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Macy’s Markets Elvis, Blackhawks to Revive Sales

Macy's CEO Terry Lundgren
Terry Lundgren, chairman and chief executive officer of Macy's Inc. Photographer: Jin Lee/Bloomberg

Macy’s Inc. is touting Elvis Christmas tree ornaments in Tennessee and Blackhawks decorations in Illinois ahead of the holidays, tailoring goods for local markets to squeeze more out of its biggest shopping season.

The second-largest department-store chain in the U.S. is introducing 2,200 local-themed tree ornaments as part of its “My Macy’s” program, an initiative that began in 2008 to better customize merchandise year-round. Some 1,600 district managers who oversee goods categories in no more than 12 stores each selected the items.

“My Macy’s” may add as much as 3 percentage points to the chain’s holiday sales at stores open at least a year, which will probably increase as much as 5 percent in 2010 after three years of declines, according to Deborah Weinswig, an analyst at Citigroup Inc. in New York. Focusing on merchandise tied to the Chicago Blackhawks hockey team in Illinois stores spurs purchases by making Macy’s more relevant, Chief Executive Officer Terry Lundgren said.

“We had to do something different,” Lundgren, 58, said. “I wanted to maximize the business on a local level, but how do you do that today with 810 Macy’s stores?” He expects the effort to help accelerate sales in the second half of this year, which he forecasts to rise as much as 3.5 percent.

Lundgren hatched the “My Macy’s” idea when consumer spending began slowing three years ago. Since then, the company has directed tens of thousands of specially chosen items to local markets, said Jim Sluzewski, a Macy’s spokesman.

Identifying Demand

Macy’s identified demand for size-11 women’s shoes in Chicago, formal wear for boys in Salt Lake City and Imusa cookware popular with Latin American cooks in Brooklyn, New York.

Carolina Sekkel, an Arlington, Virginia-based district planner for 12 stores, highlighted demand for separately sold pieces of women’s suits in Washington, D.C. That has helped generate “double-digit” sales gains in percentage terms, she said. The separately sold suits allow shoppers to mix and match clothing and buy off-the-rack without having to do alterations.

Lundgren, whose department-store chain trails only Sears Holdings Corp. in sales, has his work cut out for him after consumer confidence slumped in September, signaling shoppers may hold back on purchases for Christmas. Macy’s is trying to counter the drop by wooing customers with holiday items fashioned to their tastes, such as Scandinavian baking tools in Minneapolis and locally made Sanders chocolate candies in Michigan.

Local Demand

Tapping local demand more adroitly can generate sales throughout the store by developing customer loyalty and boosting frequency of visits, said Wendy Liebmann, CEO of WSL Strategic Retail in New York. It helps profit by reducing irrelevant and excess inventory that then has to be discounted or shipped to another market, allowing “My Macy’s” to “punch above its weight,” she said.

Macy’s, based in Cincinnati, fell 2 cents to $22.73 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 36 percent this year, compared with an 11 percent rise for the 31-member Standard & Poor’s 500 Retailing Index.

When Lundgren created the “My Macy’s” plan, he drew on his experience as a china buyer for the former Bullock’s chain in the 1970s. He said he was so close to the 18 southern California stores he supplied, that he would transport sets of Lenox plates in his car trunk to locations that ran low.

May Acquisition

The executive was named CEO of Macy’s predecessor, Federated Department Stores Inc., in 2003. Two years later, he spearheaded the $17 billion acquisition of May Department Stores Co., which doubled the size of the company, creating a coast-to-coast department-store chain.

In stages during 2008 and 2009, he consolidated seven regional buying offices into one national buying center and divided up the company’s store locations into 69 local districts. Today, district managers oversee merchandize in almost half as many stores as they used to, giving them more time to visit each and interact with shoppers, Lundgren said.

Sales clerks record local demand from shoppers in log books to pass on to the district managers, who then electronically make about 1,000 requests to the main office each week. The office approves about 90 percent of the pitches, usually within seven days, Sluzewski said.

Initially, top-level buyers resisted what the district managers wanted to buy, Lundgren said. He also faced skepticism that a single buying office could supply everyone’s needs. Implementing the divisional consolidation last year led to about 1,900 job cuts.

‘Cultural Shift’

“This was a major cultural shift for the company,” Lundgren said. “The hardest part was that not everyone could come along.”

The ones who are still around have embraced their buying power. In Orlando, Florida, shoppers are looking for twin bedding at stores near condominium rentals in coastal areas and Latin American visitors want Nespresso coffee machines between October and Lent, said Meredith Mescher, a district merchant for home goods.

“You can make a decision in a snap,” Mescher said. “It tells our sales associates, there is someone here to help them drive sales and, at the end of the day, this is what it is about.”

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