Ed Finkelstein's Marketing Miracle on 34th Street: It's the Glamorous New Macy's
No offense to Santa Claus, but Edward S. Finkelstein, 54, is likely to remember the parade as the start of a holiday shopping season that will set records for the world's largest department store. Things have not always been so festive for Macy's. Five years ago, when Finkelstein became president and chief executive officer, the store was old-fashioned, unsophisticated and barely making money. He transformed it from a down-at-the-heels dowager into a sleek, chic and money-coining prototype for merchandising in the 1980s.
This year Macy's sales volume is expected to reach $250 million—up $100 million from when Finkelstein took over (and more than any other department store in the U.S. grosses). Such figures enabled the Macy chain—which consists of the flagship New York store plus 83 others—to report a 69.9 percent increase in third-quarter profits, a remarkable achievement in the face of recession and the gasoline shortage.
"Running a retail business," says Finkelstein, "is like taking a Gallup poll." Perceiving a growing public appetite for glitter, he poured $15 million into a storewide facelift. Layers of paint were stripped off to reveal turn-of-the-century marble pillars and burnished wood. Counters heaped with cut-rate sundries gave way to flashy displays of clothes by such top-name designers as Calvin Klein, Bill Blass and Mary McFadden.
Determined to corral the affluent young customer as well as family trade, Finkelstein replaced the store's bargain basement with the Cellar. It is an elegant, travertine-sheathed arcade of gourmet shops (14 ounces of Beluga caviar for $270), flower stalls, a replica of a 19th-century English pharmacy called the Apothecary and a branch of P. J. Clarke's, a popular East Side hangout. (The most expensive item sold at Macy's can be found in the eighth-floor gift department: a $25,000 antique German music box.)
Finkelstein's efforts have already inspired commercial retaliation. When a shopper at stylish Bloomingdale's recently found the first floor torn up by reconstruction, she asked a saleswoman, "What's happening?" "Macy's," she replied. "That's what's happening to Bloomingdale's!"
The man responsible for Macy's renaissance is the son of a suburban New York dairy salesman—"a butter-and-egg man"—and his wife. Young Ed graduated from Mount Vernon High School at 17 and, although he had scholarships to two other universities, borrowed money from an uncle and waited on tables to pay his way through Harvard. "I wasn't very self-confident," he recalls. "The farthest I'd ever traveled before was to visit my Aunt Jenny in New Jersey."
In his sophomore year Finkelstein joined the Navy's V-12 program, then went on to graduate cum laude in economics. He earned his master's degree at Harvard Business School in 1948. "Rather than being pursued as youngsters are today," Finkelstein recalls, "we had to go out and hunt for a job." He considered law school and Wall Street, but joined Macy's executive training program instead, acknowledging modestly, "Retailing is not like being called into the priesthood or medicine or law."
Perhaps not, but Finkelstein (pronounced Finkelsteen) soon proved that he was made for the profession. He rose steadily through the hierarchy, becoming executive vice-president in 1967. The turning point for Finkelstein and for Macy's came in 1971, when he was sent to San Francisco to run the chain's California division. His profits soared above those of all other local retailers; meanwhile business in New York leveled off disappointingly.
Summoned to rescue the Herald Square store (founded in 1858 by an ex-Nantucket whaler, Rowland Hussey Macy), Finkelstein faced an uphill battle against Bloomingdale's, which is run by a Harvard classmate, Marvin Traub. Today Macy's volume is approximately $40 million above that of its rival. (Interestingly, Traub's son is learning the retail business by working at Macy's.)
Finkelstein, proclaims Stanley Marcus of Neiman-Marcus, "is one of the brightest merchants of our time. He has superb taste and something even more rare in this business—humility." Rising at 6 a.m., Finkelstein often works a 15-hour day. He is a voracious reader and regularly attends the opera, symphony and ballet—"I buy any tickets my wife, Myra, asks me to."
They met on a blind date at a Tanglewood music festival and were married in 1950. Myra, also 54, has master's degrees in education and clinical psychology from Columbia and San Francisco State. Still, she has devoted most of her life to raising their three sons: Mitchell, a 27-year-old apprentice with a blue jeans manufacturer in El Paso; Daniel, 25, an assistant sportswear buyer for Macy's in San Francisco; and Robert, 21, an undergraduate at Stanford. Ed and Myra divide their time between a spacious home in Weston, Conn. and a pied-à-terre on Fifth Avenue.
Though other retail giants constantly try to lure Finkelstein away from his $500,000-a-year post, he has no intention of leaving Macy's—where he has spent his entire professional life. Don Smiley, chairman of the parent company and Finkelstein's boss, will be 65 next April. Is that Ed's ultimate job? His smiling reply: "It had better be."