My Macy’s Provides Recession Blueprint

Late last year, Macy’s consolidated its divisions and started tailoring in-store merchandising to the needs of different regions, an approach that it calls “My Macy’s.” It turns out that “My Macy’s” has been such a success that it is rolling out the effort across all of it’s stores. According to Karen Hoguet, Macy’s CFO:

For the spring season, the My Macy’s districts outperformed the remaining stores by 2.6 percentage points

My take: These results aren’t surprising. In a previous post, I gave “My Macy’s” a thumbs-up for following a recession strategy that I called: simplify, target, and align. During a recession, companies have less opportunity for sloppiness so they need to more effectively align their offerings and efforts to the specific need of target customers. Since the needs of customers vary across regions, it makes sense to merchandise in different ways in different regions.

The bottom line: What’s your “My <Your Company>” strategy?

My Recession Management Favs Over 2 Years

In a continuation of the look back at my first two years of blogging, today I’m listing some of my…

Favorite Recession Management Posts

The essence of leading in a recession is captured by this quote by John F. Kennedy:

The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity.

While there is some debate as to the accuracy of JFK’s interpretation, the sentiment is right. Here are some of my fsvorite posts about managing in a recession:

The bottom line: Recessions require more leadership than ever. 

The Customer Experience Journey To Oz

My opening keynote speech at Forrester’s Customer Experience Forum was titled “Charting Your Customer Experience Journey Through Tough Times.”  I made a lot of references to Dorothy’s journey in The Wizard Of Oz.

Dorothy had to overcome a lot of obstacles (flying monkeys, cranky witches, etc.). It turns out that the key ingredients to her success are also the key ingredients for a company’s customer experience efforts in these tough economic times:

  • Heart (Tin Man): These economic times are unsettling for customers and employees. So companies need to raise the bar on their empathy to cater to the changing needs of customers and to build engagement with employees.
  • Brains (Scarecrow): It’s easy to make sweeping across the board cuts to respond to a tough economy. But companies need to think more deeply about their business to distinguish what’s really important (and shouldn’t be cut) from those things that are not important (and can be cut).
  • Courage (Lion): While the natural tendency is to get into a defensive mode during a recession, companies need to prepare for the future and strengthen their business. I referenced this quote from John F. Kennedy:

The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity.

There’s some debate as to the accuracy of JFK’s interpretation of the Chinese characters, but the sentiment is absolutely correct!

I ended my presentation with a rewritten version of the song “Somewhere Over The Rainbow.” Here are the lyrics:


There was a lot more in my speech, like the Yellow Brick Road of customer experience maturity. So I’ll be writing more about my comments and other parts of the forum over the next week.  Stay tuned!

The bottom line: Don’t wait for a wizard to improve your customer experience

Lessons From Condoms And Canned Goods

Okay, I’ll admit it, I used “condoms” in the title as a cheap trick to draw in readers. But don’t blame me, I’m discussing an article in Time Magazine called What Sells in a Recession: Canned Goods and Condoms.

The article uses Nielsen Co. data to discuss things that are selling (and not selling) in this economic environment. Here are some tidbits:

  • “Family planning” products, which include condoms and over-the-counter female contraceptives, were up 10% for the first two months of this year. My take: Couples are going out less, which is leading to a phenomenon that the article calls “cocooning.”
  • A catch-all category called “seasonal general merchandise,” which contains thawing salt, body warmers and gift packages with candy went up the most. My take: Even in a downturn, people need to deal with the cold and snowy winter, and candy is a more affordable Valentine’s Day gift than jewelry.
  • Canning and freezing supplies like jars, bags and containers were up 11%.  My take: Consumers are cooking in bulk to prepare for a lot of in-house dining.
  • Other categories in the top 20 include baking mixes and supplies, fresh-meat, vegetables and dry grains, dry pasta, cheese, wine and liquor. My take: Looks like a surge in home-cooked Italian meals. Yum!
  • Film and cameras dropped the most, a decline of 31%. My take: Less traveling and more contraception cuts the demand for picture-taking.
  • Sports and novelty cards dropped 26%.  My take: Could anything be more discretionary?!?
  • Magazines dropped 17%. My take: Part of a longer trend in the media industry. Some blogs can be even more engaging than magazines. :-)
  • Cookies and ice cream cones dropped 10%. My take: People are opting for more home baked desserts.
  • Other products that dropped include air fresheners and deodorants, kitchen gadgets, lawn and garden items, and bath accessories. My take: I have no idea why this is happening, but houses are going to look and smell worse.

The bottom line: The recession windfall: romance and home-cooked meals.

Recession And Innovation From Wool To Hulu

I just read a very interesting article in the New York Times called Why Bad Times Nurture New Inventions which combines some of my major interests: customer experience, innovation, and managing in the recession. It’s a series of short commentaries by five people:

  • Amar Bhidé, professor of business at Columbia and author of book “The Venturesome Economy.”
  • Scott Reynolds Nelson, history professor at the College of William and Mary and author of the forthcoming “Crash: An Uncommon History of America’s Financial Panics.”
  • Rita Gunther McGrath, professor of management at Columbia University and author of “Discovery Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity.”
  • Don Kelly, patent agent and former chief of staff for the United States Patent and Trademark Office
  • Martin Lindstrom, marketing consultant and author of “Buyology: The Truth and Lies About Why We Buy.”

Here is my take on the key items in the article:

Bhide: “The deck gets reshuffled in a recession as habits are re-examined and patterns of behavior are broken, perhaps to greater degree than when things are humming along at a steady state. And that’s what creates business opportunities.” Bhide discusses Kindles, iPods, and computers and the 1980s.

Nelson: “America’s financial panics have often been the periods of its most interesting commercial and logistical innovations. Plummeting commodity prices combined with new observations about manufacturing or trade often suggest new solutions to old problems.” Nelson discusses wool manufacturers circa 1815, industrial food canners circa 1873, and integrated circuits in the 1970s.

McGrath: “With business as usual off the table in a recession, people become more open to new and efficient ways of doing things. And they’re forced to show more entrepreneurial discipline – you have to expend imagination before spending money.” McGrath discusses recent companies Kiva Systems and Hulu.

Kelly: “Inventors and innovative entrepreneurs should be smiling. That timeworn proverb about “an ill wind that blows no good” truly applies in an economic downturn. No doubt, in garages across the country, innovators are hard at work as opportunity bangs on the doors. Answering the call, however, will require them to step back and take a hard look at the current environment.” Kelly discusses small entrepreneurs.

Lindstrom: “What do Lindt chocolate, the Rubik’s Cube, French perfumes and a pair of Wellies have in common? They’ve all had increased profits during this recession. The number of products getting these results, however, is small and getting smaller by the day. These brands, which may weather the storm, offer some hints for start-up businesses.” Lindstrom describes two concepts: 1) don’t ask consumers what they want; figure out what they need; and 2) practical features give consumers a reason to make a purchase.

The bottom line: It’s time to ask yourself if you’re keeping up with shifting customer needs

Obstacles To Customer Experience Success, 2009

I just published a new report called Obstacles To Customer Experience Success, 2009 that examines results from a survey of customer experience decision makers in Q4 2008.  I also published a similar piece of research last year. Here are some of the findings:

  • 89% felt that customer experience as either very important or critical to their firm’s strategy in 2009.
  • 80% said that their executive teams aimed to differentiate their firm’s customer experience.
  • 65% described their approach to customer experience as either disciplined or very disciplined (up from 58% last year).
  • 57% have a senior executive in charge on improving customer experience across products and channels (up from 45% last year).
  • More than half picked lack of budget and lack of cooperation across organizations as major obstacles to their customer experience efforts.
  • What do they expect from a continued recession? 48% expect spending on customer experience to get cut less than in other places, while only 12% expect it to get cut at a higher rate.

The bottom line: Customer experience management won’t get pushed aside by the recession

Learn From Home Depot And Macy’s, But Not Office Depot

There was an interesting article about the latest earnings announcement of retailers like Home Depot, Macy’s, and Office Depot.

First of all, Home Depot and Macy’s are following a recession strategy that I call simplify, target, and align (okay, I just made up that name). Home Depot simplified by closing peripheral businesses like Expo Design Centers and cutting 7,000 of its staff. It targeted by keeping high in-stock levels and maintaining its incentive pay structure. The align step should come next; they need to get the organization to understand and embrace the strategy. And, I loved this quote from Home Depot’s CFO:

We believe if we take care of our associates, they’ll take care of our customers

This statement perfectly aligns with the 4th law of customer experience: Unengaged Employees Don’t Create Engaged Customers. But what makes it even more impressive is that it came from the CFO! Hopefully Home Depot can ignite the customer-centric spark that it once had.

Macy’s, on the other hand, simplified by consolidating its four divisions into a single organization and it’s targeting with an initiative called “My Macy’s,” in which it will tailor the merchandise in stores to target the customers in particular regions of the country. I feel compelled to say DUH! It shouldn’t have taken a recession for Macy’s (or any other retailer) to create localized merchandising strategies.

The article also discusses Office Depot’s disappointing earnings and weak same-store sales. Those results don’t surprise me. Office Depot ended up in last place out of the 25 retailers in Forrester’s 2008 Customer Experience Index and also had the largest drop in its ratings from last year.

The bottom line: Simplify, target, and align!

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