Macy's Takes Marketing Local, Cuts Jobs Nationwide

Retailer Restructures to Tailor Efforts Toward Regional Tastes

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NEW YORK (AdAge.com) -- Macy's is planning an aggressive rollout of its locally focused merchandising and marketing program, even as it eliminates 7,000 positions.

My Macy's, the retailer's new localization program, has had initial successes catering to regional shoppers.
My Macy's, the retailer's new localization program, has had initial successes catering to regional shoppers.
The retailer will eliminate its current structure -- a relic of its May Co. acquisition that had stand-alone divisions such as Macy's Central and Macy's Florida -- and streamline functions into two corporate offices. Marketing, merchandise planning, buying and stores' senior management will be located in New York, while finance, human resources, legal and real estate will be housed in Cincinnati.

The New York-based Macy's Corporate Marketing group will no longer exist as a stand-alone entity. Instead it will be integrated into a broader marketing group. Peter Sachse, president of Macy's Corporate Marketing, will maintain his role as the retailer's chief marketing officer. He will also continue in his role as chairman and CEO of Macys.com.

In response to lower sales
About 40% of executive positions in the retailer's divisional offices, including 1,400 jobs in San Francisco, 850 jobs in Atlanta and 600 jobs in Miami, will be cut. In response to lower sales, positions are also being eliminated at stores and distribution centers nationwide.

Jim Sluzewski, a company spokesman, declined to provide additional details on today's announcement. Mr. Sachse was not available for comment.

Meanwhile, the new localization program, known as My Macy's, has been touted by Mr. Sachse as a way to cater to local market tastes and adjust marketing based on area preferences. The program was tested in 20 markets beginning last spring and has had initial successes catering to regional shoppers. Terry Lundgren, Macy's president-CEO, said that of the company's 15 top performing markets in December, 13 were My Macy's pilot districts.

Peter Sachse
Peter Sachse
"We have been very encouraged by early results from our My Macy's district structure in capturing new sales opportunities in pilot markets over the past year," he said. "We are moving quickly and decisively to expand this model to all of our markets, so we can pursue sales-driving opportunities as we position ourselves to capture share in every local market."

Nationwide rollout
Now the program will be rolled out to an additional 49 districts, for a total of 69 districts nationwide. Those districts will be organized into eight regions based in Chicago, Houston, Miami, Los Angeles, New York, Pittsburgh, San Francisco and Washington. Each region will include 35 to 40 executives to oversee marketing, public relations, special events, merchandising and planning.

From a marketing perspective, the program is meant to ensure that advertising closely reflects local trends. Shorts and swimsuits will be more heavily marketed in Miami than in Detroit, for example. The initiative also seeks to embed Macy's in the local community. For example, Mr. Sachse has said Macy's could run a prom ad when the local high school's prom is approaching. Or when the local cheerleading squad wins a competition, Macy's could run a congratulatory ad.

Any advantage created by the program would be welcome in today's environment. Macy's reported a 13% decline in sales at stores open at least a year in November, along with a 4% decline in December. The company is projecting that same-store sales in 2009 will be down between 6% and 8%.

"In spite of the fact that the economic stimulus package currently being considered by Congress may improve the trend in consumer spending, we are planning conservatively to ensure our inventory, expenses and capital expenditures are appropriate," the company stated.

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