Macy's Case Study - Merchandise Strategies FIDM 2013

A Case Study
Presented By: Taylor Urbany
Course:Merchandise Strategies – Spring 2013
Due:June 18, 2013

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Table of Contents
Introduction … 3
Macy‟s & The Millennial Customer … 3 – 4
Macy‟s For The Millennial: Mstylelab … 4 – 5
Evaluation & Analysis of Current Strategies & Suggestions … 6 – 11
Competitors … 11 – 13
Conclusion … 13 – 14
Sources … 15

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Introduction
Macy‟s is one of America‟s most well known, established retailers. The
department chain, offering mid-range to upscale goods including apparel, home décor
and appliances, cosmetics, and more, has been meeting customers‟ needs and wants since
the first flagship store opened in New York in 1858. Today, Macy‟s operates almost 800
stores within the United States, District of Columbia, Guam and Puerto Rico and
employees approximately 175,700 employees (Macy's, Inc. Annual Report 2012.).
Macy‟s has also been building its omnichannel presence via its website, macys.com.
Macy‟s website states the retailer achieved $27.7 billion in sales as of fiscal 2012
(Macy's, Inc. Annual Report 2012.). The retailer continues to succeed due to its wide
assortment of quality merchandise at affordable prices.
This case study aims to examine what factors contribute to Macy‟s success and
what factors the retailer could build upon in order to gain more attention and revenue
from the Millennial customer. More specifically, this case study will exam Macy‟s
Mstylelab department. This department includes girls and women‟s apparel, targeting
customers 13-22 years old. Macy‟s has many strong, successful merchandise strategies
that contribute to the retailer‟s success, however there are additional strategies that could
further Macy‟s success, and ultimately their sustainable competitive advantage in the
retail industry.
Macy’s & The Millennial Customer
Macy‟s annual report highlights the retailer‟s strategies to position the company
to attract more millennial customers. According to Macy‟s annual report, Macy‟s plans to
reach out to the Millennials, who spend more than $65 billion at Macy‟s, with an
approach that “is part My Macy‟s… part Omnichannel… and part Magic.” (Macy's, Inc.
Annual Report 2012.). Not only does Macy‟s plan to implement this strategy, but Macy‟s
has also “brought together the Millennial teams from various disciplines…into new open-
concept office space in New York City so they could work more collaboratively, create
new ideas, and move quickly on key projects,” (Macy's, Inc. Annual Report 2012.). The
result of this strategy was the creation and announcement of 13 new Millennial brands,
the expansion of 11 existing Millennial brands, and the revamping of fresh merchandise

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and new ideas for Macy‟s Millennial departments, Impulse and Mstylelab, both in store
and online (Macy's, Inc. Annual Report 2012.).
Macy‟s annual report states that Macy‟s marketing teams plan to reach out to the
Millennial customer via social media, knowing that social media is an important factor to
Millennials' way of life and communication. Overall, Macy‟s strategy to target their
existing Millennial consumer and gain new Millennials involves creating, revamping, and
positioning merchandise and brands in a way that is not only exciting and affordable, but
also easily visible for Millennials to familiarize themselves with. Macy‟s will also have to
take into consider its fast fashion competitors, such as Zara, H&M, and Forever 21, in
terms of the retailers‟ quick and efficient supply chain management as well as frequent
merchandise turnover and accelerated speed of trends to market.
The following sections analyze and evaluate one of Macy‟s Millennial
departments, Mstylelab. Categories involving product, communication and customer
service are analyzed. Suggestions/recommendations to better position Mstylelab to gain
more attention, and ultimately a higher percentage of the Millennials' wallet share are
also proposed.
Macy’s For The Millennials: Mstylelab
Macy‟s Mstylelab targets millennial girls and women ages 13-22. Mstylelab
consists of several brands, including several of Macy‟s private label brands. Mstylelab‟s
website offers 32 different brands for girls and women to shop from, the majority coming
from Macy‟s private label brand, American Rag (Macy's). Overall, the brands contribute
to Mstylelab‟s wide assortment of merchandise, ranging from dresses and tops, to graphic
t-shirts and tank tops, to trending American flag themed apparel, to bottoms and shorts.
While there is a wide selection of merchandise, several brands stand out over others in
terms of being most appealing to the Millennials.

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For example, Material Girl, American Rag, and Mstylelab‟s collection of graphic
t-shirts and tank tops stood out the most in terms of uniqueness, on trend, and affordable.
Material Girl targets the more mature girl, likely ages 18-22. American Rag offers
apparel for the entire target market of ages 13-22. And Mystylelab‟s t-shirt selection
offers options for all ages as well. The placement of these brands‟ collection throughout
the store could be reconsidered in order to draw more attention to Mystylelab‟s strongest
attributes. For example, Material Girl is placed in the middle of the department. It
captures the customer‟s attention immediately, offers hip, trendy outfits, and embodies
that “cool factor” all millennial girls are looking for. On the other hand, American Rag
and the Mstylelab graphic t-shirt collections are in opposite corners of the department.
The collections feel more cramped and are essentially less visible. Macy‟s would benefit
by positioning these appealing brands in the center of the department, essentially
removing Ked‟s and the Marilyn Monroe brands to the outside of the race track layout, as
opposed to the being in the center.
The following section further analyzes Mstylelab‟s current strategies in terms of
product, communication and customer service that contribute to Macy‟s competitive
advantage. Suggestions and recommendations are also proposed. Following the analysis
and recommendations, Macy‟s competitors will be evaluated to further determine what
strategies Macy‟s should focus on in order to maintain and improve their competitive
advantage in the retail industry.
Mstylelab’s Material Girl display at Macy’s Union Square

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Evaluation & Analysis of Current Strategies & Suggestions
Product
Product
Mix/Ratios
o Currently, increased number of tops to bottoms;
Approximately 65% tops, 35% bottoms
o Should increase % of bottoms slightly
o Very limited options for accessories; should increase
Private Label/New
Brand Ideas
o American Rag very appealing for people with a laid back,
hip, American sense of style
o Should consider placing American Rag in the middle of the
department (like Material Girl); this would increase
visibility
o New Brand Idea: I would suggest introducing a brand that
focuses on delivering fast fashion, trending items such as a
collection designers specifically for the festival fashion
season and place this collection in the center of the store
throughout Spring/Summer seasons; Mstylelab would
benefit from a festival fashion collection because
competitors (Zara, H&M, and Forever 21) all feature
festival fashion merchandise; other retailers that target the
Millennials focus specifically on festival fashion as well
Assortments
o Assortments range by brands; American Rag has more
„American‟, festival-fashion oriented merchandise.
o Material Girl is targeted more towards girls 18-22;
assortments include more dresses and tops
o Marilyn Monroe is less appealing; The clothes are very
revealing for girls ages 13-18, lacking quality, and not sure
Millennials identify with Marilyn Monroe as an icon
o Ked's assortment is also relatively boring; more casual and
conservative; successful to have an option for girls/women
seeking a more conservative look, but not a very exciting

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Assortments
brand
o Mstylelab graphic t-shirts, tank tops, and basics are strong
addition to Mstylelab‟s overall collection; the assortment is
mostly tops, but also a wide selection of bottoms for
affordable prices; this assortment collection should be
located in the middle of the department as opposed to
hidden in the back corner
Pricing
o Pricing matches target markets predicted income
o Prices range, on average, $10-$90 (prices vary by brand
within the department)
o Macy‟s aims to launch at least 13 new brands; Millennials
like “new”; more new brands will excite Millennials,
especially if they are appealing, easy to access via
MCommerce, social media/internet, and store fronts
o These prices are competitive to fast fashion competitors
such as Zara, H&M, and Forever 21; by having options that
are less expensive and better quality, Macy‟s Mstylelab has
a competitive advantage over fast fashion retailers
Supply Chain
Management
o Need to implement, practice, and perfect a speedy and
efficient supply chain management program to compete
with fast fashion retailers such as Zara, H&M, and Forever
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Merchandise Flow
o Macy‟s Mstylelab needs to strive to have merchandise
turnover flow that is consistent and competitive with fast
fashion leaders/Millennial‟s favorite retailers such as Zara,
H&M, and Forever 21; Zara, specifically, is the leader in
bringing trends to market, in as little as 2 weeks
o Increased merchandise flow more often promotes a sense
of scarcity; this sense of scarcity will encourage Macy‟s
customers to purchase the items now

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Communication
Social Media
o High level of involvement in social media; strong strategy
due to Millennials constant, active involvement with
social media
o Connects with customers via Facebook, Twitter, Pinterest,
Instagram, YouTube & through Macy‟s blog (MBlog)
MCommerce
o High level of MCommerce; strong strategy because
Millenials are constantly on their phones; provides a sense
of convenience
o Connects with customers via Macy‟s App, Sign up for
texts to hear about sales and events, Macy‟s by
appointment includes Macy‟s team of free personal
stylists.], shop top-rated items, shipping
o Connects with customers via e-mail; notifies customers of
upcoming sales, exclusive discounts and events; when
signing up, customer receives a 15% off coupon
o Macy‟s in on Passbook; allows customers to store all of
their discounts in one place; Passbook is only available for
iPhone users; many Millennials have iPhones
o Mobile App offered specifically for Mstylelab
In Store Experience
o Overall, enjoyable and exciting
o Some brands offer more appealing styles, assortments, and
cleanliness/organization than others
o Unimpressed by Marilyn Monroe brand/selection; Does
the millennial really identify with Marilyn Monroe? I do
not think this is a strong, successful strategy to gain a
larger portion of Millennials attention and wallet share.
Celebrity
Collaboration
o Current/upcoming collaborations: Macy‟s 4th
of July
Fireworks with Usher, Mariah Carey & Tim McGraw;
Millennials like these musicians; good idea to collaborate
with musicians from different genres

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Celebrity
Collaboration
o Mstylelab should consider celebrity collaboration with
popular actresses/musicians that Millennials identify with;
suggestions: Lucy Hale from ABCFamily‟s Pretty Little
Liars
o Mstylelab offers merchandise from Jessica Simpson‟s
clothing line
Advertising
o Advertising via internet, TV ads, radio, and print; high
level of advertisements increases retailer‟s visibility and
awareness
o Should consider advertising/promoting Mstylelab via
social media sites such as Pinterest more; Example: Create
a Pin board with a select number of styles from Mstylelab
website and other photos to embody the customer‟s style,
then „Like” Macy‟s on Facebook and submit the Pinterest
board via Facebook to potentially win a gift card to
Mstylelab; this contest would increase awareness of
Mstylelab online and in the store and would excite
Millennials who are very social media-savvy; encourages
interaction
o Macy‟s annual report claims that the company allocated
$1,181 million for marketing and advertising in 2012
(Macy's, Inc. Annual Report 2012.)
Customer Service
In Store & Online
o Very successful; detailed website, easy to navigate, many
sources of information/assistance
o Ability to send „E-Gift Cards‟; customer need‟s
recipients e-mail to send e-card; strong strategy, easy and
convenient
Returns
o Easy returns; return in order or from home via shipping
o Certain merchandise categories have specific return

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Returns
policies; the website details the policies very clearly
o Easy returns attracts Millennials;
Free Shipping
o Macy‟s & Mstylelab‟s website offers free shipping on
purchases $99 or more (certain merchandise items are
excluded; offer is only valid in the U.S.)
o Macy‟s offers international shipping; not free
Stylists
o Access to free stylist via MCommerce, in store, or over
the phone to help customers find and create outfits for
events or find a new look; less likely this feature will
attract Millennials; Millennials are more likely to bring
their friends with them to help them find an outfit
Sales Training
o Macy‟s emphasizes MAGIC selling: “Meet and make a
connection … Ask questions and listen … Give options,
give advice … Inspire to buy … and Celebrate the
purchase,” (Macy's, Inc. Annual Report 2012.)
o Magic is about “treating people right, taking the extra
step with each customer, and bringing a new measure of
joy to shopping,” (Macy's, Inc. Annual Report 2012.)
o Macy‟s annual report claims that the company as a whole
will be “redoubling our efforts to encourage our
associates to sell form the heart and to take the extra step
to make every customer feel special,” (Macy's, Inc.
Annual Report 2012.)
o Magic selling is a successful guideline for training sales
associates
Store Layout/Design
o Race track layout with brands located within the center
of the race track, emphasizing importance on these
brands (Ex: Material Girls, Marilyn Monroe, Ked's);
should consider replacing Marilyn Monroe or Ked's with
American Rag and/or Mstylelab T-shirt & Tank selection
– these brands & assortment options are more appealing

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Store Layout/Design
o High level of light, upbeat music, wide aisles
o Register/Check Out located in back corner of
department; easily visible
o Its Sugar = impulse items; this display should be closer
to the register or in the center of the department to
increase visibility
Web Navigation
o Strong strategy; the millennial is very internet-savvy,
having an appealing, accessible website is beneficial
Competitors
According to Hoover‟s Database, two of Macy‟s main competitors, in terms of
targeting the Millennials, include Target and Nordstrom (Macy's, Inc.). Below is a
comparing Target‟s and Nordstrom‟s merchandise strategies in terms of targeting the
Millennials.
Target
Product
o Similar and competitive price points to Macys Mstylelab
o Styles are trendy for summer, also include casual for the
young professional, school appropriate clothing, and
basic apparel merchandise as well
o Offers more options in terms of accessories
Communication
o Similar to Macy‟s, Target has a very high level of
communication with its customers via its website and
social media connections
o Strong advertisements via commercials
Customer Service
o The website is much more cluttered (Target); more
difficult to navigate than Macy‟s Mstylelab
o In store experience: Clean, organized, well-light, music is
not as exciting, but overall good
Overall
o Similar experience to Macy‟s Mstylelab in terms of
atmosphere; more casual, laid back, yet exciting

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Overall
merchandise selection
o Similar and competitive price points
o Appealing styles and trends, potentially stronger than
some of Mstylelab‟s brands (i.e. Ked‟s, Marilyn Monroe)
Nordstrom
Product
o More expensive than Macy‟s Mstylelab, however the
quality of certain merchandise is likely to be better
o Top Shop attracts Millennials; essentially similar to
Material Girl, but more expensive
o Relatively proportionate ratio of tops to bottoms
o Products more appealing to older demographic;
however, there are options for Millennials, but not as
affordable or as wide as a selection as Macy‟s
Communication
o High level of communication via connections on social
network sites such as Facebook, Pinterest, Instagram,
Twitter, etc.
o Also very well-known for omnichannel presence and
success; high level than Macy‟s
o Offer exclusive deals and discounts; similar to Macy‟s
Customer Service
o Very high level of customer service, both in store and
online (Nordstrom).
o Free returns; similar to Macy‟s
o Special events; similar to Macy‟s
Overall
o Macy‟s Mstylelab‟s atmosphere is likely to attract more
Millennials vs. Nordstrom
o Prices are also more affordable
o However, there are more stylish brands/better quality at
Nordstrom, but it is more expensive
o Communication and customer service levels are both

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Overall
very high for Nordstrom and Macy‟s
o Macy‟s needs to improve their omnichannel presence
and efficiency to better compete with Nordstrom
Conclusion
Macy‟s has taken considerable efforts to gain more attention from their Millennial
target customers. The Millennials includes a younger demographic, specifically ages 13-
22 for Macy‟s Mstylelab department. As stated earlier, the retailer has exciting plans for
new brands, ideas to revamp existingbrands, and other strategies to grab the Millennials
attention and essentially a larger portion of their (or their parents‟) wallet share. While
Macy‟s marketing and merchandising teams have implemented many successful
merchandising strategies, such as an easy-to-use website, interaction via social media and
MCommerce, deals and discounts, and appealing merchandise assortments, there are
several strategies Macy‟s Mstylelab could benefit from.
For example, Macy‟s Mstylelab needs to take into consideration the appeal that
fast fashion leaders such as Zara, H&M, and Forever 21 have, and why those retailers are
so successful at gaining the Millennials attention. First, the fast fashion retailers
successfully create the idea of scarcity by having a quick, efficient supply chain in place
and frequent and consistent merchandise turnover rates. Zara, specifically, also has great
success due to their ability to quickly bring trends to market. While other retailers take
months to bring trends from the runways to customers, fast fashion leader, Zara, does this
in as little as two weeks. Macy‟s would greatly benefit by increasing the speed of
bringing trends to market via a more efficient supply chain management system. This
increased speed of trends to market will also create that sense of scarcity that attracts
Millennials.
The merchandising team at Macy‟s Mstylelab should also reconsider the
layout/placement of brand‟s assortment collections throughout the Mstylelab‟s
department layout. For example, the stronger, more appealing brands such as Material
Girl, American Rag, and the Mstylelab t-shirt and basic collection should be the main
features of the department. Rather than having less exciting brands such as Ked‟s and

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Marilyn Monroe as the center focus of the department, Macy‟s should feature the brands
that will attract the Millennials.
I would also suggest to the merchandising and buying teams to really consider
whether or not the Millennials, especially the younger demographic of Millennials
identify with the Marilyn Monroe brand. Not only are some of the styles inappropriate, I
would also question whether or not girls of Mstylelab are likely to identify with Marilyn
Monroe as an icon, and essentially as a brand.
I would also suggest that Mstylelab introduce a new brand that focuses solely on
the very popular, extremely popular Spring/Summer trend that is festival fashion. Festival
fashion essentially dominates more than half of the year, with the festival season
beginning in late February/early March and extending into October. Other retailers that
target Millennials, such as American Eagle, Free People, and Urban Outfitters offer
assortments that are greatly inspired by the macro trend that is festival fashion. Therefore,
in order to compete with other retailers targeting Millennials, Macy‟s should consider
implementing an exclusive, private label brand that features an assortment of festival
fashion merchandise. The Millennials, especially the Millennials ages 16-22 are likely to
attend music festivals and could likely turn to Mstylelab‟s festival fashion brand if it
existed.
Overall, Macy‟s initiatives and goals to target the Millennials could potentially
create great success for the established retailer. The retailer just has to make sure the new
brands, existing brands, marketing strategies, and communication strategies emphasize
that “cool factor” many fast fashion retailers are very successful at. The Millennials are
the future in many ways, but are definitely a force in determining trends in fashion that
influence every aspect of the retail industry, from supply chain management, to
assortment selections and trends, to marketing techniques. With a generation that is very
Internet and social media savvy, Macy‟s should take extra steps to allocate marketing
funds to ensure that all avenues of Internet and social media marketing are reached. By
reaching the Millenial customer via social media, offering hip, quality, and most of all
affordable clothes that help the Millennial girl feel cool, it is likely that Macy‟s will
continue to succeed and compete in the retail industry.

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Sources
"Macy's." Macys.com. Macys.com, Inc., 2013. Web. 17 June 2013.
"Macy's, Inc." Hoover's Online. ProQuest, 2013. Web. 17 June 2013.
"Macy's, Inc. Annual Report 2012." Macys.com. Macys.com, Inc., 2013. Web. 17 June
2013.
"Mstyle Lab." Macys.com. Macys.com, Inc., 2013. Web. 17 June 2013.
"Nordstrom." Shop.nordstrom.com. Nordstrom, Inc., 2013. Web. 17 June 2013.
"Target." Target.com. Target Brands, Inc., 2013. Web. 17 June 2013.

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