CINCINNATI -- Macy’s Inc. is running a 40-store test in Southern California that could “revolutionize the fine jewelry business,” Macy’s President Jeffrey Gennette told Wall Street analysts last week.
It’s the latest in a series of growth experiments under review by the Cincinnati-based department store chain.
“We're up against some pretty formidable specialty store competitors,” Gennette said at the Goldman Sachs Global Retailing Conference Sept. 9. “We believe what we're doing there right now gives us the opportunity for double-digit growth in this business."
That would be a marked improvement for Macy’s, where revenue growth has evaporated since 2012 – when investors lauded the company for its 3.7 percent growth rate. Revenue growth fell to 1.9 percent in 2013 and 0.7 percent in 2014. Macy’s revenue declined in each of the first two quarters of 2015.
Macy’s told investors in February that it would invest $100 million in new growth ventures this year, including the rollout of its Bluemercury cosmetics shops within Macy’s stores and the launch of an off-price retail chain called Backstage.
Since February, Macy’s introduced new licensing deals that will bring Men’s Wearhouse tuxedo rentals and Best Buy electronics to Macy’s stores. The company also has deals that will bring exclusive merchandise to Macy’s from online retailers Dormify and Nineteenth Amendment. And it announced a joint venture to test an e-commerce venture in China.
“We have a lot on our plate,” Gennette told investors last week. “We are committed to continued growth in the future.”
Macy’s would buck an industry trend if it achieves double-digit growth at the jewelry counter.
Its new strategy was developed by store managers in the Los Angeles area and is being rolled out this fall. It differs from previous attempts to boost jewelry sales in that it’s holistic, trying multiple approaches at once, said Macy’s spokesman Jim Sluzewski.
“It is a test to see if we can increase the growth rate in jewelry by broadening and deepening the product assortment, improving the visual display and fixturing, and increasing staffing with associates with additional product knowledge,” Sluzewski said. “We are working to make Macy’s a more comprehensive jewelry destination for customers.”
Fine jewelry, which refers to merchandise made with precious metals or gem stones, registered $53.2 billion in U.S. sales in 2015, according to the market-research firm Euromonitor. The industry has been growing at an annual rate of 5.8 percent in the last five years, but most of the growth has come from online sales.
Department stores have declined from a 9.3 percent share of the total market to 9 percent in 2015, according to Euromonitor.
Department-store market share is also shrinking in costume jewelry, a $10 billion category that is growing at less than 3 percent a year.
But department stores have an advantage over online sellers, according to a 2013 report by McKinsey & Co. It predicted the global jewelry business will follow trends that dominated the fashion industry in the last 30 years, including an increase in global brands and faster development of new products.
“Most consumers prefer to buy expensive items from brick-and-mortar stores," said the report, "which are perceived as more reliable and which provide the opportunity to touch and feel the merchandise -- a crucial factor in a high-involvement category driven by sensory experience.”