded what has, he said.
The program has had a halo effect on the home store, driving traffic throughout the department, Karen Hoguet, Macy’s chief financial officer, has said during conference calls this year.
“Martha’s lane is classic—when we’re in that lane, most everything has done well,” Adams said. “If it’s overly traditional and contemporary, it doesn’t do as well.”
Martha Stewart Living Omnimedia has set a goal for the line to make up 10 percent or more of Macy’s business. It has the potential to generate $400 million in sales, MSLO executives have said.
And Adams is banking on new leadership at MSLO this year: Robin Marino was appointed CEO and former Donna Karan Home CEO Patsy Pollack was named executive vice president of merchandising—to take the Martha line to new heights.
The duo are “great product people,” he said.
Stewart housewares has been a big hit, particularly products that fill a void, such as cast-iron cookware. “It’s hard to carry Le Creuset in 700 or 800 doors,” he said.
While exclusive merchandise is about 19 percent of Macy’s business, that number is far higher in home, Adams said.
Beyond Martha, other proprietary lines have been “made more relevant,” in part to appeal to younger shoppers and those with a more youthful design sensibility, Adams said.
Meanwhile, the Cellar housewares brand has been “updated and modernized and is doing well,” with things like platinum and gold accents in barware and glassware.
Despite the sour economic picture, Adams is “cautiously optimistic” about the make-or-break fourth-quarter in home.
“When you think about what’s evolved out there—there are fewer retailers—Macy’s Home has an opportunity to do as well as anyone … or better,” he said.