Survival strategies for Macy's, Penney's, Target, Neiman's

All the great deals now in stores are one benefit of the depressing economic news, says Marietta Landon of Cambridge, Mass. She finds sales everywhere she goes. "Especially Macy's — they make every weekend a sale with saving passes and advertising galore," Landon says.

Macy's says its plan, announced earlier this month, to eliminate 2,300 management jobs in the company's central office and create 250 new ones in its local markets wasn't necessarily driven by the economy. But saving about $100 million a year sure doesn't hurt. The plan to localize decision-making "was conceived long before there was talk of a credit crunch or mortgage crisis, but executing it now in the face of a possible recession does have its benefits," says Macy's spokesman Jim Sluzewski.

The addition of Tommy-Hilfiger-branded men's and women's apparel this fall, which will make Macy's the only place to buy the brand in the USA outside of Hilfiger stores, should further boost sales, he says.

Macy's has also announced plans to close nine poor-performing stores this year. Though struggling with some of the same issues that its rival J.C. Penney faces in catering to the middle class, Macy's holds an advantageous position, says Phil Rist of BIGresearch. That's because Macy's enjoys the image of being something of a novelty in many areas since it renamed the former May department stores in the fall of 2006.

Its clientele is generally more affluent than Penney's, notes analyst Bill Dreher. Still, in times like this, even a Macy's will likely be hurt by the tendency of customers to cut back on non-essentials.

"All the department stores are vulnerable because they are about 80% apparel and 20% home goods," Dreher says. "After years of strong apparel sales, customers have full closets, and with a weak fashion cycle, there's nothing fashionistas have to run out and buy."

Target

"Hello goodbuy."

Couldn't that be a Wal-Mart slogan?

As the economy struggles, Target, long known as the purveyor of the well-designed product, is increasingly spotlighting its low-priced goods. "Hello goodbuy" is the tag line for ads that now focus as much on the price of its products as they do on their style. After all, in a down economy, hand-painted toilet-bowl-brush covers that cost several bucks more than the next one are seldom a major consumer priority.

That leaves Target more vulnerable in this economy than, say, Wal-Mart, says Deutsche Bank senior retail analyst Bill Dreher. It may be a discounter, but it's hard for it to compete with Wal-Mart on price, Dreher says.

"Target has historically focused more on being fashion-forward and having value-added design," Dreher says. "The problem is, consumers don't want that now. They're not redecorating or refurbishing their homes. They're looking for everyday life staples."

At the same time, Dreher says, Target is better positioned than department stores these days.

Target has been trying for years to get its low-price message across, says spokeswoman Lena Michaud. And she says its business plan will carry it through hard times: "We are very confident in our strategy going forward."

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