Dive Brief:
- Macy’s on Wednesday unveiled its new loyalty program aimed at rewarding customers based on how much they spend at the department store chain, according to a press release. Customers will start accruing rewards through the program starting Oct. 2.
- Through the plan, Macy’s credit card holders are automatically enrolled in one of three rewards levels, "Silver," "Gold" or "Platinum." Rewards are tiered by level, with the biggest spenders getting free shipping, additional savings and earned points on every purchase, among other benefits, Macy’s said.
- To get into the highest (Platinum) tier, customers must spend $1,200 or more with Macy’s annually, according to the release. Those customers receive 25% off on a day’s shopping with special coupons and earn 5% back in rewards on every purchase they make, along with free shipping with no minimum purchases. Customers in the middle (Gold) tier, who must spend $500 to $1,199 annually, can get the special 25% off coupons, as well as the free shipping, but not the 5% rewards points on purchases. Those in the lowest (Silver) category, who spend up to $499 a year at Macy’s, get the 25% off coupons only.
Dive Insight:
In overhauling its loyalty program, Macy’s is emulating some of the more successful (a relative term these days) department store chains, namely Kohl’s and Nordstrom’s.
In an August report, Moody’s analysts, led by Christina Boni, pointed to Kohl’s and Nordstrom as leaders in the sector. The analysts attributed their higher operating performance to strong loyalty programs that helped the retailers build relationships with their core customers.
In the report, they noted that Macy’s is trying to follow suit with its new loyalty program. The company is also trying to capitalize on the fact that 50% of the retailer’s business comes from just 10% of its customers, the analysts wrote.
Macy’s CEO Jeff Gennette said in August that he expects the retailer’s sales in the second half of the year to get a bump from the new program. Macy’s needs the bump, too. In August, Macy’s posted total second quarter sales of $5.55 billion, a 5.4% decrease from the year-ago period that was driven largely by this year’s store closures, expected to number around 100.
Wall Street gave Macy’s Q2 earnings a tepid review, dinging the company’s stock when it released earnings. Analysts with Morgan Stanley described Macy’s Q2 performance as "'less bad' but not enough." But not everybody was gloomy about the report. "After a torrid opening quarter, Macy's second quarter numbers come as a relief," Neil Saunders, managing director of GlobalData Retail, wrote in a note emailed to Retail Dive. "Certainly, a same-store sales decline of 2.8% is far from good, but it is one of the better performances Macy's has turned in over recent periods."
While store closures dragged down Macy’s sales, Saunders noted that Macy’s has retained some loyal shoppers, who transferred to other stores. "This is encouraging as it indicates that Macy's rationalization will ultimately deliver higher levels of store productivity without severe damage to volumes," he wrote.
Macy’s is also trying to boost sales by expanding its off-price store line, Backstage, which is set to have more than 40 locations open by the end of the year. It's also trying to shore up profits by selling and otherwise monetizing its real estate holdings, although not nearly as quickly as some investors wanted.
Further out, Gennette said in August that Macy’s was working to build a more "elevated and exclusive" product assortment and to better integrate technology in stores and the online platform. As an example of the former, Macy’s recently tapped Israeli designer Kobi Halperin for a limited-time fashion collection.
