Macy's Loses $59 Million In 3 Months, Angry Marshall Field's Customers Get The Blame
Macy's has managed to lose $59 million in the first quarter. CEO Terry J. Lundgren says that considering the crappy economy, losing $59 mil isn't all that bad:
"Given the very difficult economic environment, our company performed relatively well compared to the competition in the first quarter," said Terry J. Lundgren, chairman, president and chief executive.
The AP, however, couldn't resist hinting that pissed off former Marshall Field's customers were at least partly to blame for Macy's unpopularity:
Macy's has struggled with disappointing sales and resistance from shoppers in some markets where the Macy's name replaced local favorites after its 2005 buyout of May Co.
While Marshall Field's customers are certainly the most vocal (Chicagoans are pathologically resistant to change. See: "Wrigley Field"), Macy's has a nasty reputation for displacing other local favorites as well.
Macy's reports loss on weak sales, beats estimates [AP]
(Photo: Mr.Oliver )
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Comments:
Low blow with the Wrigley Field comment.
There'd be a similar outcry if they tried to change the name of Fenway. The charm of these old, historic parks are intertwined with their name.
Hell, they're tearing down the stadium in the Bronx, and the new one is STILL called Yankee Stadium.
And yes, the 1908 in my name is relevant.
It's called business. Mergers and acquisitions happen, and the end result is higher returns for our shareholders. If you feel like you were somehow "cheated out" of Marshall Fields' (or any other chain we've absorbed/converted) you are free to do your shopping elsewhere.
Believe it or not, the primary responsibility of every corporation is to its shareholders, not its customers. Protest away.
My mother was on the phone yesterday carping to me that she missed having Famous-Barr in St. Louis. Macy's had a "dumpy" line of women's clothing, she thought.
Local identity, local buyers- take that away and yes, people get pissed. Especially when you offer older women dorky coral pantsuits with appliques.
Chicago consumers are pissed becauses Macy's cutomer service "sucks ass". Where as Field's use to treat their customers great.
@Murph1908: It's not a low blow, it's self-congratulation. I'm from Chicago and am wearing a Cubs hat right now.
@carso:
Yes, that's true. But there's "smart" business" and "stupid business decisions" in the course of doing business.
Alienating your customers en masse would fall under the "stupid business decisions" category.
No customers = no business = soon-to-be-no-mo-shareholders.
Chicago = Q_Q
Macy's = pewpew
@Murph1908: I thought the charm of Fenway was the weeks of back and leg pain you suffer from cramming yourself into those tiny seats.
As both a Macy's employee spouse and a Chicago resident, it takes everything I have to not slap a "Forever Marshall Field's" bumper sticker on the back of my car. But, alas, I dare not bite the hand that feeds us and hands out an occasional bonus check. Others have said it before me, but one can only imagine the outcry if the tables had been turned and we renamed everything on the east coast Marshall Field's. Field's was declining, but not dead. Last week I went to my local Macy's and found that some of the signage on the clearance rack had been printed from Word on someone's laptop - and they did not even bother to center the damned words! Mr. Field would not approve. Apparently R.H. Macy wouldn't have minded. Mr. Lundgen's sunshine days are over and we need someone new at the helm.
@carso: That is exactly what the article is claiming. That because Macy's had pissed off their customers the customers went to other stores leading to a decline in sales. I know that I have only been in a macy's a hand full of times since the name change, because I liked Field's and Dayton's better.
@carso: Actually, their responsibility is to their STAKEholders, which does include their customers as well as their shareholders.
What about Hudson's? Will no one think of Hudson's and their Maurice Salad!!!
Yeah and does Macy have a really cool natural history museum with dinosaurs and stuff named after him?
No.
@carso: You know, I know that 'Shareholders first' mentality is technically correct, but that is, in my mind, at the root of every damn thing that's gone wrong with this system. It has led to the decline of capitalism in it's best sense, led to crappier service, crappier products, less competition, higher prices, and bad Cable Television service, dammit. In my imaginary economic world, it's a change in mentality that is still masquerading as democratic capitalism and is nothing of the sort. Plus, and this is my final point on this. The quality of Frango chocolates has declined precipitously sense the merger, and that is one damn step too far.
@Dakine:
The "Macy's" brand is the most-recognized retailer in America; the brand power behind our name is incalculable. People on the east coast have never heard of Marshall Fields', nor are they familiar with Famous-Barr. With the goal of solidifying our brand strength nationally (and soon internationally) it's worth "alienating" some of our customers if the payoff is cohesiveness and reduced overhead costs - both of which have been achieved.
The problem here is that the people against the name change are so much more vocal than the people who appreciate having a Macy's in their backyard. In truth, we've gained a lot more customers than we've lost in the areas where nameplate changes are occurring.
It's not a clean process, nor a pleasant one - but it is profitable, and therefore necessary.
@carso: You don't maximize shareholder value by angering customers who then shop at the competition, thus depriving you of money. This happened because Macy's angered customers and showed that it didn't care what they wanted.
Yes, the responsibility is legally to the shareholders -- but those shareholders are served best by maximizing sales/profit/potential profit/customer numbers!
You just pointed out why Macy's erred by not listening to these people.
Isn't this the point of free(ish) market? Piss of the customer base, for whatever reason, and they can and will choose to shop elsewhere. Good to see we still have a semifunctional free(ish) market.
And as a "non-Chicagoan" living in Chicago, I don't shop at Macy's because they don't cater to what I want. I've been in there a few times for specific things, and never once made a purchase. More often than not I walk around thinking "people buy this stuff?"
@Murph1908: And our new stadium here in St. Louis is also called Busch Stadium. Even though I am not a die-hard baseball fan, I have local pride in making sure that name stays around and if it had been any other business who got the naming rights, I and many other people would have been very upset.
@carso: So, you work for them and just told a whole boatload of folks to basically love Macy's or find a new place to shop? Then claimed it was profitable under a banner that reads you just lost $59 million dollars.
Wow. I shop at Macy's A LOT, actually, and you've got me rethinking this.
I remember when macys bought fields and people around here in chicago were pissed at the name change. I was in a store and I overheard two old ladys talk about how they were going to go protest the name change.
I did all I could to not bust out laughing at them. I wanted to tell them to find a real cause to protest. When were at home bored, my wife and I still make jokes about going to Macy's to protest...
@Carso:
It may be the case that "The "Macy's" brand is the most-recognized retailer in America", however the truth is, they have appalling customer service.
Field's customer care was great, Macy's on the other hand took everything that made Field's a great place to shop and threw it in the Trash.
@carso: Grocery stores do fine by keeping local names (e.g. Kroger, Supervalu). Why does Macy's think nobody cares that they've been a loyal Dayton's/Hudson's/Marshall Field's customer for most of their life?
I feel like my "local" department store had a major identity crisis: first it was a Dayton's, then a Marshall Field's, and now it's a Macy's. I had loyalty to Dayton's, but you're dead to me now.
Today I shop at Target, because that's the closest blood relative to Dayton's left.
Without the customers the shareholders don't have squat. Why was it so important to rebrand all of the May Co stores "Macy's"? They did it here in Cleveland too, most of the time it's the least populated store in the mall.
I hate that Minnesotans are so willing to cave on this stuff.
Daytons buys Marshall Fields, becomes Marshall Fields to not offend Chicago. I still miss Daytons.
Norwest buys Wells Fargo, becomes Wells Fargo.
Minneapolis gives up arguably the best basketball team in the nation, and suddenly LA is famous for its inland water density? (ok, this is an example of a giveaway rather than a takeover, but it still applies, based on some tenuous strand of incoherent logic I'm able to fabricate.)
There's more examples of it, but Minnesotans are entirely too willing to say, "We bought you, suck it up and bow down to your new corporate overlords."
If YOU owned Macy's and bought out a competitor's store (Fields), would you really want to leave the name the same (and damaging your brand) just to appease some crazies who stand on the corner of State and Washington with their moronic signs?
Agreed, Meg, that Chicagoans are incredibly resistant to change. The Wrigley thing really blows my mind - the field is already named after a company to begin with! Can't wait for "Mark Cuban Field"...
@carso: Evidently it is neither appreciated or profitable. As a Chicagoan, I was sad to see the Field's name disappear, but it's certainly not the reason I don't shop at Macy's...it's because your stuff is crap and your service is worse.
I'm now a loyal Nordstrom's girl.
@Buran:
The AP quote above implies a great deal but one notes that it is careful not to make a direct connection between upset Marshall Fields customers and lost profits. I am not aware of any official Macy's statement (by Lundgren or otherwise) that directly makes this link, either.
Our research shows that former Marshall Fields customers are still patronizing our locations - in addition, we have gained additional customer base. We're not making money right now because the economy is not favorable for our niche, and we've been making (remarkably) poor merchandising decisions. Period. We hope to see that change in the near future as we decentralize our marketing operations to focus more precisely on regional tastes, styles, and demand.
The unfortunate fact is that people will always find something to complain about. Trust me when I say that we didn't just disregard customer opinion when converting these stores. We compared the benefits with the costs, and found nameplate conversion to our advantage.
.@carso: We're not making money right now because the economy is not favorable for our niche, and we've been making (remarkably) poor merchandising decisions. [so the economies of centralized purchasing & marketing are biting you in the ass, huh?]
we decentralize our marketing operations to focus more precisely on regional tastes, styles, and demand [Oh, sort of like becoming Marshall Fields again instead of forcing a national decision on what and how to sell in the midwwest? So your new decentralized strategy is for Macy's to become Marshall Fields again, right?]
When macy's took over the Mashall Field's stores it was more than a name change. Product lineup has changed and lot of the selection and service has gone straight to hell. MF used to be my first stop when I needed clothing. Now that its Macy's I really debate if it's worth going in. I'm not even a long time Chicago resident who's emotionally attached to the name. I'm a west coast transport.
@carso:
"the brand power behind our name is incalculable."
While this may be true, nothing is invincible. I live on an island in the most remote island chain on Earth. There is a Macy's here. Choices are very limited here for shopping. This isn't a major city so it's not like there's another store on the next block to switch to in most cases. There used to be a JCPenneys here too, and now they are gone. I can honestly say I haven't been inside the Macy's here in over 2 years. Even with the limited choices I have here.
So, sure.... the Macy's brand may be all that to YOU.
To me it's just another corporation with their collective head up their ass. If you can't recognize (and exploit for profit of course) the loyalty to these other brands, what makes you think they'd be loyal to the Macy's brand after swallowing them up?
Behavior like this is also been documented in crack heads.
Not, not right. We were right to nameplate the stores as Macy's. We were wrong to centralize our purchasing and marketing. Business is unfortunately not an exact science, and we made an error there - which, incidentally, we're in the process of correcting.
@Dakine:
The regional loyalty to brands such as Marshall Fields and Famous-Barr that we lost by converting them to Macy's is far outweighed by the national-level loyalty we gained.
@carso: If you're going to make merchandising, purchasing and marketing decisions at the local level, you're basically saying we're a national chain, but we're gonna run our stores like semi-independent retail merchants (which they used to be). So what is the benefit of the name change?
Reading between the lines, the new plan seems to acknowledge that what Macy's did (name change, centralized operations) failed and all the critics were in fact right. You're returning to the regional merchants status of Fields in most ways, but name only.
@carso: As a Chicagoan, I think that the nameplate change was forgivable, but the problem is that you downgraded Fields in terms of brands, quality, service, etc. and kept prices just as high. I don't think peole are willing to pay the same premium for your private label brands compared to brands/selection you used to carry. In my view, you're stuck in the same spot as the Gap- you have an inflated notion of your brand cache and have prices to match. Unfortunately, consumers are not following. I honestly don't think this is an economic conditions issue, but the fundamentals of your business. My guess is that when we come out of this slump, your numbers will still be lower than most. It's time to actually do a little introspection rather than constantly blaming outside conditions.
@carso:
Well, in the end it's all about the bottom line. The reason this conversation interested me is because I am a, shall we say "Brand Enhancement Specialist". And the clients I have worked for have been successfully sold / merged within no more than one year after hiring me. (the goal, by the way). All of these bought companies have retained their new brands to this day. Why? Because the customers were die-hard loyalists and would have jumped ship had they tried to roll them into the faceless mass.
In the case of macy's, I'm not so sure it didn't have something to do with making a statement about crushing competition as well as bottom line.
Especially when a "rep" gets involved in a chatboard and starts cutting lost customers like bad merchandise instead of doing a full blown PR spin.
My sister is a manager at Nordstrom in Chicago, she said sales have steadily increased since MF turned into Macy's. I wonder why the "difficult economic environment" doesn't seem to affect Nordstrom's sales. Hm.
While the whole "burning your Macy's card in protest" is silly, we all agree... it wasn't just the name change that turned people away. Ex-customers will say, "They have shopping carts!" in abject horror. Do you see what the problem is? It's not the name, it's the "downgrade" in service. Longtime Marshall Fields customers expect a certain level of service and product quality that Macy's took away, and basically turned their Marshall Fields into a store one step above a Target.
Oh, but if it keeps your shareholders happy... (Ugh.)
That's what you get for selling crappy clothes. There hasn't been a good Polo for men collection in five years.
@ConsumptionJunkie: Shouldn't you be angry at Ralph Lauren? I was not aware that Macy's designed clothing for Polo. I thought they simply sold them.
@dinger_82: If that was the case, then both Macy's and Bloomingdales should be called Federated Inc. Stores.
And as for you Carso...Where do you get off saying that east coast shoppers never heard of Marshall Fuckin' Fields? The place was an institution and one of the first places I went to the first time I visited Chicago. I have to say that I was really impressed. I was even moved to open an account and purchase somerhing. I can't say the same about any of the experiences I've at at Macy's in the past...forever. It's so bland! And look at Bloomingdales! They're still able to retain a brand identity! So screw you!
@MrJames:
Same here I have hear of marshall fields and i live in north carolina. I have went into the macy's here maybe two or three times in my life. I end up walking around thinking "man people buy this overpriced crap?"
I'm in the Chicago area...had one of my wedding registries at Macy's. There was such a huge difference between the Macy's in Skokie/Old Orchard (which was a mess, impossible to find anything, and a lesser selection) and Oakbrook (clean, much more of a pleasure to shop in). The customer service was much better in Oakbrook too. Kind of sad when there is such differences between stores. Had one incident when we had to exchange china plates that were sent in the mail to us and were ringed with a gold color instead of silver. They were bought on sale and when we exchanged them they were full price - they wanted to charge us the difference. Luckily with a little haggling I got them for the sale price.
@MrJames: There is no federated stores. They changed the corporation name from federated to macys last year.
@carso - "the brand power behind our name is incalculable"
You know, brands aren't always a good thing. Chrysler is a big brand, but it's poison to most buyers.
Macy's continues to make stupid decision after stupid decision. The Macy's brand isn't as bright and shiny as you think it is.
Full disclosure: I come from a long line of retail employees. Macy's fed me, paid the bills, and put clothes of my back for most of my childhood. I have MANY reasons to despise Federated but renaming Marshall Fields was by far the DUMBEST, most idiotic decision I've seen them make. No one was really going to miss Bamberger's or Filene's. In those instances, Macy's was a vast improvement.
Hear hear.
They replaced the local emergancy backup Dept store since Frederick Nelson closed, Bon Marche.