Talking Expansion at the Weintraub Seminar
This morning’s Emanuel Weintraub Seminar, titled “You’ve cut costs! Now grow the top line,” was intended to build on the more hysterical themes of the New Jersey-based consultant’s previous seminars. After all, March sales at retail looked great, continuing a couple of months of much-needed (although modest) growth. Perhaps it’s time for the surviving vendors and retailers to start looking at how to expand again.
Peter Sachse, who does double duty as Macy’s chief marketing officer and Macys.com’s CEO, reprised his November Weintraub Seminar appearance. Last year, he spoke as an e-commerce expert; this time, his topic was marketing.
“Consumers are still scared,” Sachse said, but they’ve learned to manage their fears and are beginning to spend again. For the department store giant, with its stagnant marketing budget, every dollar must do more. In that spirit, Sachse told the audience, Macy’s is hounding their existing customers. In fact, according to their research, “loyal customers are worth six times as much as non-loyal customers.” It’s simply cheaper to play to the repeat shopper than to recruit new ones.
Looking at some of the data from their 2.9 billion customer transactions, Macy’s is learning something. They’re able, via the point of sale, to track what people buy, when, and how often. This is the basis of a new loyalty program that looks a bit like the ones we see at grocery stores—complete with the little keychain card. No longer will Macy’s force customers to use the Macy’s credit card in order to participate in the loyalty program—although there is an incentive to do so. Shoppers will start seeing percentages back after five transactions, and somewhere between the first and the fifth (whether online or in the store), they will get a special discount coupon that’s targeted to them, based on purchase history.
Further building on the data collected from its customers, Macy’s is now able to send out mailings in many different versions. If your purchase history shows nothing but menswear, the Macy’s catalogs and sale circulars you receive will too.
While it’s important for all of us in the business to stay apprised of new initiatives at the biggest department store chain in the country, some of these presentations can feel like a bit like consumer-focused marketing blitzes—or worse yet, shareholder confidence builders.
Overall though, today’s Weintraub Seminar was even more insider-ish than previous ones: the first speaker was a Commerce Department expert on international trade, pitching her services, and during a lively question-and-answer break, audience members traded wisdom on global sourcing and the wool and cotton markets. Under the palpable relief with regard to customers, these executives showed signs of uncertainty in the realms of sourcing, manufacturing and promotions.
The price of cotton is going up in China, and so is the cost of Chinese manufacturing. As this happens, factories are moving from the developed parts to the undeveloped parts, where all costs are lower—including labor. Some executives in the room mentioned manufacturing in Vietnam and Bangladesh. The price of both wool fibers and wool fabrics is increasing, according to others in the room.
And while these costs are rising, the American consumer still likes seeing discounts. Thirty and 40 percent off seem normal to many of us.
Panelist Gilbert Harrison of Financo expects more consolidation. Manny Weintraub, the seminar’s organizer, elaborated on Harrison’s point and said that while small companies are having a tough time, it’s mid-sized companies that will continue to feel the biggest pinch. And if the rumors of rising manufacturing and raw materials costs are true, this will hit everyone.
But let’s end this on a happy note: consumer confidence has been rising since February. Earlier this week, the Conference Board announced that consumer confidence, which had dipped below the 50 mark in February, edged up to 52.3 in March and rose to nearly 58 in April—it’s highest point since September 2008 (61.4).
