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Column: Can Macy's make the shoe fit with new loyalty program?

Retailer aims for more value, less confusion
Posted: 8:00 AM, Sep 15, 2017
Updated: 2017-09-15 08:00:05-04
Column: Can Macy's make the shoe fit with new loyalty program?

CINCINNATI - I bought a pair of shoes at Macy’s last week, but I still can’t tell you exactly how much I paid for them.

Maybe that's why Macy’s CEO Jeffrey Gennette told analysts last week that he wants to simplify the company’s loyalty marketing programs with a spate of reforms that begin in early October. Gennette wouldn't spill all the details but stressed that “reducing the amount of pricing complexity” at Macy's will be one of the new program's goals.

Jeffrey Gennette

“The simplicity of what we’re learning in (the discount-pricing format) Backstage and what we’re learning in Last Act (clearance racks) is the customer is very responsive when the price on the ticket is the price that she pays,” Gennette said. “So, the amount of layering that we did with discount on top of discount, we’ve eliminated that. Getting the one price with a coupon or a loyalty program on top of that is where we think the formula needs to be.”

Gennette said Macy’s will eliminate exclusions on coupons and offer more shipping and service options to its best customers. The goal is to encourage more spending from the 9 percent of Macy’s customers who account for 46 percent of the department store’s sales.

“The more you spend, the more soft or hard benefits that you get,” Gennette said.

Macy’s has been trying to reverse a two-year sales slump by closing its slower-growing stores, selling off real estate, cutting employee costs and reinvesting in new initiatives. So far, it has expanded the Bluemercury cosmetics chain and boosted its presence as a discount retailer, even as it grows the amount of exclusive merchandise it offers.

All of these growth plans are complicated enough in their own right, but the devil really lurks in the details when it comes to simplifying loyalty programs, said Mark Johnson, CEO of Loyalty 360, a consulting firm on Cincinnati’s east side.

“Some of these programs are very complex and very arcane,” Johnson said. “People don’t want to spend 25 hours getting up to speed on their loyalty program. They want to know it works and that the value equation is good for them.”

And that’s why I wanted to tell you about my new Bostonian Flexlites.

The receipt clearly states the price was $56.25 before tax. Originally $100, my the shoes were on sale for $75. Because my wife paid on her Macy’s credit card, she was eligible for an additional discount of $18.75.

But here’s where it gets murky. We didn't know about that additional discount until our card was in the chip reader and our friendly Macy’s associate asked us to choose from a half-dozen discount options.

She also talked us into joining Macy’s “Thanks for Sharing” program. They charge $25 to your Macy’s credit card and donate $10 of that to charity. Then, you get 10 percent of all Macy’s purchases through Dec. 31. The discount is reimbursed to you on a debit card that arrives in February. My receipt said the new shoes added $5.63 to the card, but I’m still down $19.63 from my $25 donation. To get all that back, I have to spend $193 on merchandise that does not include the following items on the “Thanks for Sharing” list of exclusions :

“Furniture, floor coverings, mattresses, box springs, fur salon, bridal salon, gift cards/certificates, electronics and associated accessories, special orders, watch/jewelry repair, sunglasses, maternity, athletic shoes for him, her & kids, Tag Heuer, eSpot, custom decorating, carpet cleaning and other non-merchandise-related services, service and delivery fees, gift wrap, purchases from licensed departments, bill inserts and restaurants, Macy’s Backstage merchandise/locations, as well as all purchases made outside of Macy’s.”

And then there’s the Plenti card, a multi-merchant loyalty program that American Express offers to all Macy’s credit card holders. We earned 57 Plenti points on that transaction, although it’s a mystery to me – even after reading the program’s 5,800-word terms and conditions – how I might trade those points for merchandise, much less what they're actually worth.

Bottom line: I’m pretty sure I paid about $50 for a pair shoes that took me five minutes to find for $42.71 on Amazon.com. For the record, I'm happy with my purchase. I was able to try them on for fit and comfort and didn't have to worry whether Amazon and its partner, shoozforu, would get them to me undamaged in its promised one-day shipping time. And let’s not forget that I was willing to pay $75 when I brought these shoes to the register.

But that means Macy’s loyalty programs were a nonfactor in my purchase. I’m no more or less likely to go back to Macy’s in the future. The loyalty discount they offered at the end of the transaction didn't bring me extra value. It just narrowed the gap between Macy’s and a cheaper rival.

Amazon screen capture

Macy’s outlined five goals in June when Chief Marketing Officer Richard Lennox briefed Wall Street analysts on planned changes. They included establishing a “simple program with clear value, incentives that motivate changes in customer behavior” and “tiered benefits” for Macy’s best customers.

Lennox said the 2.5 million shoppers who account for 46 percent of Macy’s revenue tend to migrate in and out of the company’s most active customer groups. So, keeping them consistently active would boost sales volume.

“The idea is not to pull back on promotions, it’s to make sure the different species of promotions we run are clear and distinct — one-day sales aimed at deal hunters or friends and family aimed at fashion spending,” Lennox said. “What you also can do is surround those 2.5 million customers with added value, high perceived-value offers that really don't cost us a lot of money. My Stylist is a classic example. Could we invite them to VIP friends and family sales the night before the sale opens? So really it's about how do we really say to customers, you're really important to us.”