- October 27th, 2015
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Seeking Youth, Macy’s Flagship Gets A $400 Million Face-Lift. But What Of Loyalty?
Youth comes but once, but if you are a retailer, it comes continuously. As Macy’s Inc. continues its three-year strategy to appeal to teen shoppers, a flagship effort presents further opportunities for its rewards initiatives.
It may not be trading in its core customer for a younger model, but even Macy’s Inc. has been allowing its eye to stray toward youth – as long as the money is there.
In its latest effort to woo young shoppers, the department store chain has invested $400 million in a dedicated space at its flagship Herald Square location in New York, designed expressly to appeal to 13- to 22-year-olds. As described in Bloomberg’s Business of Fashion, the basement space – called One Below – includes everything a young consumer might want, including a blow-out bar (for the hair), 3-D printed accessories and smartphone charging stations. Even Macy’s loyalty initiatives, including its Star Rewards program and My Wallet app, are promoted there.
“It’s essentially its own 53,000-square-foot store filled with technology, apparel, accessories, cosmetics, food, and a constant electro soundtrack of house music,” the story states.
You can say One Below represents the advanced stages of Macy’s overtures toward youth. The retailer in 2012 announced a three-year plan to unroll several enhancements to its assortment and shopping experience for two consumer groups – those ages 13 to 22 and those ages 19 to 30. The shopping area for that younger group, called mystylelab, has surfaced below the surface as One Below.
And for good reason. Nearly 27 million teens live in the United States, accounting for almost $260 billion in spending, according to the Statistic Brain Research Institute. And on what do they spend? According to the Research Institute, 75 percent of teens surveyed said they’d prefer one new pair of shoes over 50 mp3 downloads; 63 percent said they’d take a new pair of jeans over concert tickets.
Indeed, more than half of teen spending is geared toward clothing, food and accessories, according to Statista. All of these items can be found at One Below.
Not your mother’s teenager
Purchasing, however, has a price. For all their spending, teens are fairly value-driven, having been schooled and shaped by the hard lessons of the Great Recession. Macy’s, which has established itself as both exclusive (through its many private labels) and affordable (through its many sales events), may find efforts such as Below One to be the trusty attractions to expose teens to these qualities.
The retailer will have to fight the tendency among teens, however, to trade in its brand promise for another, as technology has trained teens to believe that something even better is inevitable – and close. Macy’s loyalty initiatives may be just the strategy to do that.
Those younger than 18 cannot apply for a Macy’s credit card, which provides access to its Star Rewards program. However, shoppers as young as 13 can create personal profiles with Macy’s to get special offers via text or email and to use My Wallet, a mobile feature that manages offers, tracks deals and organizes wish lists.
Those who are old enough to apply for a credit card can enroll in Macy’s Star Rewards and gain access to its Star Pass direct mail promotions, special birthday offers and surprise savings at the register. Additionally, young adults can apply for the Plenti program by American Express, of which Macy’s is a participant, to earn points with one merchant and redeem them elsewhere.
The odds of Macy’s capturing this group are increasingly in its favor. Nearly two-thirds – 63% – of consumers ages 18 to 34 said they have joined a loyalty program within the past year, according to a recent survey of 2,000 loyalty-program members, conducted by COLLOQUY.
One-quarter of this age group said they joined a program because it offered access to member-only events (compared with 16 percent of total respondents). Nearly 40 percent said they joined for access to member-only sales, products and services. More than half, 56 percent, chose the word “economical” to best describe their experiences as members; 34 percent described the experience as “fun.”
The rewards of youth
If it succeeds in enrolling consumers early, either through a credit card or its My Wallet, Macy’s has one more opportunity to gain their long-term affection by appealing in ways that are important to them. The key has been in identifying the qualities that make this market segment so different from others.
For example, as part of its three-year plan to engage younger consumers, Macy’s has developed customer lifestyle profiles to help its staff better understand this diverse customer segment. It has been refining and localizing assortments – it introduced or expanded 20 brands in 2013 – and has been adding more functionality to its digital offerings. Also, Macy’s has been investing in ways to improve the in-store experience, by making products easier to find.
Macy’s decided three years ago to learn what this maturing market seeks, and these lessons are continuously being applied to new efforts, such as One Below. I expect they also are woven into Macy’s rewards initiatives, and that the retailer uses regularly updated analytics to derive personalized communications. How else would it know this group’s behaviors and preferences, whether they are for 3-D printed bracelets or house music?
Teens understand their value as consumers, and they expect that value to be recognized. The younger the target consumer, the more important it is for any organization, including Macy’s, to be direct, clear and genuine in its brand promise.
That promise applies to the shoe selection, the service and the rewards offering. Macy’s long-term approach is enabling it to grow its knowledge alongside its young market. This is necessary, because that market, like many retail innovations, can be fleeting.
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.