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Life Health > Running Your Business

Macy's floats an old idea

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In 1837, Rowland H. Macy left his comfortable Nantucket, Mass., home to sail the Atlantic with whale hunters. He returned home in 1841 and opened a needle and thread shop and a dry goods store that both quickly went bankrupt. After following the gold rush to California, he returned to Haverhill, Mass., to open yet another dry goods store with his brother and achieved some success. He left his brother in 1858 to open a small store of his own on the corner of 14th Street and 6th Avenue in New York.

Macy had learned from his previous business failures and used that savvy to innovate in ways retailers at the time had never imagined. He was the first to have an in-house Santa Claus. (Some credit Macy with the commercialization of Christmas.) When his little store broke the rules by being the first to promote a woman to an executive position, Macy made sure all of the newspapers knew about it. Women wanted to shop at Macy’s place.

The store introduced Americans to such products as the tea bag, the Idaho baked potato and colored bath towels. In 1924, to celebrate their new status as Americans, the store’s immigrant employees organized a Christmas parade, which today has become an annual Thanksgiving extravaganza. But Macy also saw the advent of product commoditization and understood that his ultimate “product” was extraordinary service.

Recently the chain has had some inconsistencies in customer service, so they have begun a campaign called “Magic Selling” to up the service ante in all of their customer interactions. The Macy’s of today understands what Rowland H. Macy learned years ago: that it is the service — even more than the merchandise — that keeps customers happy. When customers have great interactions with the sales staff, sales increase and the customers keep coming back.

As we watch health care plans become commoditized, standardized and soon to be sold by automats called “exchanges,” Macy’s lesson is one we should all keep in mind.