Big department stores have always counted on the holiday gift-giving season to make their year financially. But the truth is that many did a terrible job actually targeting the gift market. Until now. Holiday pop-ups are a new trend and Macy’s Herald Square is an innovation from Tony Spring’s bold new chapter.
The Macy’s program is without a doubt the most intriguing and reflects new CEO Tony Spring’s background at Bloomingdale’s where seasonal and event pop-ups were more the rule than the exception. They are calling it the Holiday Square, logical as it will only be at the flagship Herald Square location in Manhattan. But it’s also a bit illogical as the program should have at least been rolled out to its First 50 stores or some of the regional flagship locations in addition to the mothership.
Unexpected Gifts
That’s because national retailers like Macy’s, JCPenney and Kohl’s – not to mention home improvement chains – are introducing major new initiatives to go after the gift market, beyond the usual apparel, beauty and home products they normally promote for the season. These new programs specifically focus on the gift sector with high-profile store placements, third-party branded tie-ins and merchandise that isn’t normally part of their assortments. And while there are online components to all of these, it’s in-store where the focus is.
It seems like a no-brainer…but let’s remember, these are retailers we’re talking about. None of this is exactly earth-shattering. The big discounters – Walmart and Target – have been bringing in holiday merchandise for years and specialty retailers have made a living on the Christmas season, often pre-wrapping gifts and displaying them by price points. Even these department stores have had holiday displays in their stores – often candy, food and maybe some socks or scarves – but they were limited in scope and often tucked away in parts of the store you only passed on the way to the restrooms.
This is different. It’s also about time.
Macy’s Herald Holiday Square
The Macy’s program is without a doubt the most intriguing and reflects new CEO Tony Spring’s background at Bloomingdale’s where seasonal and event pop-ups were more the rule than the exception. They are calling it the Holiday Square, logical as it will only be at the flagship Herald Square location in Manhattan. But it’s also a bit illogical as the program should have at least been rolled out to its First 50 stores or some of the regional flagship locations in addition to the mothership.
That said, the program will feature more than 30 independent brands showcasing their products, much like other holiday pop-up markets sprinkled throughout the city, in Bryant Park and elsewhere. Macy’s will also have its own merchandise which it goes out of its way to emphasize will be at least 40 percent new product. The market is being designed by Urbanspace which also runs some of the other holiday events in the city and kicks off November 1.
And in a quid pro quo, Macy’s will also be part of the Bryant Park market as well as moving its own pop-up onto the street in Herald Square for December. And all of this is in addition to the nostalgic Santa Land upstairs, the Toys’R’Us shop and let’s not forget, that modest little parade they run on Thanksgiving Day.
All-in-all, it’s a well-rounded promotion and provides shoppers with an extra reason to venture into the 34th Street store – and maybe even buy something rather than just gawking at the Christmas decorations and upscale handbags. One hopes it’s extended out to additional locations next year.
Kohl’s Kris Kringle
In his ongoing efforts to turn the company around, CEO Tom Kingsbury has been rolling out all kinds of merchandising initiatives at Kohl’s across multiple product classifications. One of them was moving a rotating assortment of impulse items at the entrance to the store, products that normally would be further into the layout.
So, doing this with a holiday shop is consistent with that plan and the Kohl’s Value Gift Shop combines seasonal merch with the retailer’s price-oriented strategy that plays to its new “family” positioning. Kohl’s describes these as “stocking stuffers and grab-and-go gifts, with the majority offered under $5.” Additional giftables will be situated around the rest of the store as well, including in its Sephora and Babies’R’Us shop-in-shops. There’s also what it’s calling the “Kohl’s Tree Farm” which features an expanded assortment of trees, ornaments, lighting and inflatables.
“Our expanded assortment across categories further positions Kohl’s as a destination for gifting at great prices,” said chief merchandising officer Nick Jones in announcing the program. As always, the challenge for Kohl’s will be execution at the store level. Too many online reports continue to post images of sub-par displays and departments that apparently didn’t get the memo from HQ. Kingsbury may be doing some good things, but he can’t be everywhere. And a recent visit to Kohl’s in Vallejo, California revealed that a good idea doesn’t guarantee success. Yes, you’re greeted at the door again this year with charming holiday giftables including adorable polar bears and reindeer, but the wreath and tree décor upstairs seemed an afterthought, along with a range of end-aisle holiday gift selections.
Penney Promotes Martha & More
Unlike its mid-market competitors, JCPenney is not creating a dedicated area for its holiday pop-up. Instead, it’s working a heavy-duty value story with merchandise scattered throughout the store, including the first 133 locations that have been refreshed as part of its $1 billion capital investment program. There are still more than 500 doors to go but the company says the revamped stores are outperforming the overall chain.
Holiday merchandise includes a new Martha Stewart Holiday Collection, the irony of which continues to be extraordinary considering the legal bad blood between these two parties during the Ron Johnson era when Stewart was heavily tied in with Macy’s. There’s also a clothing program with candy brand Haribo and assorted beauty efforts in Penney’s ongoing efforts to plug the big hole left by the departure of Sephora to Kohl’s.
“This value proposition will be front and center through initiatives across the season,” Marc Rosen, CEO, said in announcing the new products and programs, making sure nobody missed that pricing is still the cornerstone of the retailer’s strategy.
DIY Holidays
Curiously, two of the bigger – and unexpected – players in the holiday game this season come from the home improvement sector. Both Lowe’s and Home Depot are seriously serious about being destinations for holiday decorations and, tangentially, gift giving too. This comes from their successes – particularly Depot – in Halloween where their giant skeletons, often animatronically disturbing, have been huge sellers.
For retailers that might see traffic falloffs during the holiday season when shoppers are more focused on gifts than home improvement, these are smart strategies and competing retailers need to understand that there’s only going to be more of this for more holidays throughout the year going forward.
It’s the Gifts, Stupid
If all of this sounds a bit like Retailing 101, perhaps that’s true: often the simplest, most obvious ideas are the best ones. Big stores have the space to set up these kinds of pop-ups that smaller specialty players might not, and they certainly have the merchandising know-how to handle seasonal assortments. Hey, they do it for a living.
For the department store chains that are getting more aggressive in the gift area, there will of course be challenges. As mentioned for Kohl’s but really for all three of these players execution at the store level will be critical. Macy’s will have it a little easier with just the one physical store to worry about but still, it’s a rather ambitious program to pull off.
There’s also the matter of markdowns and what to do with anything that doesn’t sell. Every good retailer knows that red and green doodads look pretty silly on the sales floor after New Year’s — and they better find a way to get rid of any leftovers quickly. With 1,200 doors that could be Kohl’s biggest challenge.
You’ve got to give all of these retailers credit for launching these programs, especially Macy’s which clearly is feeling Spring’s presence for new ideas. Still, it will be tricky. Christmas comes but once a year, there’s no second chance to get it right in 2024.
