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Will Macy’s Magic Work in China?

Will Macy's Magic work in China?Macy’s is in the midst of setting up on Tmall Global. News on this move also mentions Macy’s declining sales. But even if desperation isn’t driving the brand’s overdue China entry, there are some shamefully under-publicized realities about this market Chief Exec Terry Lundgren is hopefully aware of.

The Magic of Macy’s …

…is the company slogan, one that no longer casts a powerful spell. In China, the magic of upscale department store shopping was strongest in the first decade of this century.

Today, the thrill is gone. In its stead, the magic of a mobile phone with a 4G connection holds China in thrall. The classy department store experience is card trick magic by comparison.

Quick quiz – guess which picture is of a Macy’s shoe department, and which is from upscale ShinKong Beijing’s shoe department :

A. first upscale department store

B. second upscale department store

Answer: Doesn’t matter!* Department store retail is as doomed in either place. China’s shopping plaza magnate Wang Jianlin is frantically diversifying to mobile commerce and other endeavors, while announcing brick and mortar plans only for 3rd and 4th tier cities, using “OPM” (other people’s money.)

Fortunately, Macy’s has yet to announce a stab at China brick and mortar, although they have been mulling it over.

We’re Way Past Buying Names

 As far as online retail, Macy’s “expects sales of about $50 million from China in 2016,” with a total investment of $25 million over the next year and a half.

That’s the nice clear number-tossing that gets massive budgets greenlit by the board. Less clear is why the Chinese will buy $50m worth of Macy’s merch online.

Yes, it’s an iconic brand. No doubt a healthy percentage of daily visitors to Macy’s NYC flagship store speak native Mandarin. Shopping and tourism are like chocolate and peanut butter.

Here’s a clue as to how that $25 million should be allocated – the top organic result for “Macy’s” on China’s Google, Baidu, translated for your convenience:

China and the Macy's brand

The parades are great, Macy’s. The red color scheme with star rampant  – quite felicitous for China!

But why on earth are we buying famous brands from you? As opposed to, say, a buying agent near Boston airport. Your answer must combine a winning formula based on the variables of price, authenticity, and user experience (the latter includes delivery.)

Classy department store magic is not an acceptable answer, as shown above.

A Name of One’s Own

So, what is your middleman’s retailer’s answer, and please include how Tmall Global helps with the variables. Any hogwash about “trusted platform for authentic overseas goods” indicates you’re cribbing from an Alibaba rep.

If you let that rep speak for herself, she will respond, “COSTCO!! COSTCO!!” Costco, a wholesale retailer, is Tmall Global’s go-to case study for proving the platform. You’d think this is a nation of 1.3 billion squirrels, the way Costco is moving its private label Kirkland mixed nuts. 

Therein lies the way forward, Macy’s. Coach, Estee, all those snooty brands you carry, what value can you add for them or the Chinese consumer in purchasing online through you?

While thinking on that one, focus on your lesser-known private brands – Hotel Collection, Ideology, International Concepts. Most Chinese will have no idea how uninspired those names are, so ya got that going for ya….

…as well as exclusivity, putting something new on China’s SBX-power brand radar. There are no more safe plays in China’s online market. At least, not safe and profitable. Go outside Alibaba’s ecosystem to build those brands, and triple confirm all permits are in order before holding any parades here.

When you have grey market vendors on JD Global selling your private brands (with little to nothing you can do about it) that will be a good problem to have. Maybe even a strong enough signal to finally pony up for a Chinese business license so you can start fully utilizing channels besides cross border.

There is magic, but you have to be the magician. You have to make the magic happen.
                                                -Sidney Sheldon

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