The Middle Name is Cash

Those who have been reading these articles for the past 14 months know that I have been anything but sympathetic to the trials and downward trends in the department store category. As we get ready for another Holiday Selling Season where Wal-Mart has already taken off the price gloves, (why do they have to make those announcements to tip off the competition anyway?) it’s obvious that branding will once again take a back seat to promotion. Of course, this will show that these retailers really mean business to get their sales trends back on track. On the other hand, recent monthly sales reports once again show that one chain, JC Penney with an 8.1% comp increase, continues its remarkable recovery as the pacesetter in this category.

Recently, I was fortunate to be with fellow RAMA board member and JCP CMO, Mike Boylson at a seminar in Columbus. While there, Mike described Penney’s strategy and efforts in righting that ship and increasing its stock price by some ten times over the past five years or so. Now, I have not been a big fan of the Penney organization since it dismantled my long-term employer, Eckerd Drugs, and basically made one of the strongest brands disintegrate before our eyes in order to fuel the department store’s recovery. However, you have to hand it to the company and Mike’s marketing efforts in making the stores not only exciting to shop, but also one of the most creative branding voices in the marketplace. Penney’s advertising efforts have been consistently on target and freshly creative, but more importantly, the store has moved into marketing venues to elevate a strong brand (with the mature customers anyway) into a higher state of excitement.

Its pop-up store in Times Square was exciting and a great vehicle to say that this is not your father’s Oldsmobile anymore. It’s tie in with MTV with the VMA’s, its JAM after school promotion, and its ongoing sponsorship of high profile media events like the Academy Awards continue to build it’s brand. The strong commitment to its own brands, like Arizona Jeans Company, show a packaged good mentality works or as Doner CEO Alan Kalter says “Think like a brand, act like a store.” Penney’s new agreement with Sephora is going to separate them from all the other stores who sell cosmetics and fragrance. Facing stiff competition from Kohl’s and other specialty retailers, Penney’s is now looking at free-standing sites which, in my opinion, will generate more traffic and a lot of customers who don’t think the malls offer anything exciting.

But it’s not an easy journey. As Mike told me, the brand has a long way to go before it wins over the Gen X and Gen Y customers without losing its mature customers who still believe in the quality of the JC Penney experience. What impressed me is that Mike and JCP know that building and re-building the brand that James Cash Penney started over a hundred years ago is an ongoing and long-term commitment that must touch all areas of the store and its communications. Compare this to Sears who can’t quite figure out if it should sell washing machines or washed jeans. Or Dillard’s whose advertising looks like it’s right out Vogue magazine (a 1965 issue, that is). Penney’s realizes that it must get its brand positioned in vehicles and media in an innovative, unique way. The customers don’t want more of the same and they won’t reject the stores that don’t change. In fact, they simply won’t even consider them. Penney’s may not have won over everyone yet, but you got to give them credit for making the brand more relevant and positioning it to warrant more of the customer’s cash.

"The friendly smile, the word of greeting, are certainly something fleeting and seemingly insubstantial. You can't take them with you. But they work for good beyond your power to measure their influence." — James Cash Penney

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DANCIN' IN THE STREET

To view the new Macy's campaign Just click on http://www1.macys.com/campaign/macystv_brand_relaunch.jsp

It’s been interesting seeing the nationalization of Macy’s taking place on televisions and in newspapers in almost every major market in the country the past couple weeks. Saying good-bye to venerable names like Marshall Field’s, Hecht Co., Burdines, Foley’s and others, Macy’s has launched a well produced national campaign built around one of my favorite Motown songs-- Martha Reeve’s and The Vadelas’ “Dancin in the Streets”. In many of the cities mentioned in the song, Macy’s banner now hangs high in shopping center after shopping center. The new campaign extols that the excitement of Herald Square is now being generated in market after market. Or is it?

Federated CEO Terry Lundgren is confident that the consolidation of the stores under the famous Macy’s logo will bring positive sales trends to the chain of stores that have been floundering the past several years. Maybe, Mr. Lundgren should listen more closely to his new theme song. Yes, the customers are not only dancing in the streets, but they are also spending more of their time shopping there as well. Part of the problem with today’s department stores is that they are still anchored in regional malls where today’s customers no longer dance around every week, much less shop. The customers are now excited about the new downtowns and neighborhoods where stores are cropping up more regularly and where customers love the convenience (and the ambience) of being able to park and shop right in front of the store. It holds true for the “Power Centers” which are being built all around town, including many on the same sites where defunct regional shopping malls were recently razed. The excitement of Macy’s flagship on Herald Square just doesn’t exist in the next great Town Center mall and the customers know it. They also know that the stores there haven’t branded themselves to their customers by providing an exciting—OK, at the very least, pleasurable —shopping experience.

What’s more they aren’t addressing the stiff competition from the Targets, Kohl’s, and others who are not only offering as much fashion but also doing it more conveniently and at a better price. Last week in a presentation to retail marketing executives, Michael Francis, Target’s CMO, said that their store’s biggest share of market gains are coming from the department stores. Wal-Mart has been taking share for years with price and selection. Target now takes it with fashion and the excitement that department stores were known for when they identified closely with the communities in which they were located.

The new “Streets” campaign is well executed, the message is clear, and the media weight will bring higher awareness for the Macy’s name—as if they needed it. However, it does not give me—a veteran of 8 years in the department store business—or any other customers a reason to shop a store that they haven’t visited in months. They have not given a reason to abandon Kohl’s, Crate & Barrel, or Men’s Warehouse and come back to the mall
So, Macy’s is everywhere. Now why should we shop there??

NEIGHBORHOOD BRANDING

I finished one of the most interesting assignments of my career a couple weeks ago. Working with Levitz Furniture on Long Island for the past five months gave me an opportunity to live in Manhattan. This was something I wanted to do when I finished graduate school many years ago, but Uncle Sam had other ideas for me. Having traveled regularly to the Big Apple, I always appreciated how the city somehow works against all odds.

I think the late Charles Kuralt said it best in his "13 Favorite Places In The World"`segment that he produced prior to his death. One of the places that he discussed and featured was the town that he called home for most of his life—New York City. Kuralt said that the reason New York City works so well is that it is a large city made up of a thousand small neighborhoods. Each one of those neighborhoods was its own small town and each one had its own character. And so it was for me when I settled in to my small studio apartment on West 34th Street not far from Penn Station. I soon began to appreciate my neighborhood.

First, there was Ruppert, the evening doorman at my place, who always greeted me with a smile and an “Alright!” before a commentary on the day’s weather report. Next door the dry cleaner and laundry run by a Korean woman who would not only get your laundry back the same day but also have it at the apartment lobby for those of us who usually got back long after they closed at 7pm. Down the street, the Food Fair deli and market was a frequent stop when there was no dinner on the town and their fresh wraps were as good as any food I had at the Bryant Park Grill - the smiles on the two Middle Eastern owners was worth the visit. A little further, Shutters Bar and Café was a good place to stop on a cold or rainy night where John would serve up some of the best meat loaf (and I love meat loaf!) I’ve ever had along with some great Montepulciano d’Abruzzo wine, and jazz from Thursday thru Sunday. Across the way, the Wine Shop was open it seemed at all hours with a great selection and great prices for a 500 square foot establishment. Further down, the Skylight Diner lived up to it reputation as New York’s best diner (according to the Daily News) with wonderful breakfasts and a lot more. Of course, B&H Photo and Video on the corner was an experience showing that you could sell millions of dollars of electronics and photo gear and still stay closed for the Sabbath and every other Jewish Orthodox holidays. I could go on with a lot more and never have wandered more than a block from my front door (see the view above.).

Of course, there was the exception to a good branding retailer with the Kmart Penn Station. This Kmart does more business than any other Kmart in the country despite some of the surliest employees and a chronically broken escalator between the second and third floors. Sometimes location is everything.

What all the other places had in common was that--to the surrounding community--they were famous for something and had people working there who were more neighbors than just sales people. Isn’t that what retail branding is all about? As I travel around the city, I still wonder at the number of stores that do business in neighborhood after neighborhood. No shortage of competition here. But to their market (which may only be one square block) they are the best brand in their category. Duane Reade Drug Stores learned that when they realized that sometimes their market is only the building in which they are located and they serve it well while struggling with suburban locations. It’s all about finding your niche and getting the right people to live up to it everyday.

Now, back to Florida.

Ken