Off-Price Retail Cannot Be The Way Forward, Customer Service Must Be

March 04, 2018

off-price retail storesBack when I was a kid, I had a coughing fit at a concert. My mom looked down at me, grabbed her purse, and gave me a tissue. The purse was a fairly generic brown lined in black with lots of space. While it had several compartments inside to isolate groupings of items, she just used the middle part.

While the soloist sang and I held the tissue to my mouth to muffle the tickle in my throat, she began the search for the small roll of breath mints about the size of a lipstick - Certs. In the dimly lit church, she couldn't see into the purse well and finally starting retrieving item after item until she had assembled a pile of used Kleenex, car keys and more between us. I heard her exasperated whisper finally. She gave me the lozenge and order was restored.

I thought about this experience when I read that Macys was going to expand their off-price brand Backstage to about a hundred locations, many in premium locations. Macy’s new CEO feels he has found gold in the Backstage departments where merchandise is sold at steeply discounted prices of up to 80% off.

The new expansion of Backstage will include, for the first time, some of Macy's highest-performing locations at premium malls, Macy's CEO Jeff Gennette said on a call with analysts.

Backstage departments I've seen are devoid of merchandising, proper lighting or much care, thrifty shoppers can paw through rack after rack of clothing in hopes of finding something. And Macy's is now going to expand it to home goods and furniture.

If you haven’t seen one, Backstage is the land of misfit toys.

Sweaters that were designed to be lovingly folded and displayed hang forlorn on hangers that stretch the shoulders to fit the Hulk.  Row after row of non-descript t-shirts, dress shirts, and plaid casual shirts are jammed on rack after rack, the brand tags nothing more than an afterthought.macy's last act backstage

It is all about the discounted price.

Shopping in a place like that is work. It is a shopping trip most would skip.

While this trend seems a fit for thrifty Millennials who go to consignment and thrift stores to find something unique and not mass-produced, it flies in the face of what a department store is.

Customer service was once what set Macy's apart from off-price retailers. Even in the movie Miracle on 34th Street, their purpose was all about serving the customer. That is what built the brand.

But now Macy’s doesn’t see the future the same way.

Orphaned clothes, man-handled, stretched, and laid out on 60’s chrome fixtures in underused and underlit parts of their stores are their way forward.

Macy's feels shoppers have changed….

Karen Hoguet, the chief financial officer of Macy's, when talking about shoppers in their stores was quoted article as having said at an investor conference last year, "Lots just say, 'Leave me alone — let me get the shoe I want and move on.”

Well of COURSE they said that!

When all an employee can parrot is, Can I help you find something? Or Looking for anything special? what do you expect shoppers to say?

Shoppers used to make a special trip to discover items presented with care and thought along with employees who not only liked working there but were trained in how to engage them. 

And shoppers haven’t changed. But let’s be honest, Macy’s stores have...

About seven years ago, Macy’s made headlines when they announced that they were going to put a massive effort into improving their customer service. But they never seemed to follow-up on the promise.

I guess throwing in the towel and hanging the merchandise, having fewer, untrained associates making low wages is all one can expect at this point from department stores. 

What will it take for retail companies to understand discounting more and more merchandise won’t save them? That they need to know their customer, carry quality products that are displayed impeccably, and have employees who focus on customer service and can sell those products if they are to grow their retail sales.

That is the way forward.

Why don’t they do that?  Because it is hard.

You have to manage employees. You have to engage their minds and train them before they can engage shoppers, and move the needle of sales.

See also Retail Customer Service 101

First off, you have to know how to engage strangers. I’ve discovered few directors who ever worked in the sales jobs they are responsible for.

Second, you have to know the architecture of the sale and how it goes together. You have to be willing to figuratively put the plumbing and the electrical in the foundation before the building ... the sale ... will rise.

Third, you have to go sequentially through a selling process, especially with higher margin and higher ticket items.

When you do that, you can sell the customer more than one pair of shoes, the drill bit pack with the new drill, the haircut and the color. And all of it at full price.

People go to a retail store, a day spa, a restaurant – you name it - because they are hopeful.

Hopeful people want to buy.

Depressed people are in a bar.

Those who are in your store at 10am want to treat themselves. They want the thrill of seeing what’s new spotlit with a curated color palette, enough room to see it clearly, and someone to encourage them when they pick it up to try it on.

Department stores wonder why big brands like Michael Kors and Coach are going direct-to-consumer. They don't want all the hard work they put into creating a superior brand to be watered down, discounted, and drowned in a sea of sameness.

That’s what a focus on the customer and customer service does - it keeps your brand unique and worthy of the price charged.

When you can’t do that, you’re happily selling discount goods.

See also, Don’t Be The Luxury Retailer That Had To Close Due To Discounting

In Sum

As more retailers follow the Macy’s Backstage, Nordstrom Rack, and Kohl’s off-price model, expect those stores to become more lands of misfit clothes as well.

And as that happens, your shoppers who are wanting the good shopping experience will quit shopping with you, and you’ll only attract those consumers who head straight to the bargain basement for the deals until finally, everything is cheap.

It’s at that point your store will no longer be the arbiter of what’s new and what’s the best, but rather where bargain shoppers go to find last season’s or last year’s stretched-out goods.

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