Richard Arnstein, new EVP/GMM of Macy’s menswear, is known to be instinctive and strategic.
Richard Arnstein couldn’t be happier to be back in menswear. He started his career at A&S in 1979, moving up the ranks in various men’s departments, surviving mergers and acquisitions and ending up as Macy’s SVP of jewelry and marketing director for Macy’s East. In 2010, he found himself back in menswear as EVP/GMM. “Faces from the past bring back good moments in my life,” he observes.
But it’s more than memories that Arnstein is smiling about these days. “It helps that I came into a business that was doing really well,” he admits, with his trademark New York accent, confidence and easy laugh. “It made my life a whole lot easier.”
While “doing well” is a relative term these days, facts are facts. “Several categories of menswear were among the top sellers in the store for holiday,” he confides. “It was a good season, and when you think about it, this is only the second anniversary of the newly consolidated Macy’s. (Hopefully it’s the final consolidation; what’s left to consolidate?) We’re still learning our roles and responsibilities. But the structure that was put into place and the opportunities that came about from the transition are very exciting.”
Asked to be specific about opportunities, Arnstein talks about recent launches of both proprietary brands and exclusives within national brands. (At Macy’s overall, 42 percent of everything in the store is exclusive or very limited distribution: 19 percent is private label and 23 percent branded exclusives.)
“Our collaboration with vendors is much greater than it used to be,” Arnstein points out. “We’re now one versus seven divisions with a single point of view. We can speak with one voice, plus we’ve streamlined the decision-making: it’s much faster now to get a consensus and move forward.”
Arnstein insists, however, that localized assortments are the real key to success. “I’m joined at the hip to Sue Gardner, our head planner. We make all decisions together. We’re truly tailoring assortments to individual doors and the more we do this, the more the business improves.” Regional nuances are based on differences in climate, ethnicity, sizes, licenses, fashion taste, community, etc. “We’re using market data and consumer insights to determine wants and needs at the door level,” Arnstein explains. “For example, we did a white party in Miami customized for a specific event. We have strategies based on local programs in Utah. You’ll see more men’s hats in Atlanta than almost anywhere! We have tons of data at our fingertips and we’re getting much better at identifying opportunities by door.”
Not surprisingly, Macy’s web business is already their largest door and growing fast. “It’s a different organization but we work closely with them,” says Arnstein. “We believe in congruency, but the businesses are not identical and we wouldn’t want them to be. They have fewer SKUs, a different customer base, different pricepoints. But their growth has been incredible…”
Asked about best sellers in menswear overall, Arnstein singles out collections (getting stronger), shoes (and boots!), main floor classifications, activewear, some components of young men’s and tailored clothing. “Our suit business is getting stronger,” he explains. “Newness drives sales and the slim fit message is evolving, in both clothing and furnishings. But what’s surprised me most is how balanced our wins were this year. Increases were across the board with very few disappointments. (The only tough spots were certain denim collections and some parts of dress furnishings.) Going forward, I see opportunity in youth initiatives (i.e. young men’s) and impulse fashion (i.e. contemporary).”
Arnstein cannot speak highly enough about his talented buyers and DMMs in men’s. “Our 2010 performance is a real achievement for the entire team. And of course I can’t help but think of Kevin [Morrissey, Macy's much loved GMM who died unexpectedly in 2010] who put the plan in place and who would be very proud. (He was, incidentally, my mentor for many years, starting at A&S, so of course it’s emotional for me.) Our immediate goals now are to continue to identify market share opportunities (some say ‘white space’ opportunities) and to exploit the winners. Often, you need to edit in order to grow.”
Asked how much he’s cut back inventory, if Macy’s men’s is doing more sales on less stock, Arnstein smiles. “We have a lot of aggressive merchants in menswear,” he almost apologizes. “We try to keep inventories down, but we’re not letting too many opportunities slip by. I subscribe to the theory that more stock leads to more sales, less stock to less sales.”
Of course some might say that Macy’s can get away with carrying so much inventory because their vendors take back what doesn’t sell. Arnstein objects to the theory. “Yes we have strong partnerships with our vendors, but it’s always a two-way street. We don’t drive partnerships based on receipts, but rather on strategies. And the product has to be right to be profitable.”
Asked about price increases in 2011 and to what extent he can pass them on to consumers, Arnstein is candid. “It remains to be seen how customers will react to higher prices but one way or another, we’ll achieve our margin goals… I believe that the hot brands will sell well, even with price increases. But how much ticket shock will there be? That’s the $64,000 question…”
Another $64,000 question: is there any way around the large percentage of promotional goods so rampant in department stores today? Here again, Arnstein is surprisingly candid. “We are a fashion retailer that provides value to our customers. Certain brands have created a huge promotional umbrella by how they ticket the goods. I believe that product valued at the right price will drive sales. We need a balance these days: promotions are part of the formula. Plus most promotions today are planned, unlike in ’08 when the economy dropped after the season was bought. There’s a much more positive feeling out there right now.”
Asked about the newly renovated Lord & Taylor flagship and the extent to which he worries about the competition, Arnstein smiles. “I hear they’ve done well and I congratulate them. They don’t report their numbers so I don’t know specifics, but I know they have good leadership. And yes, I worry about all competition: the pie is only so big; the men’s market is going to grow only so much. So my job is to grow our market share. Fortunately, at the end of the day, it’s about great product and great partnerships; I truly believe we’re getting better at both.”