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Macy’s Furniture Collections Case Study

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Updated: Dec 24th, 2019

History of Macy’s and history of private label

It is not a coincidence that Macy’s Inc. boasts of a large and well established portfolio of various brands in its holdings. Since 1929, the retail giant has been keen in selecting and selling moving brands and products in its collection.

Collaborations and partnerships have enabled the retail company to diversify its product line in the industry (Pepe, Abratt and Dion 163). It can be recalled that Fred Lazarus was the brainchild of the retail firm.

He managed to create initial partnerships with other leading retailers and departmental stores such as Abraham & Straus and Manhattan’s Bloomingdale’s.

By 1945, the retail firm was ready to set up its first headquarters in Cincinnati. After a period of three decades, major cities in the United States were already being served by Macy’s departmental stores stocked with various household goods. However, it is crucial to mention that it largely operated as a federated company during its initial years.

Strauses bought Macy’s four decades after Rowland passed away.

During the 1980s, the retailer went through a difficult economic time since it was unable to clear its debts. Before the close of 1992, the company filed for bankruptcy. Three years later, the store was bought and acquired by the Federated Company and renamed as Macy’s.

This led to a massive expansion of the firm. May Department Stores was added to the company in 2005. Hence, it became part of its roster. It was possible to reach the target markets through localized initiatives after the establishment of “My Macy’s”.

Besides, most of the Macy’s offices were consolidated to less than 70. As a result, the company managed to save close to $400 million in terms of expenses.

Currently, 45 states and 850 stores are controlled by Bloomingdale’s and Macy’s. The main products include home furnishings, cosmetics, children’s apparel, accessories, women’s clothing, and men’s clothing. Annual sale is above $25 billion. Macy’s also enjoys over ten private label brands.

In addition, there are a number of exclusive partnerships with other leading retailers within the industry. Since the retail company has a vibrant market, it clearly understands its needs, tastes and preferences.

Apart from attracting the attention of a wider market, the retailer is keen in promoting its products to the affluent and young generation. In addition, the upper middle class shoppers are in the list of the company’s targeted group.

The history of the private label is also amazing. The common misconception is that products sold as private labels are of low quality. In fact, most competitor products are usually higher in price than those of the private labels. This explains why the latter is though to be low in quality (Pepe, Abratt and Dion 159).

One of the most outstanding identities of private label products is that customers are allowed to bargain for the best price. Private label emerged as a strategy to counter products with extremely high price. From the history of private labels, it reached a point when a low pricing strategy was necessary in order to attract more customers.

Low-priced merchandise was viewed by marketers as the best promotional strategy to counter stiff market competition. This trend has been prevailing since the 19th century.

Other features of private labels include direct manufacturing of products in order to sell at lower prices, selling goods in wholesale and enhancing quality so that the market reputation is not spoilt.

This paper analyzes Macy’s line extension within its furniture collection and proposes the best expansion strategies and marketing campaigns that can be adopted to improve sales.

Macy’s line extension

The current Hotel label at Macy’s mainly targets the high-end market. Individuals who have a sharp taste for class, design and fashion are the focus of this label. The demographic for this target market comprises of males and females who are aged between 35 and 60 years.

The Hotel collection presents a number of strengths at Macy’s Inc. First, the retailer can set the maximum possible price because the target group comprises of working class with a unique taste for architecture and design. The freedom to make a wide variety of choice should definitely be accompanied by costly spending.

Hence, the company can be in a position to optimize its revenue base. Second, the Hotel collection provides many opportunities for both innovation and invention. Since the targeted demographic group keeps on evolving in terms of taste and preference, the retailer is compelled to invent new designs and styles on a regular basis.

As a result, the retailer may outwit any emerging competition along the same line. Third, the large suburban neighborhoods and metropolitan cities are the main target locations for the Hotel collection.

The retailer can indeed benefit significantly from the available infrastructure when setting up its facilities. In other words, establishing new hotels is quite easy within the targeted regions due to low investment capital.

On the other hand, this collection may suffer from various weaknesses. These include innovation challenges, low revenue base in rural settings, poor market segmentation due to profiling of customers and seasonality challenge of the hotel industry.

Owing to the challenges posed by the Hotel collection, it is highly recommended for the management at Macy’s to contemplate its private label line extension. One of the possible areas of extension is in the furniture collection. The latter can indeed boost the design and architecture of the Hotel collection into a highly competitive level.

The management should lateralize the line into a modern and stylish bedroom furniture by adding different categories of products as it is the case with Calvin Klein. Second, the price should be competitive enough so that the retailer can attract more customers. It does dot imply that low-priced products are of poor quality.

The company should seek for bedroom furniture that are sleek, durable and of different designs and sizes. Color is also of great essence when it comes to the furniture collection. It is vital to remember that customers within the above demographic profile are very sensitive to color.

Therefore, it will be prudent for the management to sample different types of colors for the furniture so that the tastes and preferences of different customers can be fully met. In fact, the furniture collection can be custom-made according to the preferred designs of most clients.

When sourcing for the bedroom furniture collection, it is pertinent to consider the following features:

  • Firm joints for all pieces of furniture
  • Paints used to decorate the furniture should be friendly to the environment
  • High quality furniture
  • Double-dwelled joints are highly preferred
  • The foam density for beds should be over 40 degrees
  • The fabric used for chairs and sofas should be highly endurable

In addition, the bedroom furniture collection should incorporate accessories such as mirrors, writing chair, writing table, TV cabinet, tea table, sofa, coffee table, luggage stand, and bed base.

These accessories will provide the much needed merchandise mix in the collection. Additional merchandise mix that can be incorporated in the furniture collection are shown below:

Nightstand

Nightstand

Heardboards Only

Heardboards Only

Heardboards Only

Heardboards Only

2-door armoire

2-door armoire

Bedroom Bench

Bedroom Bench

Floor Lamp

Floor Lamp

Line introduction and marketing campaigns

As part of the marketing campaigns, the management should put flyers and posters around Home department of Macy’s to let customers know about the line extension. A flyer is a small stuff characterized by less information than other types of print advertising. Hence, it is necessary for the information to be objective.

A flyer can be used for various purposes such as promotion of a company, a product, marketing a new ideas and so on. Small businesses often use flers as a way to reduce costs on advertising since its distribution can be easily targeted in a region, event or at a given spot as it is the case with Macy’s line extension.

However, effectiveness will be required so that the flyers can pass the necessary information. For instance, flyers should be developed in a creative and simple way in order to attract the attention of buyers within the Home department of the departmental store.

For the flyer to pass the intended message about the extension, it should be as brief as possible. Most shoppers do not have time to read long phrases and statements. This will be his first (and only) opportunity to draw the reader’s attention. Hence, it should be a short phrase with an impact.

For example, it can highlight price reduction of a new collection within the extension. The impressions should be large enough. Seciond, the text should be concise and easy to read. The purpose of a flyer is to promote what the company can offer its potential customers.

Hence, it must be to the point. Furthermore, it is important to give the reader enough information in case of any inquiries.

Promotion or discount message on the flyers is one of the most efficient ways to attract the reader’s interest. People love discounts, gifts and free samples. The management should create a coupon encouraging potential customers to get in touch with the store.

In addition, creating a flyer that contains texts only may leave a dull and boring impression to the targetted shoppers. Include an image, photo or illustration that represents products which have been added into the collection.

Some basic care should be taken when making the flyers and posters. For example, beware of excess supplies, be attentive to the size of fonts and make sure that they are legible.

Colors used should be aligned with the message being passed along. A simple layout should be manatined so that the reader does not lose focus on what really matters.

Another promotional/marketing campaign strategy is to put all the furniture together with the original Hotel’s collection (bedding products) in order to use bundled marketing strategies to attract customers. When customers buy more, there will be an increase in sales per-square-foot.

Most importantly, the management should consider using social media networks such as Instagram, Facebook and Twitter to promote the new line of products.

Social Media Marketing are actions related to social networks that can create an image for a company on the Internet when placing advertising campaigns, fixing the reputation of an organization and enhancing the relationship between customers and a firm.

The popularization of the Internet and the growth of social networks have improved marketing of products in a virtual environment.

The greatest advantage of Social Media Marketing of the extended product line at Macy’s is direct customer interaction. Social networks have emerged as the most efficient way of obtaining accurate feedback about an organization (Vernuccio 217).

The opinions of customers facilitate rapid and efficient response from a company’s representatives. In the case of Macy’s retail store for the extended line of product, an event such as #HotelplusFurniture can be created on the company’s Facebook page so that both active and potential customers may leave their comments.

In addition, all the Facebook, Instagram, and Twitter accounts of Macy’s should be followed so that the new products can be known to the public (Koeth 28).

Better still, the retailer’s marketing officers can post a picture on Instagram of the most unwanted piece of furniture in bedroom and describe why it should be eliminated. Moreover, three winners can be picked to walk away with a total of $10,000 worth of bedding and furniture from Hotel and Furniture Collection department.

The promotion should run for about three weeks before winners are identified (Marek 258). Finally, the management should come up with other effective marketing strategies that will help introduce the extended line of furniture collection and increase brand recall in the minds of consumers.

Conclusion

In recap, Macy’s Inc. has a long history of private label in its portfolio as a retail company. From the above case analysis, it is evident that the store is still competitive in the retail industry. However, some of its private labels still need to be revamped in order to guarantee optimum profitability.

For instance, the Hotel Collection may be face-lifted by introducing an extended line of furniture collection with competitive prices and high quality. A mix of merchandise alongside robust marketing campaigns will also be instrumental in driving the sales of the line extension.

Works Cited

Koeth, Barbara. “The Making of Merchandising Executives: Macy’s: Retailing’s Harvard.” Management Review 74.6 (1985): 28. Print.

Marek, Prymon. “A Critical Analysis of the Concept of Marketing Strategies for Small and Mid-Sized Companies.” Economics, Management & Financial Markets 9.4 (2014): 255-261. Print.

Pepe, Michael, Russell Abratt, and Paul Dion. “Competitive Advantage, Private-Label Brands, and Category Profitability.” Journal of Marketing Management 28.1/2 (2012): 154-172. Print

Vernuccio, Maria. “Communicating Corporate Brands through Social Media: An Exploratory Study.” Journal of Business Communication 51.3 (2014): 211-233. Print.

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