Peter Sachse, CMO of Macy’s, was interviewed in the Wall Street Journal on Wednesday regarding how the “My Macy’s” localization initiative will hopefully improve slumping sales at Macy’s. While there has been media focus on Macy’s switch from a “national” focus to a “local” focus, not much attention has been paid to identifying why local strategies work.
First, local strategies build brand equity. As we can learn from Macy’s, customers had a relationship with the “brands” that Macy’s converted to “Macy’s”. With the conversion, the loyalty was dissolved and only now is Macy’s trying to work to build up its local brand equity.
Second, local strategies overcome media fragmentation. Because mass media is losing its sway over the advertising industry, no longer can any advertiser simply look to television or national newspapers for their promotions. National television campaigns featuring celebrities have helped Macy’s not because of the celebrity, but because they see a product advertised and can go to their local store and purchase it. Moreover, the products being advertised are products any person might need regardless of location. These are essentially promotions and NOT brand building. Its these same types of ads that work at local levels to get traffic in the store.
Third, local strategies help retailers avoid cutting prices. In its most recent quarterly reporting, profits and sales were up at the specialty retailer Abercrombie and Fitch because they changed strategies from cutting prices on clothing to keeping prices steady and increasing store traffic through a controlled number of in-store specials. Imagine if store managers had the tools to pick one or two items of merchandise that they could mark down dramatically to get customers into the store and then see a bump in their full price merchandise. This isn’t imaginary, it’s what Sam Walton did when he first started his Wal-Mart chain. He would find a few items of merchandise he could mark down dramatically to get customers in the store where they would invariably purchase other merchandise at the regular price. Because each store’s inventory and market is different, store managers should be able to make these decisions and execute them to drive store traffic and ring the register.
Marketers need to reevaluate what it means to “go local” and no longer view it as trying to personalize an experience for millions of different customers. Going local needs to be about getting the most relevant message in front of a person in the form of media they will respond to. This means local strategies must cross all forms of media, be in coordination with all messages to build brand equity and still retain the local content necessary to be effective.
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