The Prognosis Is Not Good

Traditional department stores have been in trouble for some time.  They have been buffeted on one end by big box stores and on the other with specialty retailers and overall with virtual competitors.  Sears, J.C. Penney's and others have been closing stores and cutting back services in a desperate attempt to stay afloat.  Many flagship department stores in major cities have been swallowed up by the likes of Macy's.  But size doesn't seem to be helping Macy's survive. 

Here's the primer for desperation marketing:  When desperate, run sales.  When really desperate, run sales with huge discounts (like 50% or more).  When in extremis, pull out all the stops and go to illogical tactics.  That's what Macy's seems to be doing.  There is always a sale at Macy's and the discounts are often more than 50%.  In that environment, who in their right mind would ever pay full price at Macy's?  And, even at 50% off, Target or WalMart may offer lower prices yet.

In the illogical tactics category, Macy's in Hawaii advertised a "One Day Sale" that was actually two days!!  The big headline says "One Day Sale" but it goes on to say you can shop the sale on Friday and Saturday ... because "it's a sale to big to fit in a day!"  What's next?  Who knows, but it can't be good.

I worked in marketing for a Pizza Hut franchise just as the competition was heating up.  I tried very hard to keep the company focused on quality and points of difference to minimize the amount of discounting we had to do.  Unfortunately, the whole pizza category moved into the world of deep discounts, ruining profitability and turning pizza into a commodity.  Nationally, Pizza Hut is trying to introduce new products to get away from the deep discount game, but I suspect it may be too late.

Once your price integrity is gone, life expectancy can be short, indeed.