Jeff Gennette, Chairman and CEO of Macy’s, is doubling down on the company’s private label and private brand businesses as an important driver of profitable growth. The goal is to increase their sales contribution to 40 percent of the company’s total business. Currently, the company generates about 29 percent of its revenue in private label merchandise.
The exclusivity of fashion merchandise is important. I.N.C., an early private brand that now is a multi-million-dollar business and is refreshed every month with new fashion and new colors, is a good example. This quality, fashion merchandise is well-designed, attractively priced and, above all, liked by customers throughout the chain. It is presented in stores like a typical designer brand, but it is exclusively carried in Macy stores. The customer cannot find the label anywhere else, and the appeal of a strong private brand provides important differentiation that will attract customers.
Recently, Mr. Gennette told me that he wants to amplify Macy’s fashion credentials. That is important, and by searching for more private labels, and promoting them effectively every day, the company will create an exclusive environment. Of course, the trick will be to have fashion-right and fashion-first merchandise that makes shoppers return for more.
Molly Langenstein, the new Chief Private Brands Officer, has been appointed to search for more private label merchandise and deliver that fashion message. At a recent ShopTalk conference, she said, “It is part of our equation for profitability.” After all, most private brands are more profitable since they do not have national advertising costs and generally have better initial margins. There are also national brands like DKNY and Tommy Hilfiger that have designed exclusive merchandise for Macy’s. That is equally important because the styles will not be available anywhere else.
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It’s also worth noting that Macy’s is updating the marketing behind its brands as well. Macy’s promotional sales brochures have changed. They have been cleaned up and have a clearer message. They sparkle with private and national brands. Jeff Gennette commented to me that Macy’s is striving to simplify its promotional messaging. That will help in communicating a clear fashion image to customers.
Macy’s is striving to return to greater growth. Through its exclusive assortment be it in the home or on the fashion floors – I see much fashion excitement developing this year. Among the new exclusive private labels are Belgique, Ken Scott and Epic Threads.
Macy’s growth is dependent upon its merchandising savvy. Along with its new loyalty program, I believe that the company can grow in sales and earnings with its fashion intensification. That would be just the one-two punch that can keep customers coming back.
Date: March 26, 2018