Millennial Report: A Bad Business Move for Macy’s

Macy’s recent announcement stating their new partnership with WHP Global has Millennials like me scratching our heads.

Earlier this year, WHP took controlling interest in Tru Kids Incorporated, the parent company of Toys “R” Us. CEO and Chairman of Macy’s, Jeff Gennette, shared his belief that bringing the toy category back to Macy’s would help attract the Millennial mom.

I don’t think it was a smart business move. Here’s why:

  • The toy market is bound to plateau. Over the past year, the toy business has surged 16%. It’s exponential growth was primarily due to the pandemic; more than ever, parents leaned on toys to keep their children engaged when going to daycare or school wasn’t an option.

But now that school is in session and kids have (mostly) made their way back into the pre-pandemic rhythm, parents are less dependent
on toys.In all likelihood, the toy market won’t continue to prosper as before.

 

  • There’s a reason Toys “R” Us went out of business. After years of struggling to pay debts from a 2005 buyout, Toys “R” Us filed for bankruptcy in 2018. In-store foot traffic was debilitatingly low, likely due to Millennials preference for online shopping. As a result, the toy company closed every brick-and-mortar location.

But that was only half their problem. In addition to in-store retail disappointments, ecommerce lagged just as much. Toys “R” Us simply couldn’t compete with retail giants like Walmart, Amazon, and Target. So once their toy stores closed, they liquidated their entire online inventory, too.

The real issue, here, is that although Millennials were firmly in their child-rearing years and purchasing lots of toys, they weren’t interested in buying from Toys “R” Us in-store or online. Why would they suddenly want to buy from Toys “R” Us now that it’s part of Macy’s?

 

  • Macy’s is grasping at straws. Macy’s is desperately trying to reach Millennial audiences. They spent upwards of $400 million in renovations, including adding a new floor called One Below at their New York City flagship. Their goal is to sell things Millennials want, like “watch engraving, jean embroidering, a blow-dry station, a 3D printable-jewelry machine, and a touchscreen ‘selfie’ wall” (because apparently Millennials want to spend their brief lunch break at the busiest department store in the city to snap a quick selfie before rushing back to work).

Macy’s also recently developed And Now This, a private clothing label offering cheap, trendy apparel catering to young, price-conscious buyers. But anyone with a firm grasp on Millennial buying habits knows that these shoppers are immensely brand loyal and want sustainable clothing options, not fast fashion from a brand they aren’t familiar with.

The Toys “R” Us acquisition is the latest attempt to grasp at any Millennial they can.

 

  • Millennial moms want convenience. If Macy’s had collected data on what Millennial moms actually want from their toy retailers, they would have found that above all else, they value convenience. They want to purchase diapers, a family pack of Goldfish crackers, and maybe a toy all in one place. They want one single store with one single cart and one single click to pay. And then they want to move on.

What Millennial moms don’t want is to spend more than 15 minutes weeding through Macy’s website to find one toy that will require separate shipping, then do the remainder of their shopping on three other platforms. That’s not convenient.

 

Macy’s knows that most Millennial moms aren’t shopping at department stores in general. And unfortunately for them, incorporating a bankrupt toy store into their business model probably isn’t going to change that.

If Macy’s really wants to attract a strong Millennial base, they need lots of data and a full-on rebrand. Otherwise, they’re doomed for the same fate as Toys “R” Us.

 

Read More

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