Macy's bows to local tastes

| Friday, Dec. 24, 2010

Macy's customers asked for women's Frye boots at the Ross Park Mall store. The department store chain ordered them in.

The casual leather boots might appear soon at the South Hills Village and Robinson stores, as part of the 810-store chain's "My Macy's" strategy to tailor merchandise mixes to local customers' tastes, said Russell Schutte, senior vice president and director of Midwest region stores.

The 2-year-old program has helped Macy's reinvigorate sales, while easing the disappointment that many customers felt in 2006 over losing regional department stores such as Kaufmann's, experts say. Federated Department Stores Inc.'s acquisition of Kaufmann's parent May Department Stores Inc. led to the rebranding of hundreds of stores nationwide as Macy's.

After the merger, sales fell as the Cincinnati-based retailer stocked most of the same items at all its stores. Macy's then opted to empower locally based executives to work with buyers and planners to decide what best suits customers' needs by region -- and even by individual store.

"So we turn 'No, we don't ' into 'Yes, we do,'" Schutte said as he strolled through Macy's at The Mall at Robinson this week. "It's about what the customer wants to buy, instead of what the retailer wants to sell."

Customers appreciate the changes. "I'm a petite size, so I used to have trouble finding things but not anymore," said Amy Maxin, 44, of Kennedy. "It seems they've made a conscious decision to accommodate the local customer more."

Macy's kicked off My Macy's in about 20 selected markets including Pittsburgh in 2008. A national rollout followed in mid-2009.

Here's an example of how it works: Logs are kept at each cash register, to record how often customers ask for merchandise that Macy's doesn't carry. The feedback is sent to central buyers in New York when there's enough meaningful information, usually 25 or more customer requests, Schutte said.

"Most of the time, those requests are granted," he said.

The Robinson store for years was geared for a more traditional customer, but lately it's turned more fashion-conscious based on customer preferences, he said. Recently, one customer asked for "hot and trendy" Jessica Simpson-branded items, and the store responded by featuring the celebrity's clothing, fragrances and accessories.

"We can adjust sizing, colors, fabric weights, item categories and brands on a store-by-store basis," said Schutte, who is based Downtown and oversees stores in Pittsburgh, Cincinnati, Cleveland, Columbus, St. Louis, Kansas City and Indiana.

The Robinson store and others in Western Pennsylvania feature Penguins attire tied to the Jan. 1 game against the Washington Capitals at Heinz Field. "On its own, New York never would have thought to have this in Pittsburgh, for the Winter Classic," he said.

Sales of candy by West View-based Betsy Ann Chocolates are growing at 10 Macy's stores in Western Pennsylvania, said Jim Paras, president of Betsy Ann.

"After we closed several retail stores a few years back, people thought Betsy Ann had closed altogether," he said. Macy's approached Betsy Ann in late 2008 about carrying the chocolates, and as a result, longtime customers were pleased to find the brand at the stores, and new ones have discovered it, Paras said.

Macy's third-quarter sales totaled $5.62 billion, up by more than 6.5 percent from a year ago. The retailer reported a $10 million profit, compared to a $35 million loss for the third quarter of 2009.

The company's stock, which traded at about $45 after the national rollout of the Macy's brand in September 2006, fell to below $6 at the start of the recession but since has rebounded. Shares closed Thursday at $25.16.

Macy's was "trying to make these cookie-cutter kinds of stores across the country," Duquesne University marketing Professor Audrey Guskey said, but it didn't fly.

With 69 districts consisting of 10 to 12 stores each, Macy's can quickly respond to regional likes and dislikes, track daily sales and consider demographics and local trends to figure out what items are likely winners, experts say.

"The very basics of marketing are to know your customer, and define your product by what the customer needs," said marketing Professor Paige Beal of Point Park University. "We have a huge older population and a young college population, and a very Northeast perspective."

Almost all retailers rely on centralized decision making, but sales data that drives that type of system deals only with what's already in the stores, not what's wanted that's missing, said Gilford Securities analyst Bernard Sosnick, who follows Macy's.

Macy's employs people "to point searchlights to expose dark, unfulfilled spots in assortments," he wrote in a report this week.

Guskey said Macy's long has wanted to be the nation's department store. "The way they did it, in a sense, was by becoming a neighborhood department store again," she said.

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Downtown store still on block

Macy's still is trying to sell its Downtown store with plans to lease back 'four or five' floors of the building, said Russell Schutte, senior vice president and director of Midwest region stores for the retailer.

A similar plan is taking shape in St. Louis, he said. The building housing the Missouri city's seven-story downtown Macy's was sold in August. Macy's has leased back space and plans to introduce a renovated, three-story store in the spring, Schutte said this week. The store remains open during the work.

The same process could be used to improve productivity at Pittsburgh's largest Macy's, he said. The 13-story Smithfield Street building was Kaufmann's flagship for most of its history, and was built in sections between the late 1800s and 1955. Macy's uses 10 floors.

The Macy's in Pittsburgh is listed on commercial real estate company Cassidy Turley's website with a $20 million value. Representatives of the St. Louis-based company couldn't be reached for comment.

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