Sale Away

It’s a holly, jolly Christmas – at 25 percent off
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Posted December 4, 2017

Christmas: That special time of the year when all of the pressure of the season falls squarely on the shoulders, and the nerves, of the retail industry.

It’s the time of the year that makes or breaks the entire 12 months’ worth of business for most retailers. It’s also that time of year when retailers really need to figure out what they stand for. More now than ever.

Because retailers, certainly traditional retailers, must not only convince the public that they – and not their neighbors on the street or in the mall – are the doors that should be entered. Now they must also convince consumers that their websites are the ones to get the clicks.

Take, as just one example, Macy’s. I’ve lived for years in places where Macy’s has had a strong physical presence: in New York, the most fully developed streetside retailing in the country; in northern New Jersey, at the time probably the country’s most bustling mall activity; in Atlanta, that booming market where every retailer wanted to establish a strong position; and in Cincinnati, the city Macy’s calls home. (To round out the conversation, I grew up in Chicago, which didn’t have a Macy’s – not then – but had, in Marshall Field’s, just about the best example of what department store shopping could be.)

At some point in the 1990s, though, Macy’s began to sell largely by price. Everything was 15 percent off – 40 percent off if you bought two – and 25 percent off that if you opened one of their credit cards, and . . . and . . .

All year, the sales continued, tumbling over one another, right into the Christmas season. Deemphasized was the product development, enormous selection of excellent merchandise and classy presentation that sparkled so in the 1980s. (Macy’s Cellar; rainbow walls of Polo shirts.) It got to the point thatshoppers ignored Macy’s if there wasn’t a sale. But there was always a sale. It was an iron trap, fixed tightly around Macy’s ankles.

I remember sitting in a conference room at IRDC in Chicago in 2005, and hearing Tom Cole (in person) and Terry Lundgren (by video) declaring that the “new Macy’s” (it had just acquired the May Department Stores and now had a coast-to-coast, border-to-border presence) would no longer rely on a price-driven strategy. It would return to the glory days of the department store.

Sadly, that strategy seems to have failed. It’s a new world, and Macy’s is trying to be a strong digital player. But its emails and online ads are almost entirely about price, bargains, sales, special offers. So price-driven is the Macy’s strategy, so wound desperately around special savings, that I recently ordered three shirts and a coffeemaker from Macys.com. Before I finished, I dithered about the coffeemaker and, at one point, took it out of my shopping basket. When I did, the total price of my order actually increased. I would save money by adding the coffeemaker back onto my order.

It’s by no means only Macy’s. Virtually every national chain is using bargains to get through the season. And, in fact, the digital kingpin, Amazon, markets largely on price. Its selection and service are so disarming, though, that it seems to elevate above what it is – a bargain-basement retailer.

Macy’s, a powerful brand long before we even started talking about retail “brand,” once represented everything charming and delightful about holiday shopping. There was even an Oscar-winning movie. Now, it is the poster child for the dilemma traditional physical retailing finds itself in: reducing prices to clear merchandise off the shelves and somehow post a strong fourth quarter by the time it faces its shareholders in another month.

As a journalist, writer, editor and commentator, Steve Kaufman has been watching the store design industry for 20-plus years. He has seen the business cycle through retailtainment, minimalism, category killers, big boxes, pop-ups, custom stores, global roll-outs, international sourcing, interactive kiosks, the emergence of China, the various definitions of “branding” and Amazon.com. He has reported on the rise of brand concept shops, the demise of brand concept shops and the resurgence of brand concept shops. He has been an eyewitness to the reality that nothing stays the same, except the retailer-shopper relationship.