|Jonah Bloom, executive editor of Advertising Age.
He jumps up, strides to his desk and starts rifling through videotapes in a hunt for the new ads Lowe has produced for one of Macy's private-label brands: "You have to see this."
James Bond good looks
This is the passion and personal involvement that Lundgren -- an impeccably dressed 51-year-old with James Bond looks -- has brought to the rejuvenation of Federated and its key retail brands, Macy's and Bloomingdale's, since he was appointed last February. He has overseen a strong comeback for the retailer, which has reversed sliding sales, achieving a year-on-year doubling of first quarter earnings and a 6.9% same-store sales rise. His growth strategy? Marketing, marketing and marketing.
The overhaul started with in-store measures, based on customer research and piloted at the company's "Reinvent Store," a Lazarus-Macy's in Columbus, Ohio. Fitting rooms were moved from cramped corners to easy-to-find locations; cable TV and seating were introduced outside these areas; partially hidden checkout counters were shifted into the aisles; big way-finding signs were built; bar-code scanner stations installed to offer consumers information on their potential purchases; and -- to
|Federated Stores' CEO, Terry Lundgren, has re-invented Bloomingdale's and Macy's.
Lundgren then turned to traffic-driving tactics. He scaled back couponing and simplified pricing, shifting 10% of items from sometime discounts to an everyday low price. Merchandising teams were tasked with ensuring clearer differentiation among the company's various $2.6 billion private label businesses; deals were struck with suppliers such as Hilfiger to create exclusive lines.
Shifting ad dollars ...
A McKinsey marketing-effectiveness study concluded Federated should shift ad dollars away from newspapers, long its stalwart medium, into the Internet (where more purchasing decisions are made), radio and TV. Having taken a host of different store names and rebranding them so that they all share the Macy's nameplate, Federated was set up for more cost-effective national ad campaigns to push its private-label brands. Lundgren appointed the company's first-ever CMO, Peter Soxy, to orchestrate the shift to one consistent national strategy.
Yet, with all these savvy marketing moves, it is Lundgren's latest innovation, the creation of a mini Bloomingdale's in SoHo -- at 90,000 square feet, it's less than half the size of the next-smallest store -- which may just prove his smartest. Federated's future depends on ensuring its large, mall-based stores continue to increase their revenues. But smaller, upscale stores in hip city-center locations, with potentially better margins, could provide a welcome injection of profit.
... and influencers' opinions
And, as Lundgren says, "the SoHo store is, itself, a great marketing vehicle." With fewer, carefully edited designer lines targeted to hip young Manhattan residents, and a setting and service more usually associated with a boutique, the store is already shifting influencers' opinions of Bloomingdale's -- and exceeding revenue expectations.
"There's no better advertisement than that," he says.