Terry J. Lundgren, Macy’s (M) chief executive officer, has research showing that more than half the people in the biggest Macy’s urban markets—including New York, Los Angeles, and Chicago—are Hispanic, African-American, and Asian. The chain already uses various tactics to woo minority shoppers, such as its deal to sell an exclusive line from rapper-turned-clothier Sean “Diddy” Combs. Coveting a deeper relationship with minority customers, Lundgren decided to seek out mom-and-pop retailers already serving minority consumers and get their products on Macy’s shelves.
Small businesses, however, often lack the wherewithal to supply a behemoth like Macy’s, the second-largest U.S. department store chain after Sears Holdings (SHLD). So Macy’s last year developed a training program designed for minority vendors. Participants learn the basics of big-time retail, and the most promising get to sell through Macy’s. In November the retailer awarded its first orders to four graduates: two makers of cosmetics targeted at African-American and multi-ethnic women; a designer who makes dresses primarily for Hispanic women; and a designer of plus-size swimsuits. “We are doing this not just as a nice thing,” Lundgren says, “but as a business proposition.”
It’s a sizable one: By 2015, Hispanics will spend $1.5 trillion on U.S. goods and services, according to the University of Georgia’s Selig Center for Economic Growth, 50 percent more than they spent in 2010. Blacks’ buying power will expand by about a quarter, to $1.2 trillion, in that period, and Asians by more than 40 percent, to $775 billion. Macy’s forecasts its sales of goods from minority- and women-owned businesses will jump to $1 billion in two years, after rising a projected 22 percent, to $683.2 million, in 2011. (Macy’s total sales were an estimated $26.4 billion last year.) “When we get there,” he adds, “I can assure you I will raise that goal.” READ MORE
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