The head of Macy's on Black Friday and the future of retail
Bargain hunters enter Macy's just after midnight on 'Black Friday' on November 25, 2011 in New York City.
Jeremy Hobson: Well it's finally Black Friday, although many people didn't even have to wait until midnight to go hunting for discounts this year. Retailers opened early and analysts say that shoppers showed up in force. The National Retail Federation says 152 million Americans will be hitting the stores this weekend. That would be a record -- which seems odd in an economy that's saddled with high unemployment and lots of consumer debt.
Here to talk more about the state of the American consumer with us is the CEO of Macy's Terry Lundgren. He joins us from the company's flagship store in New York's Herald Square. Good morning.
Terry Lundgren: Good morning.
Hobson: So we've heard that this could be a record-breaking Black Friday -- how is that possible in this economy?
Lundgren: You know, it helps that we've had somewhat of a record-breaking year so far. At Macy's Inc., we're up 5.3 percent on same-store sales for the year-to-date period, after running a very strong year last year. So in spite of the challenges of the economy, people are coming out to Macy's in particular because I think we've had some strong values consistently. We've got great brands, and I think we're executing pretty well.
Hobson: What's the best and worst performing part of the United States for you right now?
Lundgren: Interestingly, the best performing part of our country in terms of regional differences has been Florida; the whole southeast part of the business. And people are still concerned about the real estate market in that area. But I think that particular market has had so much challenge over the last several years that there must be a great deal of pent-up demand.
And then I would say the more challenged part of the country has been parts of the midwest. You know you think back -- all year long, you think of flooding, you think of tornadoes. And I think those are big setbacks and have been, that they're starting to bounce back now. But for the year-to-date period, that would be my answer.
Hobson: When I think of how we'll shop in the future, I think online, I think mobile -- stuff like that. How does a company like Macy's fit into that landscape going forward?
Lundgren: Well, we're one of the most advanced companies when it comes to the online business. By next year, we'll have a business that's approaching $2 billion in online sales. So we're very, very successful in that area. And we've been investing there -- that's where a lot of the capital investments I've made for the company have gone into technology over the last three years. And it's really paying off -- we're up 40 percent over last year on the online part of our business this year on a big base.
So today, the most important customer and the most important trend is what we call the "omni-channel consumer." And that is the consumer who is shopping on his or her phone, or shopping at their desktop, and going into our stores. So I think that's the key customer, and the future will be for us to figure out how to encourage the online customer to come to our stores, and encourage the customer in our store to shop online.
Hobson: You're in the famous flagship Herald Square store -- do you see a day when Macy's doesn't need properties like that anymore?
Lundgren: I sure don't. In fact, I just made a pretty large committment -- I announced a couple of weeks ago that we're going to be investing $400 million into this one single store here at Macy's Herlad Square. Now it is the store in the world, so it does require a lot of attention. But I think that could be the single largest renovation in the history of retailing. That's our bet and committment on the future of department store retailing and in this particular, fantastic store here.
Hobson: Terry Lundgren is the CEO of Macy's. Thanks so much for talking with us.
Lundgren: Pleasure. Bye-bye.