Retail Politics: Can Macy's, 'America's Department Store,' Survive in a Divided Nation?
"I don't see any difference between Ivanka and Donald," said Sara, who asked that her real name not be used to avoid having her political views intrude on her practice. "She is part of the problem."
Not all of the store's shoppers feel that way. "Macy's, don't pick sides!" one woman wrote recently on the retailer's Facebook page. "Be the store for ALL people!"
The hypercompetitive retail industry has suddenly become hyperpartisan, as shoppers vote with their wallets. That leaves Macy's in a difficult place. Offering a little something for everyone, the company has long been the quintessential midpriced department store. But the business has been struggling. Macy's plans to lay off 10,000 workers and shut 65 of its 729 stores this year as part of a plan to close 100 of them. With consumers so divided over Trump, it seems that appealing to both red- and blue-state shoppers is no longer a winning formula.
But giving up its nonpartisan identity may not be so easy for Macy's. While Nordstrom, its biggest rival, announced earlier this month that it would stop carrying Ivanka Trump clothing and accessories, Macy's took no action. And that left neither side happy. Conservatives continue to deride the retailer for its decision to dump Donald Trump-brand merchandise in 2015, after the then-nominee made derogatory comments about Mexicans. Now liberals are equally outraged that the chain has yet to cut ties with merchandise bearing the name of his daughter.
"The politics of retail and the politics of branding have gotten a lot more complicated in the last month," said Greg Portell, lead partner in the retail practice of consulting firm A.T. Kearney. "You have a president who is a brand and views himself as such. Anything that impacts the brand will trigger a response."
Headquartered in New York and Cincinnati, the retail giant has been losing customers to Amazon and to smaller, more specialized chains, like H&M and T.J. Maxx. Amid the overall slowdown in apparel sales, Macy's is reportedly considering selling itself to Canadian retailer Hudson's Bay.
Now it finds itself in the crosshairs of boycotters on both sides of the Trump divide, highlighting the challenges of its longstanding strategy to be the brand for all Americans. Not only does Macy's have a large number of stores, but it also has them in 45 states plus the District of Columbia, with as many in Texas as in New York.
"They're in a very tough position and a lot harder a position than Nordstrom," said Matt Sargent, a senior vice president at Frank N. Magid Associates. Nordstrom has 123 regular stores plus 215 Nordstrom Rack outlets, and most of them are in prosperous enclaves in the heartland and metropolitan areas on the coasts. The more upscale retailer's clientele doesn't expect the company to be all things to all people.
"Macy's is speaking to a very broad populace, which is very, very polarized," Sargent said. "Either direction they go regarding Ivanka is likely to land them in trouble."
Macy's also may not want to spark a repeat of the Twitter-lashing that it suffered when it dropped Trump's products 18 months ago, prompting the then-candidate's #BoycottMacys campaign.
As president, Trump denounced Nordstrom in an angry tweet that possibly drove a brief dip in the company's stock price. But the Seattle-based retailer took care to insist that the decision was not personal -- for the company, at least -- regardless of how its customers may have felt about it. According to Slice Intelligence, which tracks digital purchasing trends, sales of Ivanka's goods at nordstrom.com plunged 63% in the fourth quarter of 2016, one of several data points that backed up Nordstrom's claim that the move was driven purely by poor sales.
One size doesn't fit all
The data for Macy's paint a more complex picture. While sales of Ivanka's brand grew 30% on the retailer's website in the same quarter, the growth was considerably slower than earlier in the year. If the company were to decide that its continued association with the Trump name isn't worth the headaches, it would be hard "for Macy's to claim that dropping the line is a business decision," Sargent said.
Macy's did not respond to requests for comment, but analysts say that assessing the cost/benefit of carrying the Trump family's brands is not the only challenge. "It's the least of their problems on a long list of problems that they have to deal with," said Richard Jaffe, a research analyst at Stifel, which has given Macy's stock a "hold" rating.
In a statement, the Ivanka brand insisted that reports of its demise have been greatly exaggerated: "Our brand experienced a double-digit growth in revenue last year. We've expanded our categories, distribution and offerings, with plans to continue this growth in 2017, and we're reaching more women than ever before."
That growth may have come mostly in the first half of last year, however, and may not indicate a trend. In addition to double-digit sales declines in the fourth quarter on amazon.com and zappos.com and at Nordstrom, the brand's combined online sales at its top five retailers slid 26% in January compared to the same period a year ago, according to Slice data.
Ivanka's Manhattan-based brand insists that its mission is to "inspire and empower women" and disputes the notion that it plays any kind of political role. "In recent days, we've seen our brand swept into the political fray, becoming collateral damage in others' efforts to advance agendas unrelated to what we do, which is produce accessible, solution-oriented products for our loyal customers," the company said.
The people who are behind #GrabYourWallet also insist that their venture is nonpartisan. "This isn't a Democratic versus Republican thing," said Shannon Coulter, the San Francisco-based marketing executive who co-founded the campaign. "This is a human decency thing. It's about the divisiveness and disrespectfulness of Donald Trump."
Coulter and other critics argue that Ivanka -- the person -- hasn't stood up for women when her father has insulted them. And by aligning herself with his presidency, she has made her company fair game for a boycott. The #GrabYourWallet campaign focuses on retailers such as Macy's because "these companies rely on women," Coulter said. "We're here to put them on notice and say they have to move toward a more ethical, respectful and inclusive approach to inventory in order to keep us as customers."
Coulter said she believes the anti-Trump faction has an advantage in pressuring retailers to take its side. The counties that Hillary Clinton won in November generated two-thirds of the nation's economic activity in 2015, according to a Brookings Institution study. Coulter also says the campaign is gaining momentum. Since it launched in October, 18 companies have been removed from the boycott list -- because they've stopped carrying Trump-brand products -- including 11 within the past three weeks.
Most analysts, though, tend to dismiss the power of boycotts, arguing that the majority of shoppers are far more concerned with convenience and price than with social and political issues. But one often-cited study by professor Brayden King at Northwestern's Kellogg School of Management found that while a boycott may not affect a company's bottom line, it can hurt its stock price -- provided the movement gets plenty of media coverage. Two weeks before Trump urged his supporters to boycott Macy's, the company's stock approached $74 a share, a near 10-year high. As those supporters like to point out, the company's stock price today is around $32.
"As politics become more polarizing, people may be more willing to endure inconveniences to make a point," said Eric Greenleaf, a professor of marketing at New York University's Stern School of Business. "And with online shopping, consumers have more alternatives."
But whatever impact boycotts may have, some observers say the president may prove to be the ultimate undoing of his own brand.
"Someone who has behaved in as polarizing a fashion as anyone in modern history would be tagged with a large number of citizens who don't want any part of him," said Mark Cohen, director of retail studies at Columbia Business School. "They don't want to buy products with his name on them, and they don't want to buy his daughter's stuff."
A version of this article appears in the February 20 print issue of Crain's New York Business, an Advertising Age sibling publication.