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Industry News - February 12, 2008



Macy’s Restructures after Steep Drop in Sales
Macy’s creation of a national department store banner is faltering and forcing the $26-billion retailer to cut costs and restructure. After announcing a 7.1 percent drop in January same-store sales, the retailer says it will combine three regional divisions and put more managers in local markets.

About 2,300 management jobs will be cut. Locations will be grouped into 20 new districts of about 10 stores. Currently, districts contain 16 to 18 stores. The announcement also included guidance that Macy’s expects that its earnings in 2008 would not meet Wall Street’s estimates.

Sharp regionalization of assortments by price, demographics and local taste would mean Macy’s would have to operate a less centralized organization than it envisioned when it purchased the May Companies in 2005.

“Now, the pendulum is swinging back,” says Stevan Buxbaum executive vice president of Buxbaum Group, a Minneapolis-based investment company. “Technology is available that is capable of doing what Macy’s wants to do, but is Macy’s current system capable of doing it? They would have to get the regional buyers to figure out exactly what percentage of their businesses they need to regionalize.”

Cincinnati-based Macy’s became a national corporate brand in 2006 after officially changing its name from Federated Department Stores. About 10 regional department store brands were put under the Macy’s umbrella, including the venerated Marshall Field’s chain.

National branding was intended to leverage the Macy’s name across all 850 stores and the company’s Web site. Macy’s also wanted to create economies of scale for its promotions and media buys. The latter represent somewhere between 2 and 3 percent of Macy’s annual sales.

Some former regional chains benefited from the brand change. But former Marshall Field’s customers in Chicago, Minneapolis and other Midwestern markets were outraged. Macy’s is regarded as an upper moderate department store; Marshall Field’s was regarded as much higher end, especially its historic State Street flagship location in Chicago.
“In other markets where Macy’s converted stores, people seem to accept the name,” says Buxbaum. “In the Philadelphia area where Strawbridge had operated, for example, Macy’s was a step up. But in Chicago and Minneapolis, it’s really been a struggle. Consumers have resisted and feel they’ve been demoted.” Experts estimate that the former Marshall Field’s stores represent 10 to 15 percent of Macy’s sales.

If Macy’s is successful in reintroducing higher end brands to its Midwestern markets, Buxbaum believes the former Marshall Field’s shoppers will return—even if their store is wearing another name. “Consumers have a fairly short memory,” he adds. “The question is whether or not Macy’s will be able to deliver a shopping experience that will bring them in.”

-Debby Garbato



Best Buy Adds Markdown Software
Best Buy selects DemandTec Markdown to help effectively manage price, profit and inventory levels. Best Buy uses the system specifically on items such as seasonal merchandise and discontinued product lines. The electronics retail giant also uses the technology to optimize both the timing depth of markdown pricing in order to meet its merchandising objectives. The system helps Best Buy provide improved shopping experiences to its customers.

Levi Strauss & Co. Optimizes Global Sourcing Operations
Levi Strauss & Co. chooses TradeCard to automate processes and streamline customs compliance to help it gain speed and agility in global supply chain. The jeans and apparel retailer uses the platform to help eliminate manual processes that require physical handling and viewing of paper documents received from suppliers for purchase orders, invoices and compliance checking. The apparel retailer integrates the TradeCard system with its existing ERP system to consolidate payments and streamline customs compliance by sending data electronically to customs brokers. Levi’s unveils plans to bring 255 vendors from Europe, Asia and the Americas onto the TradeCard platform.

Lillian Vernon Deploys Web 2.0 Platform
Lillian Vernon implements Certona’s Resonance Web 2.0 platform to optimize revenues and conversions from product recommendations. The retailer uses the self-optimizing, real-time behavioral targeting platform to gain relevant, material content that drives Web visitors. Lillian Vernon also uses Resonance to personalize web content, better pinpoint online ads to reach specifically targeted visitors as well as increase the ability to perform cross-sell, up-sell recommendations and enhance transactional e-mails with personalized merchandising. The Catolog merchant and online retailer leverages the traffic patterns of visitors to help optimize their Web experience without the need of their personal information, third-part cookies or special individual interaction. 

Citi Trends Fashion for Less Chooses Buyer’s Toolbox
Citi Trends Fashion for Less deploys ANT USA’s Buyers Toolbox. The “everyday low prices” retailer uses the toolbox for company-wide merchandise planning and open to buy. Citi Trends uses the system to help plan for various markets across the nation and quickly adjust to changing fashion trends. The value priced family apparel retailer has more than 300 stores in the southeast, mid-Atlantic region and Texas. 

More Technology News


Optimizing Video Across the Board
By Joe Davis, Director of Retail and Security Strategy, Wren
Veteran users of video, retailers are pioneering new uses for network video for more than just loss prevention and security.  The savviest retailers rely on IP video across the board to support operations and to help improve the overall customer experience in their stores.  The following examples demonstrate how retailers can broaden the use of video to maintain a brand, improve employee performance and maximize customer service. 

Maintaining the Brand
Retailers spend countless time, money and energy building their brands.  They promise customers a certain experience – whether it be impeccable, personal service each and every visit or consistently low prices and wide product availability.  To maintain their investment in the brand, happy customers, and long-term viability, retailers should support their brand with every available resource – including video. 

Most retailers put policies in place to fulfill their brand promise at every customer touchpoint, but it can be difficult to ensure that policies are followed consistently, particularly across hundreds of stores.  By providing the power to see events at each store, video lets managers verify that procedures are being consistently followed at every location.  Whether it’s safety compliance, in-store displays, merchandising, employee training or customer service, video gives managers a powerful tool for evaluating what is actually happening on the floor.  While traditional data from POS and other systems are available, that data is often delivered without context and is therefore harder to analyze and make improvements after evaluation. 

For example, the POS system may show the number of registers being used at a given time within a store. However it will not be able to clearly show the customer wait times or other vital information that would help improve customer service. The combination of video and data gives managers the ability to understand the situation, and ultimately gain a deeper knowledge of how stores are operating, leading to better management and a more consistent experience across multiple locations.  Video goes a long way toward ensuring fundamental expectations that represent the brand name are met for every customer – every time.

Improving Performance
Video is an excellent tool for improving training and associate performance and satisfaction, yielding a better-operating, more pleasant retail environment for employees and customers.  Video gives managers the ability to identify problems and issues that occur with employees in stores by capturing examples of actual incidences. They can then use specific video to train other employees.  This is much more effective than merely painting a picture for other associates of a scenario.  Video examples can augment other training processes to visually demonstrate real-world examples of how to handle or how not to handle particular situations. 

Employees may also perform to maximum potential if they are aware of being monitored.  Loss prevention studies show that monitored employees are less likely to steal or conduct personal business during work hours.  Some retailers are also using video as a way to provide incentives and reward employees that are performing well and going the extra mile.  Evaluated across multiple stores, video can capture outstanding performance, allowing managers to reward those individuals.  For example, a business may have a focus on certain types of transactions within its stores.  By using video, retailers can effectively evaluate cashier activities during these targeted transactions and reward or train the operator accordingly.

Maximizing Customer Service
Both of the previous applications for video contribute to ensuring a positive customer experience.  However, video can be used in other ways to improve customer service. 

For example, demographics can be captured with video, giving retailers a better understanding of their customers.  This is valuable information for implementing the most effective marketing programs and also for procuring and stocking products that are of interest to that market.  A review of video over time reveals who is shopping at the store, the effectiveness of end caps and other in-store promotions, and the peak shopping times. 

Video can also be used to ensure readiness during peak store hours. Managers can view video of any store to verify shelves are stocked, floors are covered with retail associates, aisles are clear and accessible, shopping carts are stacked and available, cash registers are fully staffed, and that each store is ready for the rush of customers. Video can be reviewed remotely by the corporate office to ensure that customers are being well-served.  The power of network video to provide easy remote access to a wealth of information is unmatched by any other source of data. 

Retailers who apply some creativity to their investment in video can use it as a tool to differentiate themselves and to maximize their efficiency and revenues across the board. 

Joe Davis serves as Director of Retail and Security Strategy at Wren, a video surveillance solutions provider for more than 20 years.  Mr. Davis directs the product management efforts of the company and serves as subject matter expert in retail and loss prevention. Davis also provides consulting services to customers looking to develop successful loss prevention programs. Mr. Davis began his retail career in 1987 in an entry-level operations position at Wal-Mart. From there, he was promoted nine times during his 12-year career with the retail giant. He can be reached at joe.davis@wrensolutions.com


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