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March 8, 2012 7:53 PM

Business

Macy's and Penney's Stir Chicken or Egg Debate

When Karen Hoguet, Macy's chief financial officer, took a gentle swipe at Ron Johnson's plan to revive J.C. Penney, she sparked an interesting side debate....

When Karen Hoguet, Macy's chief financial officer, took a gentle swipe at Ron Johnson's plan to revive J.C. Penney, she sparked an interesting side debate.


Speaking at an investment conference in New York, Hoguet said, "I have been with Federated/Macy's 30 years, I've grown up believing the product is where it all starts, and I think you'll find the Macy's merchants and our approach is a lot more focused on product and merchandising than I think the approach [Penney's is] taking vis-à-vis marketing."

Let's put aside the fascinating interplay between Macy's and Penney's, which are increasingly competitive. 

Rjuzukonis, a WWD.com reader, noted: "Actually, Ms. Hoguet is incorrect. Great retail starts with the consumer, the product is basically a creation of our need." And another reader, frostie, added: "I agree....The customer will tell you if it's good or not."

While some of this can and should be chalked up to simple semantics, it's a good question: Do you zero in on product, which will then attract shoppers, or do you focus on the shoppers and let it all flow from there?

It might sound like six of one and half a dozen of another, but the two approaches could lead to very different businesses. The brewing Macy's-Penney's battle might yet prove that.

Making and presenting great product is one thing and hard enough to do. Understanding consumers and what they want, especially right now, is probably even harder.

And despite the recent bout of optimism fueled by increasing consumer confidence, rising luxe sales and new highs in retail stocks, a lot of people, even when they do have jobs, are still hurting.

Just look at the results of WSL Strategic Retail's online survey, which was conducted at the height of the holiday shopping season and released this month. The research found that 52 percent of Americans are struggling to afford the necessities. And six-figure earners consider themselves "middle-class," while nearly 30 percent in the $100,000 to $150,000 income bracket claim they can only afford the basics.

Those are pretty stark numbers and, if they're on target, this spring revival of optimism should be looked at with some caution -- no matter if your retail starting point is the product or the consumer.
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