A Retail Buying Focus – Macy’s Private Labels

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Introduction

The last two decades have seen the business arena tighten up in leaps and bounds in terms of competition. The result is that organizations, especially those in the retail industry, find themselves in compromising business situations. Offering private label products is one of the business strategies that organizations have coined to survive such situations. Macy’s, one of America’s oldest department stores is among the retail outlets that are currently using the private label strategy.

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It is not the leading dealer of private label merchandise, but it has realized positive returns from the venture. Thus, deeper involvement in private-label merchandise can improve the organization’s performance tremendously. In light of this background, this paper seeks to explore the possible avenues through which Macy’s can deepen its private-label investment in a bid to improve its overall performance.

Private Label Products

Private label brands, also known as the owner’s brands, home brands, store brands, or retailer’s brands, refer to products manufactured under contract and sold under a retailer’s chosen brand name (Mullick-Kanwar par. 4). Traditionally, private label products were synonymous with generic products featuring as low- priced substitutes for national brands. Nonetheless, private label products proliferated in retail outlets all over the world. Today, retail stores strive to meet every customer’s desire with private label merchandise (Barsky et al. 165). This change has led to the growth of the private label industry all over the world.

An Overview of Macy’s Departmental Stores

Macy’s is one of the oldest departmental stores in the US. It commenced its operations in the year 1858 in Manhattan and has since then endeavored to set itself apart as an iconic brand (Nevares 1). Today it operates close to a thousand stores in the US as well as a plethora of other stores in the Northern and Southern parts of the American continent. The European, Asian and African continents are also dotted with Macy’s retail outlets.

In the one and a half millennia of its existence, Macy’s growth trajectory was full of vicissitudes like any typical organization. Alongside other established retailers in the US, Macy’s sought different initiatives that would enable it to survive the global economic downturn that came at the end of the last decade. In the process, Macy’s focus on private label products intensified. As of 2013, its product assortment comprised forty-five percent exclusive products, out of which twenty-six percent were Macy’s private label products (Nevares 2).

Macy’s still has room to grow since the private label market in the US remains largely untapped. Further, the price gap between private label products and national brands is still sizeable in some product lines. Currently, Macy’s offers the following private brands, Alfani, Charter Club, INC, Hotel Collection, American Rug, Green Dog, and Tools of The Trade among several others (Urbany 4). If it focuses objectively on the right private labels, its future is promising.

Proposed Private Label Investment Strategy

An analysis of the private label trends in the US in comparison to Europe shows that the former has a lot of untapped potentials in this area (SymphonyIRI Group 2). Macy’s as one of the organizations that have embraced this strategy needs to become more innovative in seizing this opportunity to grow its market share. Outlined below are three methods by which the organization can achieve this feat.

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Macy’s is a chain of retail stores that deal largely in apparel and beauty products such as accessories and cosmetics (Urbany 3). This line of business comprises relatively fast-moving goods. The products can earn the organization a fortune if it positions its private labels as premier brands. This can work well with the millennial generation as its target market since this group has a keen eye for flashy and celebrity-type merchandise (SymphonyIRI Group 5).

Moreover, the 2010 US Census extrapolates the millennial generation to be about 73 million in number (Nevares 3). It thus forms a sizeable market segment with the potential to drive Macy’s sales a notch higher if well tapped. By positioning its private label products as premier brands, Macy’s can go a long way in transforming its performance since the strategy can work well with its already established initiatives such as localization of products and enhancement of customer experience. Further, this initiative is consistent with the current technological trends. This aspect is important because the millennial generation is technology savvy (Urbany 2).

In line with the positioning of its private labels as premier brands, Macy’s can calibrate its brand promise and proof within its merchandise (Mullick-Kanwar par. 53). It is one thing to accompany a product with advertising hype that captures the attention of the target market, but maintaining that interest and possibly transforming it into customer loyalty is a very different thing. Macy’s has already developed a good reputation for itself because it sources its private label products from some of the best manufactures (Urbany 5). It can use this reputation to its advantage by ensuring it seeks its private-label goods from high-quality manufacturers only.

Such a move will ensure that any customer who purchases any premier private label product from Macy’s finds it commensurate with the price and quality. In this manner, the positioning of Macy’s private label products can work to the organization’s advantage by helping it to build strong customer loyalty. Apart from having a keen eye for trendy and high-quality merchandise, the millennial generation is notorious for short-lived attention spans (Nevares 2). No matter how good a product is, it can only sustain this group’s interest for a short length of time. The implication of this attribute for Macy’s is that it needs to invest heavily in market research to make itself the trend-setter in its line of business as this is the only sure way to capture and retain the millennial generation.

The third strategy that Macy’s can employ to ensure that its premier brand strategy thrives is to optimize and promote the synergies that accrue from the portfolio of private label brands it offers (Mullick-Kanwar par. 47). Macy’s is already renowned as one of the key players in the private label industry. Such a reputation can only develop when the line of private label products offered consistently meet or even exceed specific customer needs.

Macy’s can leverage this synergy to the advantage of its premier private label brand by probably offering its loyal private label consumers free samples of the premier brand or offering them discounts on the same. Once the consumers have had an experience with the premier brands and assessed their quality, the organization will gradually start realizing a rise in the consumption of the products.

In addition to this, the company can increase the presence of the exclusive merchandise it offers as well as its private-label merchandise in its key stores. As of 2013, Macy’s private label sales accounted for about twenty percent of the overall sales (Nevares 2). This figure comes from an estimated twenty-six percent stock of private label products out of its overall stock. If the organization changes its assortment of merchandise from a national-brand dominated to a private-label dominated composition, it may give many more people a reason to visit its outlets.

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Customers can easily purchase a national brand from any nearby outlet but will have to visit a Macy’s outlet to purchase an exclusive brand or a private label brand. The exclusive brand composition should comprise forty percent private label products and forty percent exclusive brands leaving only twenty percent to nationally branded products. This way, Macy’s can transform itself into a retail store of choice and beat its competitors.

Conclusion

The private-label arena is apparently the next frontier that needs exploration by the US retail organizations. It promises great potential in increasing the market share of retail outlets. The conventional trend of associating private label merchandise with poor quality is a notion of the past. Today, retail outlets prioritize the satisfaction of customers’ needs just like manufacturers of national brands.

In fact, private label products pay closer attention to specific customer needs and demands than national brands. Moreover, they retail at cheaper prices than their nationally branded counterparts do. Macy’s has thus settled for one of the best business initiatives to enhance its performance. If it implements the three proposed strategies outlined in the paper, the organization can realize even better performance.

Works Cited

Barsky, Robert B, Mark Bergen, Shantanu Dutta and Daniel Levy. “What can the price gap between branded and private-label products tell us about markups?.” University of Chicago Press, (2003): 165-228. Print.

Mullick-Kanwar, Meera. “The Evolution of Private Label Branding | Meera Mullick-Kanwar | brandchannel.com.” Brandchannel. 2014. Web.

Nevares, Quinn. “Merchandise Strategies: Macy’s Case Study.” Slideshare. 2013. Web.

SymphonyIRI Group. Private Label: Brand Positioning in the New World Order. Chicago: SymphonyIRI Group, 2011. 1-21. Print.

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Urbany, Taylor. “Macy’s Case Study – Merchandise Strategies FIDM 2013.” Slideshare. Web.

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BusinessEssay. (2022, January 12). A Retail Buying Focus - Macy's Private Labels. Retrieved from https://business-essay.com/a-retail-buying-focus-macys-private-labels/

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