PFA 1 Macy's Inc. March 2018 Macy's Inc. Operates 690 D

Pfa 1 Macys Inc Mas Of March 2018 Macys Inc Operates 690 D

Macy’s, Inc. (M) as of March 2018 operates 690 department stores across 45 states, Washington DC, and internationally in Colombia, Guam, Puerto Rico, China, United Arab Emirates, and Kuwait through third-party license agreements. The company's headquarters is located in Cincinnati, Ohio, and its core brands include Macy’s, Bloomingdale’s, and Bluemercury. The majority of these stores are situated in urban and suburban areas and offer a diverse product assortment, including apparel, accessories, cosmetics, home furnishings, and other consumer goods.

In the fiscal year ending January 2017, Macy’s reported revenues exceeding $25 billion, generated from 382 company-owned stores, with additional revenue from leased stores. About 600 of these stores function as department stores under Macy’s and Bloomingdale’s names, with the remaining stores comprising specialty outlets such as Bloomingdale’s The Outlet, Bluemercury, Macy’s Backstage, and Last Act. Macy’s has been actively reshaping its store footprint by divesting 66 stores in fiscal 2017 and 43 stores in the previous year, with plans to further reduce its store count by approximately 30 as leases expire.

Currently, Macy’s employs approximately 148,300 individuals, both full-time and part-time, with about 10% of the workforce represented by unions. Despite its expansive store network, Macy’s has been facing financial difficulties, characterized by declining sales and store closures, necessitating the development of a strategic plan to revitalize its business model. The company's marketing efforts in December 2017 included spending $32 million on television advertising, compared to $27 million spent by J.C. Penney during the same period.

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Introduction

Macy’s, Inc. stands as a historically significant player in the retail sector, particularly in department store retailing across the United States and select international markets. However, by 2018, it was evident that Macy’s faced substantial challenges, including declining foot traffic, increased online competition, and shifting consumer preferences. The company’s considerable store footprint, though once a strength, evolved into a liability as the retail landscape changed rapidly. This paper seeks to analyze Macy’s operational and strategic situation as of March 2018, examine its core issues, and propose viable strategic solutions aimed at revitalizing its business.

Operational Overview and Market Position

As of early 2018, Macy’s operated 690 stores across various locations, representing a significant physical footprint that contributed to its brand recognition and customer accessibility. The international licensing agreements expanded its global reach, although its core market remained within the United States. Macy’s brands—Macy’s, Bloomingdale’s, and Bluemercury—served a broad demographic spectrum, leveraging both mature and emerging consumer markets. Despite this extensive network, Macy’s reported revenues of over $25 billion for the fiscal year ending January 2017, illustrating its substantial market presence but also indicating the necessity for strategic change given the competitive environment and declining store sales.

Challenges and Strategic Dilemmas

The decline in Macy’s financial health was attributed to various interconnected issues. The retailer’s strategy of expanding its store count and relying heavily on brick-and-mortar operations was increasingly incompatible with the rising prominence of e-commerce retailers like Amazon. The company’s divestment of stores, totaling 109 over two years, was an attempt to cut costs and streamline operations; however, it also reflected a shrinking footprint that risked diminishing brand visibility.

Furthermore, Macy’s marketing spending, specifically $32 million on television advertising in December 2017, indicated its willingness to invest in consumer engagement, yet the return on these investments was uncertain amidst the decline in consumer foot traffic and changing shopping behaviors. The competitive landscape, particularly with J.C. Penney’s advertising spend of $27 million, underscored the urgency for Macy’s to adopt innovative marketing and operational strategies.

Strategic Options and Recommendations

1. Omnichannel Integration: Macy’s needed to accelerate its omnichannel strategy by integrating online and offline shopping experiences. This includes enhancing its e-commerce platform, investing in mobile shopping, and offering services like buy-online-pickup-in-store (BOPIS) to provide convenience and meet customer expectations.

2. Store Optimization and Experience Innovation: Macy’s should re-evaluate its physical store portfolio, closing underperforming locations and transforming remaining stores into experience centers that offer personalized services, exclusive events, and interactive displays to attract customers and increase dwell time.

3. Product Diversification and Private Label Expansion: Expanding private label offerings and exclusive brands could differentiate Macy’s from competitors and improve margins. Collaborations with designers and popular brands could also drive traffic and sales.

4. Cost Management and Operational Efficiency: Macy’s must improve operational efficiency through supply chain optimization, reducing inventory costs, and leveraging data analytics for better demand forecasting.

5. Enhanced Marketing and Customer Engagement: Increasing targeted digital marketing efforts, loyalty programs, and social media engagement would better connect Macy’s with its consumers and reduce reliance on mass advertising channels.

Implementing these strategies would require a comprehensive change management plan, aligning organizational culture with new business models, fostering innovation, and continuously monitoring market trends. Macy’s must position itself as a flexible, customer-centric retailer capable of adapting swiftly to the evolving retail environment.

Conclusion

By 2018, Macy’s was at a pivotal juncture where strategic revisits were essential for sustainability and growth. The retailer’s extensive physical presence was both an asset and a liability, necessitating a shift towards integration of digital channels, experience-centric stores, and private branding. Through a combination of cost efficiencies, innovative marketing, and customer-focused initiatives, Macy’s could regain its competitive edge and chart a path toward renewed profitability and relevance in the changing retail landscape.

References

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  • Macy’s, Inc. Annual Report. (2017). Retrieved from https://investors.macys.com
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