Macy's has a master plan to capture the most difficult customers


Macy's needs to attract younger customers.


The department store brand, which was a leader in the space for many years, has seen sales drop 1.7% from last year. Shares fell to the lowest level in a year this week, and the company is closing dozens of retail stores.

But attracting millennials isn't going to be easy. Macy's executives say that the 18 to 35-year-olds would rather spend their money on subscription services like Netflix and buy affordable apparel from off-priced outlets like TJ Maxx.

A new floor, called "One Below," at Macy's New York City flagship offers a hint at what is to come in retail stores around the country.

The company renovated the basement level of the store into what it believes is a millennial wonderland. It's part of a $400 million renovation of that store.


Macy's one below

Marina Nazario/ Business Insider

Macy's, however, faces an uphill battle.

"It's tough for big brands to pivot and adapt to a different generation," Jason Dorsey, lead millennial researcher at the Center for Generational Kinetics, told Business Insider. "Macy's intention to adapt to fit the needs of trendsetting millennials is spot on, but when it's overdone, then it becomes a turnoff."

A recent report by Morgan Stanley shows that millennials are spending more on expenses like rent, cellphones, and personal services than young people did a decade ago. This leaves less money for buying clothes.

Rather than exclusively sell apparel, One Below offers watch engraving, jean embroidering, a blowdry station, a 3D printable jewelry machine, and a touchscreen "selfie" wall.


Executives say this gives Macy's the personalization many millennials crave.

Macy's is also in the process of opening off-priced stores similar to Nordstrom Rack.

Macy's One Below

Marina Nazario

But the brand might be going after the wrong kind of shopper.

Hilary Stout writes in The New York Times of a "millennial mania that is overtaking all manner of businesses, and seems to be getting more obsessive by the day."


She says companies should be focusing on baby boomers instead.

"After all, the millennial generation has less wealth and more debt than other generations did at the same age, thanks to student loans and the lingering effects of the deep recession," Stout writes.

A recent report also reveals why the obsession with millennials is misguided and could be leading to sales declines from department stores such as Macy's.

"While addressing older shoppers is often perceived as less sexy, they are a larger segment of the population than those under 35 and have significant disposable income," Sucharita Mulpuru writes at Forrester Research. "They are already spending more on shopping than young shoppers."

Ashley Lutz contributed to this story.


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