Macy’s faces a challenging dual task
Now that all the Marshall Field's stores in the Twin Cities have become Macy's, the biggest department store chain in the metro area faces an uphill battle as it seeks to create an attachment between its brand and local consumers.
That was among the conclusions reached by three University of St. Thomas marketing professors who analyzed data gathered in a recent study they conducted in the 13-county Minneapolis-St. Paul area.
The researchers, Dr. John Sailors, Dr. Lorman Lundsten and Dr. Dave Brennan, are faculty members at the Opus College of Business at the University of St. Thomas; Brennan and Lundsten are also members of the college's Institute for Retailing Excellence.
The institute's fifth annual Survey of Holiday Spending Sentiment in the Twin Cities asked shoppers for their opinions on six aspects of Macy's: merchandise variety and quality, prices, store appearance and layout, and sales associates. Since the change to Macy's this past fall, several changes have taken place in addition to the name change, including replacing familiar merchandise lines with new ones.
These changes have not sat well with some Macy's shoppers. “Perceptions of their merchandise variety and quality are really quite negative among a sizable percentage of their shoppers,” noted Sailors, who analyzed the survey responses on the Macy’s questions. “Twenty-one percent of the sample plan to shop at Macy's less or much less than they did last year, and on average these customers have significantly more negative views of Macy's merchandise variety and quality than do people who say they don't shop at Macy's at all.” Sailors added that these customers are most at risk to stop shopping at Macy's and suggested that the company address their concerns immediately.
Perceptions of price seem to be a major factor why some survey respondents have decided not to shop at Macy's. Sailors noted that people who do not shop at Macy's have significantly more negative perceptions of their prices than do even those who are unenthusiastic Macy's shoppers. Lundsten added that while people who don't shop at Macy's might have a tendency to give the store neutral ratings, due to a lack of familiarity, this was not the case with prices. “Right or wrong they feel they know what price points they would find at Macy's and, by and large, they are not happy with them.”
“After they have secured their base, enticing these nonshoppers to give Macy's a try will largely be a matter of changing perceptions of their prices,” said Sailors.
The professors note that these findings should be understood in terms of all the changes that Twin Cities shoppers have endured over the last several years. The stores that were for generations known as Dayton’s switched to the Marshall Field's name in 2001 and since this September have been Macy’s. As noted earlier, the latest name change occurred along with more dramatic changes to merchandise than did the earlier change. It's also important to recognize that, as connected as people here were to Dayton's, Marshall Field's had a relatively similar image, strongly rooted in the Midwest. Macy's, on the other hand, brings a strong East Coast flavor.
The three professors agreed that the term “shotgun wedding” could describe the arrival of Macy’s to the Twin Cities. The question, they said, is how does Macy’s get shoppers to accept it as the new member of the family. “In an age where the tangible aspects of retailers become harder to differentiate, the psychological connection to the brand becomes all the more important,” says Sailors. “They need to salvage what they can of the connections shoppers have to the old brands while creating new bonds of their own.” The professors suggest that Macy’s should continue traditions from the Dayton's and Field's eras, while introducing shoppers here to Macy’s traditions.
The stakes are high. “It is theirs to lose,” said Brennan, referring to the Minneapolis-St. Paul market, “they are by far the largest department-store presence in the metro area and the major force in an otherwise fragmented market.” No other department store in the area, including Von Maur, Herberger’s, Nordstrom or Bloomingdale’s, is even close to Macy’s in terms of floor space or sales.
The survey also asked area shoppers if they planned to spend more, or less, at Macy’s this year:
- 38 percent said they don’t shop at Macy’s. This is 6 percent more than the corresponding figure about Field's from last year. While not statistically significant, this larger figure of nonshoppers is disturbing. While not a good portent, the professors also note that some shoppers will eschew every department store for specialty retailers or discount stores. “Still, if I was an executive at Macy’s, this is a number that I would be concerned about,” Sailors said.
- 21 percent said they will shop there less this year than last.
- 38 percent said they will shop the same amount.
- 3 percent said they will shop there more.
This year’s survey was conducted in the fall, after the Marshall Field’s signs were taken down in the Twin Cities and the new Macy’s signs were put up. “It will be interesting to see the survey results a year from now,” Sailors said. “We’ll be able to see if Macy’s was successful in establishing a bond with core customers who had been loyal shoppers at Dayton’s and Marshall Field’s.”
The research data revealed 11 percent of shoppers who could be called devoted Macy’s fans. These individuals reported a stronger spending trend for Macy's than for the holiday season overall. In other words, if they said they were going to spend the same this year as last year overall, they said they would spend more this year at Macy's than last year; if they said they were going to spend less this year than last year overall, they said they would spend the same as last year at Macy's. This group, according to the survey data, tended to have a positive view of Macy’s prices and the stores. They also tended to have higher incomes, are married, have larger households, and in general planned to spend more on holiday gifts, especially on gift certificates.
On the other side of the coin, though, were 17 percent who reported a weaker spending trend at Macy's than for the holiday season overall. If this group planned to spend the same amount this year as last year overall, they planned to spend less at Macy's than they did last year; if this group planned to increase their overall spending this year compared to last, they planned to only spend the same at Macy's.
As might be expected, those who don’t shop at Macy’s tended to rate the stores lower than those who do shop there. These people also said they plan to spend less than average on holiday gifts in general. They are more likely to have household incomes below $80,000, and are more likely to be men than those who do shop at Macy's.
The questions about Macy’s were contained in a broader survey on predicted holiday spending that was distributed between Oct. 6 and Nov. 3. The survey was mailed to 3,000 Twin Cities-a
rea households in 13 counties, including two counties in western Wisconsin .
The researchers received 254 completed and usable surveys. The demographic characteristics of those who returned the surveys matched the characteristics of the original sample, and in turn, the characteristics of a cross section of Twin Cities residents.
Lundsten and Brennan are both longtime members of the Opus College of Business faculty. Sailors joined the faculty in 2005.
Sailors is a specialist in consumer behavior, marketing research, and brand equity and loyalty; his Ph.D. is from Northwestern University.
Lundsten is a professor of marketing and chairs the university’s Marketing Department. He holds a doctorate from the University of Michigan.
Brennan, who holds his Ph.D. from Kent State University, is a professor of marketing and co-director of the university’s Institute for Retailing Excellence.
The Institute for Retailing Excellence, part of the St. Thomas Opus College of Business, conducts research and offers educational programs for those who work in retailing.