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Back in January, Augeo Marketing CMO Ken Greer offered Loyalty360 an unequivocal response to the following question: “Do you think Macy’s is on the right path to regain brand loyalty since it has fallen on hard times in recent years?”
“In a word, NO!” Greer said at the time. “Don’t count on Macy’s or any current competitor to be inventive enough to bring us the next generation of ‘department store’ retailing. YES! Closing stores, streamlining operations, choosing locations more carefully, increasing accountability for performance, are all good economically-driven decisions. We hope the outcome is better results for the shareholders, but nothing we have heard so far indicates Macy’s will lead the charge into the new area of retailing.”
Sinking sales and profits, plunging net income and same-store sales, and evolving customer shopping preferences and patterns have, unfortunately, shadowed venerable retailer Macy’s in recent years.
“Macy’s and the other large department store chains have been struggling with brick-and-mortar sales growth for several years now,” Martin Mehalchin, partner and head of the consumer experience practice for Lenati, told Loyalty360 in January. “The underlying problem is that the department store shopping experience has not really changed in 30-plus years, so it’s becoming increasingly irrelevant to today’s consumer. Most department stores are still organized around categories that look like the organization chart of the retailer’s merchandising team. This makes them inconvenient to shop for most consumers and leaves the retailer dependent on margin-eroding promotions to drive sales.”
Aside from those opinions within the loyalty industry, Macy’s held a critical Investor Meeting on June 6, accompanied by a specific slide presentation outlining its marketing reinvention agenda.
During a segment of the presentation, Macy’s CMO Rich Lennox talked about the iconic brand that has 1.5 billion annually and more than 600 million transactions per year in-store and online.
To close the brand engagement gap by focusing on the following:
Deep understanding of its customers
Behaviors (spend, frequency, profitability)
Demographics (age, gender, income, geography)
Attitudinal (personality traits, values, interest, and lifestyle)
Engagement (targeted marketing and migration of customers up loyalty chain)
Lennox noted that Macy’s is reinventing its marketing strategy:
Customer insight and segment strategy involves the brand purpose to articulate “our why”
Campaign architecture based on love, authority, value
Big ideas to win emotional high ground
Media strategy to migrate from low to high ROI
Marketing investment with greater impact and efficiency
High promotional intensity with value proposition that activates our customers
Re-engineered loyalty to encourage customer migration to higher value
What’s more, Lennox noted 5 Big Changes:
Revitalize brand engagement
Build tentpole campaigns around the four key seasons
Establish Macy’s always-on publishing voice
Design distinct promotional event properties
Create a loyalty program; not a rewards program
In a new marketing equation, love and authority together balance value and alleviates us from the unsustainable promotional battle, according to the presentation.
Macy’s new loyalty program set to launch in the fourth quarter of 2017 comprises:
Tier 1 (Base Value tier): 14 percent of customers prefer over the current program
Tier 2 (Mid-value tier): 35 percent of customers prefer over the current program
Tier 3 (High-value tier): 75 percent of customers prefer over the current program and 56 percent would shop more with Macy’s overall
Guiding Principles for Macy’s Loyalty:
Simple program with clear value
Incentives that motivate changes in customer behavior
Tiered benefits that benefit our best customers
Deliver the program mobile first
Develop a loyalty program, not a rewards program
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