YMA FSF 2016 Case Study

Running head: 2017 YMA FSF ETSY & MACY’S PARTNERSHIP CASE STUDY

2017 YMA FSF Etsy & Macy’s Partnership Case Study

B. Merchandising & Marketing

A personalized jewelry seller, Layered & Long has the greatest opportunity based on a customer

analysis of female millennials; therefore, by concentrating on a personalized product assortment

and creating a personable experience for the customer, Etsy and Macy’s growth will be

optimized.

2017 YMA FSF ETSY & MACY’S PARTNERSHIP CASE STUDY 1

Etsy and Macy’s have recently partnered together, hoping to benefit from one another's

strengths. This case study will analyze the partnership between Etsy and Macy’s, suggest

opportunities for growth, and ultimately reveal an Etsy seller and strategy that will optimize

growth for all stakeholders involved.

Part One - SWOT Analysis

Strengths

Etsy has implemented guidelines that allow its independent sellers to overcome

traditional challenges associated with partnering with large retailers. These guidelines, referred

to as Etsy’s wholesale retailer commitments, provide the sellers with the tools and connections to

fare well in a complex and overwhelming retail atmosphere. Furthermore, the company has

created a network of sellers involved in “wholesale retail,” thus providing an atmosphere of

sellers open to learning and teaching (Mauriello, 2015).

The Etsy and Macy’s partnership has created a selling space that enhances the Etsy

brand, as well as connects buyers to the Etsy sellers. From the aesthetic visual merchandising to

the color scheme, the partnership focuses heavily on Etsy’s brand when designing and planning

the shop (“Etsy Pops Up”, 2016). The designers incorporated the handmade aspect beyond the

partnership’s products; they purchased all the risers and tabletop fixtures from an assortment of

28 Etsy sellers (Ryan, 2016). In addition, each shop has a display that creates a personal

connection to the seller, as well as credits them for their products. The seller displays include

shop name, picture, and name of the seller, “what makes their items unique”, and the shop URL

(“Etsy Pops Up”, 2016).


Weaknesses

Creating an omni-channel experience is imperative to maximizing the partnership’s

reach; however, it is not using this to its advantage (Wallace, 2016). The Etsy shop is located at

Macy’s Herald Square in New York City creating only one channel for consumers to use (“Etsy

Pops Up”, 2016). Furthermore, the shop is located on the newly renovated basement floor, One

Below, which targets younger shoppers using stereotypical trends among young millennials and

Generation Z, 13 to 22 years of age (Bhasin, 2015). This target market, younger than the average

Macy’s shopper (50.6 years old), is too young to target millennials (comScore Media Metrix,

2014).

The Macy’s and Etsy partnership has a weak social media and online presence. The

partnership debuted in late January and by mid-February social media was silent. The hashtag

“#MacysxEtsy” was used to reference the partnership on Twitter and can be seen in eight tweets

between the two companies from January 27th to February 11th. Afterward, they rarely

referenced each other on social media. In regards to Facebook, Macy’s never mentioned the

partnership and Etsy only posted twice: opening day and May 3rd to entice followers to visit for

a Mother’s Day gift. Furthermore, primary research revealed that roughly 90% of Etsy’s

consumers were unaware of the partnership.

Opportunities

The Etsy and Macy’s partnership would benefit from store expansion and e-commerce.

MarketLine stated that Macy’s had a strong omni-channel presence, which is not being leveraged

(2016). The partnership has the ability to expand into all Macy’s department stores across the

nation, as well as be listed on Macy’s.com. When targeting millennials, a generation that “spends


more money online in a given year than any other age group”, companies should have an outlet

for e-commerce (Dua, 2015).

Jewelry products, specifically targeted at creating an individual statement, would be a

high-transaction category for the partnership. Etsy has a vast selection of products ranging across

various categories, but not all of them generate the same level of sales. According to comScore

data (~45% of transactions) and a primary source survey (~46% of transactions), jewelry has the

highest number of transactions (comScore Media Metrix, 2014). Diana Smith, a senior research

analyst, encourages jewelry marketers to create a message based on purchasing jewelry “to

create a fashion statement, and then let the outfit become the accessory” (2015). She continues to

say that “Millennials are likely to be receptive to this messaging” (Smith, 2015).

The end-use consumers who provide the most opportunity are millennial females who are

influenced heavily by others opinions’ and by social media marketing. These consumers are

drawn to unique products and brands that offer experiences, not just products. Primary research

revealed that a majority of Etsy’s buyers identify as female. In addition, the data set provided by

comScore Media Metrix on 2014 Etsy transactions revealed various demographics leading to

higher transaction numbers, including the millennial generation (comScore Media Metrix, 2014).

Millennials, individuals between the ages of 22 and 39, make up approximately 25% of the US

population. This generation spans over 17 years, leaving a majority of the generation in two

different life stages. Older millennials are settling down, creating families, and have already

established themselves within their careers; while younger millennials are exiting college,

starting a career path, and beginning to branch out into the real world (Macke, 2016). As noted

by the Federal Reserve, this can affect income as well (2013). It reported the median income of

millennials at $35,300, but this statistic has the ability to change dramatically over three short


years (Federal Reserve, 2013). “Eighty-seven percent of online adults in the US age 18 to 29 use

Facebook, with 53 percent on Instagram, 37 percent on Twitter and 34 percent on Pinterest”

(Becker, 2016). Furthermore, other consumers’ opinions are a major influence on millennials’

shopping habits. “Research...suggests that social media is often responsible for e-commerce

success [and] word of mouth drives 80 percent of purchasing actions, albeit most indirectly” (Ho,

2014). Etsy’s 2015 Annual Report mentions the value of craftsmanship, artistry, uniqueness, and

authenticity to its consumers. In addition, Markelz stated, “58 percent of surveyed millennials

prefer unique goods over mass-produced, up 13 percent in just two years” (2016).

Threats

Powerhouse and online retailer, Amazon, launched a new site dedicated to handcrafted

goods in October of 2015 (Leinbach-Reyhle, 2015). Handmade at Amazon has seen incredible

growth over its existence with an increase in customer traffic by 30% and sales by 150%, month-

over-month (Hahm, 2016). Amazon being “the leading e-retailer in the United States” has the

ability to re-define handmade and capitalize on any mistakes made by Etsy (Wilson, 2016). In

addition, department stores have not seen growth in recent years. There has been a 4% decline in

Macy’s same-store sales, as well as its recent announcement, closing 100 stores at the beginning

of 2017 (Anderson, 2015; Egan, 2016).

Part Two - B. Merchandising and Marketing

Layered and Long will provide the greatest opportunity for growth based on the female

millennial consumer. This Etsy seller is ranked number nine on Craftcount, a seller ranking

service for number of transactions, and number one for number of transactions in the jewelry

category (“Handmade top sellers”, 2016). In addition, jewelry has been proven to be one of the

more popular and profitable categories for Etsy (comScore Media, 2014). This particular jewelry


seller places a strong focus on consumer interaction and personalization, statistically proven to

be important to millennials, yet difficult to accomplish within department stores (Markelz, 2016;

Etsy, 2015). A primary source focus group revealed female millennials’ perceptions of Macy’s

jewelry. The women used the words “mom/grandma jewelry”, “bulky and bold”, and “flashy” to

describe Macy’s jewelry and didn’t find what they wanted in Macy’s department stores. They

were looking for jewelry that was simpler, but still gave insight into their personality. Layered +

Long’s products fit the description of simple, yet personalized jewelry and have the ability to fill

the void in Macy’s jewelry assortment.

Launch Plan

In an interview, Rachel Leibowitz, Business Manager at Macy’s, released quantitative

insight about the partnership and products. When a seller was chosen, Macy’s selected six to ten

different items and bought twelve to thirty pieces per item, depending on price and projected

sales (“So You Want To”, 2016). Following the insight provided by Mrs. Leibowitz, the

following table is the recommended flagship product assortment for Layered and Long.

Table 1: Recommended Flagship Product Assortment for Layered + Long at Macy’s

Picture Item Pre-made Personalized Variations Number of Pieces Suggested Retail Price

Gold State

Charm Necklace The shape would be the state the store is

located in a heart could be added in that area.

30 $29.00

Gold Adjective Bar Necklace

ADVENTUROUS CONFIDENT CREATIVE

DETERMINED FEARLESS

PASSIONATE

4 of each adjective (total: 24)

$50.00

Gold Zodiac

Disc Bracelet ● Aries

● Taurus ● Gemini

● Cancer

● Leo ● Virgo

● Libra

● Scorpio ● Sagittarius

● Capricorn

● Aquarius ● Pisces

● Cancer - Libra: 3

● All others: 2 each

(total: 30)

$30.00


Gold Mantra

Cuff Bracelet ● stay hungry. stay foolish.

● life is a journey; enjoy it. ● live in the moment; make it

beautiful

● don’t find yourself; create yourself

● it’s about direction, not speed

4 of each mantra

(total: 20) $64.00

Gold Initial Bar Ring

● J

● K ● L

● M

● A

● C ● E

● H

● P ● S

● B

● D ● G

● N

● R ● T

Column… ● 1: 3 each

● 2: 2 each ● 3: 1 each

Total = 30

$36.00

Gold Chain

Necklace (2in1: Choker & Long)

N/A 30 $27.00

Gold Statement V Necklace

N/A 20 $52.00

The assortment concentrates on personalized and statement-oriented items. Layered +

Long, focuses on personalization, however creating a line of pre-made products for wholesale

limits the consumer's options. In order to bring a personal and unique aspect to the store, this

product assortment uses states, empowering adjectives, zodiac symbols, inspirational mantras,

and initials in combination with jewelry layering, to create a unique mix for each customer. The

adjectives and mantras were chosen to create a lifestyle of empowerment and inspiration with the

brand, as well as incorporating the seller’s passion of empowering women. Furthermore, the

initials and zodiac symbols were selected by their commonality. For instance, the initials J, K, L,

and M will have three pieces each because they are the most common first letters for names

(Tout, 2015; Melina, 2010). Refer to the “pre-made personalization variations” section of the

product assortment table to see all the variations.

Increasing the number of channels accessible to the consumer is an advantageous move,

but the product assortment should be altered. For medium and small stores, the assortment would


have fewer products and less pieces per product. Furthermore, the final two products are more

expendable because they only offer personalization through layering. The following table shows

the assortment changes due to size.

Table 2: Assortment Differences with Medium & Small Stores

Offered Products Pieces per Product

Medium ● Gold State Charm Necklace

● Gold Adjective Bar Necklace ● Gold Zodiac Disc Bracelet

● Gold Mantra Cuff Bracelet

● Gold Initial Bar Ring ● Gold Chain Necklace (2in1: Choker & Long)

● 20

● 3 for each variation (total = 18) ● 2 for all variations (total = 24)

● 3 for each variation (total = 18)

● Referencing column #s in order: 2, 2, 1 (total = 24) ● 20

Small ● Gold State Charm Necklace

● Gold Adjective Bar Necklace

● Gold Zodiac Disc Bracelet ● Gold Mantra Cuff Bracelet

● Gold Initial Bar Ring

● 10

● 2 for each variation (total = 12)

● Cancer - libra = 2; others = 1 (total = 16) ● 2 for each variation (total = 12)

● Referencing column #s in order: 2, 1, 1(total = 20)

The pop-up shop’s location within the store is vital to its success. To maximize foot

traffic and visibility, the shop will be placed near an entrance in the women’s department, more

specifically the contemporary clothing section, which is more targeted to the millennial female.

In regards to visual merchandising and display, the pop-up shop needs to further incorporate

handmade displays and create a more personal interaction with the consumers. The Herald

Square shop purchased furniture and lighting from Etsy sellers in order to create a handmade

atmosphere from display to products (Ryan, 2016). When designing the store shops and displays,

designers need to incorporate more of these seller collaborations to further emphasize the

handmade atmosphere. For example, the tables can come from Jaak Rabbit (Etsy furniture seller)

and the jewelry displays can be bought from Dand J Lollipop Stands (Etsy display/stand seller)

and Array and Display (Etsy jewelry display seller). Etsy prides themselves on building an “Etsy

Economy” where consumers can build relationships with the sellers, however the retail

atmosphere limits these interactions. Therefore, a seller card, similar to those at the Herald


Square location, will be present to create an interaction between the seller and the buyers

(Appendix A1). Layered and Long’s packaging adds a personal touch to its products by

providing empowering quotes towards women (Appendix A2). In order for the retail customers

to experience the packaging, the pop-up shop should have a display model for each product

variation while the rest of the items are pre-packaged.

Marketing Campaign - Accessory to Fashion Statement

The Accessory to Fashion Statement campaign will strive to increase partnership

awareness, generate consumer engagement, and provoke consumer behavior by featuring in-store

events and an extensive social media push that appeals to the millennial market. The overarching

messaging of the campaign, quoted below, is about being able to express oneself through the

personalized jewelry that Layered + Long craft.

Jewelry is more than an accessory. It's an expression of your personality. Jewelry is the

fashion statement; let your outfit become the accessory.

The in-store events are focused on creating customer experiences and a brand perception

that is more meaningful than the product. These events will be advertised through flyers and

social media. There will be two types of in-store events, the Meet and Create with Chrissy

Lavdovsky and motivational/inspirational speaker days. The main event will be the Meet and

Create with Chrissy Lavdovsky, where the seller comes to the selected pop-up shop, meets the

customers, and demonstrates how to make some of the products. The demonstration will involve

a unique, personalized product that is chosen by the winner of a customer raffle. The other in-

store event focuses beyond the products and attracts customers to the pop-up shop by providing

an experience of meeting an inspirational speaker and/or figure. For example, a store could invite

a local athlete or celebrity to speak about women’s empowerment.


With the strong influence of social media marketing on millennials, it is important to

increase the effectiveness of the partnership’s online presence. The extensive social media push

focuses on three objectives: consistency, increasing partnership awareness, and creating buyer-

seller interactions. The partnership lacked consistent social media marketing with its initial

campaign, therefore the AFS campaign focuses on consistency with daily posts (See Appendix

B2). In Appendix B1, there are sample posts that show the visual consistency of the posts.

Furthermore, increasing the partnership’s online presence and consistency of its posts will lead to

increased partnership awareness. By incorporating hashtags such as “#FreshItemFriday”,

“#MeetTheSellerMonday”, and “#WhatIsYourJewelryStatement” consumers’ interactions are

created and they are developing experiences with the brand. Appendix B covers the month of

February; however the same tactics and ideals can be used for future months as well.

Financial Plan

The following table displays the financial plan detailing expected sales, receipts, profit

margin, and inventory for the months February through July.

Table 3: Financial Plan for February 2017 to July 2017

Month February March April May June July Season August

Inventory $16.76 $23.75 $27.42 $21.37 $18.62 $17.13 $20.71 $19.92

Sales % 15% 17% 19% 17% 16% 16% 100% 14%

Sales $ $6.98 $7.92 $8.85 $7.92 $7.45 $7.45 $46.56 $7.97

Purchase % 26.05% 22.04% 7.21% 11.38% 12.82% 20.50% 100%

Purchase $ $15.13 $12.80 $4.19 $6.61 $7.45 $11.91 $58.10

Markdown % 2.5% 2.6% 3.0% 3.1% 3.2% 3.6% 18%

Markdown $ $1.16 $1.21 $1.40 $1.44 $1.49 $1.68 $8.38

S/S Ratio 2.4 3.0 3.1 2.7 2.5 2.3 TO: 2.25 2.5

Open-to Buy $4.54 $3.84 $1.26 $1.98 $2.23 $3.57 $17.43


All markdown percentages, sales percentages, and stock-to-sale ratios are modified from

Macy’s competitor’s 2016 financials. The total planned sales was calculated by using the product

assortments’ number of pieces and prices and the four week turnaround given by Rachel

Leibowitz, the Business Manager at Macy’s (“So You Want To”, 2016). Using Macy’s

competitor’s stock-to-sales ratios, the inventories for each month and August are calculated. The

average inventory is then the sum of all beginning-of-month inventories (BOM) August divided

by seven (2016). The turnover (TO) is then calculated by dividing the net sales by the average

inventory. To calculate monthly planned purchases, one adds planned sales, planned markdowns,

and end-of-month inventory (EOM) then subtracts BOM. In regards to August, the figures are

based on Macy’s competitor and the “45-55 rule” for sales across the first and second six months

of the fiscal calendar year (2016). In addition, open-to-buy (OTB) is calculated from using a

70% markup on the jewelry products; therefore 30% is the actual cost percentage of the product

(Macy’s Competitor, 2016). The gross margin would be total planned sales minus seasonal OTB;

therefore the gross margin is $29,130.

If the Layered + Long shop is successful in terms of transactions and moving inventory in

and out one should look to scale up the pop-up shop and its business. The best tactic would be to

increase the number of pieces of each product. Other options would include: increasing the

square footage; new, innovative products; and personalized variations. In regards to liquidation

of the assortment, the shop could transfer inventory to other shops, and markdown products.

Julia Hanna recommends that markdowns be typically higher at the beginning of the process and

typically lower near the end to maximize net recovery (2013). The best tactics are situational, but

transferring the inventory to other stores that are actively selling the product would be the most

positive outcome.


References

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stores/#118e0e9415cd

Bhasin, K. (2015, September 25). This Is Macy's Idea of a Millennial Wonderland. Retrieved

September 15, 2016, from http://www.bloomberg.com/news/articles/2015-09-25/this-is-

macy-s-idea-of-a-millennial-wonderland

Company Profile - Macy's, Inc. [MarketLine SWOT Analysis]. (2016, March 03).

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strategy-for-store-liquidation/#7ddf24a17bff

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millennials/

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Appendix A

Image A1: Layered + Long Seller Card - Chrissy Lavdovsky

Image A2: Layered + Long Packaging


Appendix B

Image B1: Social Media Post Visuals

Image B2: Social Media Posts for the Month of February

Documents

YMA FSF 2016 Case Study