Macy's Is Still Struggling To Figure Out Millennials

Macy's announced plans to open off-price retail stores has drawn a lot of interest. However, the move may have as much to do with a slowdown in its higher-end product sales as it does with observing the success of off-price formats like Nordstrom Rack. At least one gets that impression from a controversial comment made by the company's CFO, Karen Hoguet, at a recent industry conference in which she placed blame for the lull in luxury sales.

"We did some consumer research, and the customers said she likes going to the off-price retailers because she doesn't have to put lipstick on," Ms. Hoguet said, according to a transcript of the conference quoted in MarketWatch. "I think part of that is the customers are buying other things, whether the electronics, cable services, Netflix , whatever."

It's not clear whether Ms. Hoguet truly intended to blame Netflix, Millennials or customers' reluctance to dress up for Macy's fourth quarter shortfall of analyst expectations ($9.36 billion to the analyst-predicted $9.40 billion). But technology does appear to be redefining what constitutes worthwhile luxury goods among younger generations, making one wonder if, even with all its omnichannel savvy, Macy's has a blind spot where high-tech luxury products are concerned.

In an online discussion last week, many of the industry insiders of the RetailWire BrainTrust argued that Macy's Millennial problem can be attributed to more than just technology trends.

“Part of Macy's problem drawing Millennials to its merchandise mix is that it just doesn't try very hard compared to its fast fashion competitors,” said Dick Seesel, principal at Retailing in Focus. “Adding overlapping private brands geared to the older customer (JM Collection, Style & Co., Charter Club and so forth) exacerbates the problem. And the promotional monotony of Macy's undermines whatever 'luxury' position it is trying to grow.”

“It's interesting to me how many obvious ahas are missed in retail just because someone isn't paying attention to (and responding to) cultural cues,” said Laura Davis-Taylor, EVP of customer experience at MaxMedia. “We've seen for years now that Millennials are more into life experiences than badge brands. ... Good grief, it's so much more than if they have to put on lipstick. If the experience was something that they really looked forward to, they'd put on lipstick without a blink.”

“I've always understood stores like Nordstrom Rack and Off Fifth to be for the aspirational Nordstrom and Saks shopper,” said Paula Rosenblum, managing partner at RSR Research. “This creates a problem for Macy's because it is already a mid-priced department store, so who are its aspirational shoppers? The other question I would ask myself if I were a product person is, 'Isn't there something not right when the next generation of tech product is cooler than the current runway fashions?'”

Others advised that Macy's needs a clearer vision of what it means when it talks about Millennials.

“The focus has to be one of accepting that Generation Y, like every other generation, has a bifurcated population base,” said Roger Saunders, global managing director at Prosper Business Development. “When the target portion of the audience is determined for the merchandise line, messaging and media than can be addressed. Retailers will find a wealth of difference between Millennials and married Millennials. ... Merchandise lines, as well as the size of their pocketbook, will influence purchasing in different ways.”

But Professor Gene Detroyer had a more succinct take on what constitutes Macy's problem with selling to the segment.

“Millennials (and those slightly older) would rather do than wear,” said Mr. Detroyer.