Macy’s Inc. has always been lead by creative and innovative leaders who kept working hard to ensure the success of the company. Managing a large retail store requires a team of experienced, committed and talented executives. Macy’s stores face competition from different retail stores in different formats operating in different areas in the form of specialty stores, department stores, discount stores and general merchandise stores. On the same note, the company competes with international brands as well as online stores among others. Apart from competing with other key players for clients, Macy’s also have to compete aggressively for best talent within the region.
Macy’s Inc. is organized in the form of hierarchical structure which follows the layout of a pyramid. The CEO is on top of the management pyramid having every employee being subordinate to someone else within the organization.
Chairperson and Chief Executive Officer
The chairperson and chief executive officer of Macy’s Inc is Terry J. Lundgren Since the year 2004. He was appointed to this position after serving as the president and chief executive officer since the year 2003. Before this, he also served as the president and chief merchandising officer.
Terry J. Lundgren is an expert manager and has worked in the retail industry for long. He has been working at Macy’s since 1975 where he began as a trainee with Bullock’s branch of the Federated Department Stores, Inc. He was promoted over the years and was given increasing responsibilities within the organization. By the year 1984, he was already the senior vice president and general merchandise manager.
Terry was transferred from Federated to Neiman Marcus in the year 1988 where he served as executive vice president and finally the chairperson and chief executive officer. He later returned to Macy’s Inc. in the year 1994, where he worked as chairperson and chief executive officer.
The president of Macy’s Inc. is Jeff Gennette. He was appointed as the President in the year 2014 after serving for five years as Macy’s chief merchandising officer. Jeffrey’s chief responsibilities include overseeing merchandise planning, maintaining oversight responsibility, marketing of Macy’s products and finally engaging in product development. Gennette has previously served as the chief executive officer and chairman of Macy’s West located in San Francisco. Gennette started working in Macy’s since the year 1983. Over the years, he held positions of increased responsibility such as the vice president, division merchandise manager in different sections.
Chief Merchandising Officer
The chief merchandising officer for Macy’s is Tim Baxter who was appointed in February 2015 preceding his services as the executive vice president and general merchandise manager since 2013. Timothy Baxter has been working in the retail industry for about 23 years doing a variety of merchant roles.
Chief Omnichannel Officer
Robert Harrison was appointed as the Chief Omnichannel Officer in January 2013. His main responsibilities include technology infrastructure, site development, analytics, and programming for macys.com and Bloomingdales.com. Before this, he served as Macy’s executive president for omnichannel strategy. The chief omnichannel officer is also responsible for ensuring that the company systems and technology, logistics and other operation related functions are working well.
Chief Financial Officer
The chief financial officer of Macy’s Inc is Karen M. Hoguet. She has been working as the Chief financial officer since the year 1997. She is responsible for ensuring that the organization’s finance and accounting aspect is properly managed. The main responsibility of the chief financial officer is to manage credit and customer services, non-merchandise purchasing, real estate and sustainability functions. On the same note, she is responsible for internal audit functions and reports directly to the CEO Terry Lundgren.
Hoguet started working with Macy’s as a senior consultant in marketing and long-term planning in the year 1982. She worked as the director of capital business planning and later promoted to operating vice president for planning and financial analyst before being elected as the corporate vice president and finally the chief financial officer.
Different stakeholders use financial information for different purposes. For instance, investors use financial information to determine whether or not to invest in an organization. On the same note, the management uses financial information to make important decisions when developing organization strategies. The financial fundamentals of Macy’s incorporation have been strong over the years. However, the company sales have been decreasing for the last two years. This has been attributed to increased competition from online shopping brands such as Amazon.
To determine the liquidity of an organization, we can look at different accounting ratios such as accounts receivables turnover, day sales uncollected and total asset turnover.
Account receivable turnover: This refers to the number of times that a firm converts its assets to cash in a year. The account receivable turnover can be calculated using the following formula:
Account receivable turnover = Net Credit Sales/Average Accounts receivables. According to Morningstar.com (2016), the Macy’s account receivable turnover for the year 2016 is 74.72 times. This ratio is very high at 74.72 which indicate that the company can collect their receivables efficiently per year.
Days to Sales Outstanding: The days of sales outstanding ratio have been growing over the years. According to Morningstar.com the Macy’s days to sales ratio have been increasing since 2014 from 5.28 times to 6.62 in the year 2016. This ratio is extremely low indicating that Macy’s is good at collecting their credits. When comparing day’s sales outstanding with account receivable turnover, we can see that low uncollected result in high turnover.
Asset Turnover: This metric is used to describe how many times in a year a firm utilizes its assets to generate revenue. The asset turnover has been increasing over the years also. According to Morningstar.com (2016), Macy’s asset turnover for the year 2016 is 1.29. This ratio is relatively high compared to the industry ratio of 0.9 indicating that Macy’s is efficient in utilizing its assets to generate profits.
The solvency of an organization can be determined by looking at important ratios such as debt-to-equity ratio and current ratio.
Debt-to-equity ratio: This ratio is an important metric utilized by users of financial information to determine the proportion of equity and debt a company utilizes in financing its assets. The debt to equity ratio for Macy’s has been increasing gradually over the years. According to mornigstar.com (2016), the debt to equity ratio for Macy’s is 1.65 for the year 2016.
Current ratio: Macy’s current ratio slightly dropped from 1.57 in the year 2015 to 1.34 in early 2016. This indicates that the company financial structure is improving.
Profitability metrics are important for users of financial information. Some of the main profitability ratios include profit margin and return on assets.
Profit margin: Profit margin is an important profitability metric used for reflecting the percentage of revenue generated by each dollar of sale. According to Morningstar.com (2016), the profit margin for Macy’s Inc is 36.23 in the first quarter of the year 2016. Over the years, the profit margin for Macy’s Incorporation has been increasing. This can be attributed to the US economy coming out of recession.
Return on Assets: Return on an asset is computed by dividing net income by average total assets. The Return on Assets for Macy’s incorporation is 5.10. Macy’s return on asset ratio has been fluctuating over the years. There is a slight decrease in the ratio from 7.08 in the year 2015 to 5.10 in the year 2016. This indicates that the amount generated by the assets of the company is slowly decreasing.
The company sales declined over the last six months. The sales in this fiscal year 2015 were 27.1 billion dollars, a decrease of 3.7% as compared to the previous year. Other key competitors are growing faster as compared to Macy’s Inc. For example, TJX posted total sales of 30.9 billion dollars and H&M which posted sales of $30 billion dollars.
Comparison of Macy’s Inc. with others
Macy’s Dillard’s JePenny’s Saks Industry
Market Capital 15.38 B 3.89 B N/A 1.50B 2.34B
Quarterly revenue growth 0.04 0.05 N/A 0.05 0.00
Revenue 27.06B 6.60B 17.56B 3.08B 2.73B
Net Income 1.31B 482.21M 251.00M 78.53M N/A
Macy’s Inc. houses a variety of brand name goods of high quality that can be sorted into different categories that contribute to the wide selection of products that is sold to generate profits. Products that are sold by Macy’s target both women and men. On the same note, Macy’s have diverse employees and customer from different ethnic background and culture. Some of the factors that may affect business operations in Macy’s include:
Political or Legal Factors: Macy’s is a publicly traded company. Therefore, it is critical that the organization complies with all the government laws, regulations, and rules to continue operating. Therefore, Macy’s has to act according to the government rules and regulations. For example, it must follow Sarbanes-Oxley Act by reporting honest financial information and publicly posting financial information on their corporate website.
The company must also comply with all anti-discriminatory laws, policies, and rules by providing equal employment opportunities to people in the community. This is important for creating a positive and productive work environment as well as a pleasant shopping experience for customers.
Social Cultural Factors: These factors put a lot of emphasis on the attitudes and cultural values of the society. It might be challenging to keep up with the social-cultural factors because attitudes and cultural values tend to undergo change within a very short time. People have varied tastes, preferences, needs and want. Therefore, Macy’s Inc diversifies its product selection in a bid to give customers choices to choose from. The company also spends a substantial amount of resources and time in research to understand the market before beginning to produce different brands. The company also stays informed about their endorsed brands and designed products to ensure the success of their product lines.
On the same note, Macy’s Inc promotes cultural diversity within the workforce. The only primary objective is to establish a well-trained, knowledgeable workforce who can work towards the attainment of organization goals and get career satisfaction.
Technological Factors: Changes in technology also affects how Macy’s operates in the market. Advancement in technology has enabled Macy’s Inc. to offer greater shopping experience by delivering easy and convenient online shopping for customers to shop via the internet. Technological advancement has also enabled Macy’s to keep constant contact with different parties such as customers, investors, employees and suppliers efficiently and effectively.
Because of advancement in technology, Macy’s Inc. has been able to save on time and at the same time increase its market share by reaching other unidentified markets using e-commerce.
Demographic Factors: The demographic aspect of the external environment focuses mainly on the population’s size, geographical distribution, age structure, distribution of income and ethnic mix. Macy’s offers a variety of products to suit a wide range of ages from children, youth as well as men and women of over the age of 65. The company’s facilities include an 800 operational department stores to serve consumers from different locations. On the same note, the company operates a fully functional online shopping website to promote effortlessness access to all clients conveniently regardless of where they are located in the country.
Macy’s incorporation also operates Bloomingdale’s brand that possesses over 40 stores located in different states and a fully functional website for conducting e-commerce transaction. Macy’s Inc. stores stock a variety of brand names and goods that fit consumers from different age, gender, and social class.
The global environment: Globalization also tends to affect how business organizations operate. Understanding the global market is important for Macy’s as it may negatively affect the politics, culture or even the stability of the economy in which the organization operates.
Expansion of the global market also gives Macy’s Inc the opportunity to balance its portfolio by getting an opportunity to generate income outside the United States and hence cover for any losses that may occur within the United States.
Physical environment factors: Changes in the physical environment also affect how a business organization operates. Factors such as global warming waste and recycling awareness are of great concern to business organizations. Companies are striving to be environmentally friendly when making a business decision. Macy’s incorporation involves themselves in the conservation of energy by using energy saving fluorescent and using environmentally friendly packing for packaging products to customers.
To understand Macy’s internal environment, we can use SWOT Analysis
Macy’s SWOT Analysis
More than 800 stores in the United States
Popular brand with a good recall and quality
Impressive portfolio of strong private brands
Diversity of merchandise
Strong workforce of about 160,000 employees
Shipment to over 100 countries
Slow market share growth because of competition
Limited global awareness as compared to other key players in the industry
Marcy’s Inc is not diversified. There are only two lines of business that is Macy’s and Bloomindale’s
Online Shopping because of e-commerce
Availability of emerging markets to expand to such as China and India.
Strong competition from other key players in the Industry such as J.C Penney and other international brands.
Competition from other discount stores such as Wal-mart and Costco who offer extremely low prices compared to Macy’s.
Macy’s has been facing strategic issues recently. The company sales declined over the last six months. The sales in this fiscal year 2015 were 27.1 billion dollars, a decrease of 3.7% as compared to the previous year. Other key competitors are growing faster as compared to Macy’s Inc. For example, TJX posted total sales of 30.9 billion dollars and H&M which posted sales of $30 billion dollars.
Customer traffic to Macy’s stores has been decreasing over the years despite intensive promotion campaigns. However, Macy’s have to continuously promoted its products to achieve its strategic goals.
Recently, Macy’s announced that a new CEO would replace the existing CEO Terry Lundgren who has been working as the CEO for more than ten years. It is expected that the long-time executive Jeff Gennette will become the new CEO in the first quarter of next year. Lundgren will remain on the board as the chairman.
The new CEO is expected to turn around things within the organization as Sales for Macy’s has been decreasing. Some of the key issues that need to be addressed include:
Traffic problems: According to Schlossberg (2016), the number of transactions in Macy’s decreased by 7% in the first quarter. The reason is that of a decrease in apparel spending. However, there might be an underlying problem where the company is not offering value to make come into the stores. According to Schlossberg (2016), the Macy’s stores do not offer consumers incentives to visit its stores by offering value.
Therefore, there is the need for developing strategic plans to assist in boosting traffic. The company is also capitalizing on investing in young people whose needs are primarily health and wellness goods and also spending on experience.
Reestablishing Macy’s as the premiere brand: Increasing competition is becoming a threat to Macy’s position as one of the best and popular brands in the United States. Lack of proper attention and care from the customer care, disarray and lack of motivation from the employees is one of the primary issues of concern for Macy’s brand. The company is also working on its strategy to ensure that the company retains its position as high-end areas for a great shopping experience.
Dealing with excessive discounting and focus on Off-price business: Macy’s has been giving huge sales discounts to attract more and more customers. On the same note, the company has put a lot of emphasis on off-price business. The company is developing strategies for opening up off-price backstage stores. These stores will be offering great discounts to attract customers to purchase from the organization.
Online Shopping: More and more people prefer online shopping compared to traditional shopping where people shop online and place an order via e-commerce website and get their products delivered to their homes via cargo services or post. Most giant online companies such as Amazon are proving to be a threat to the existence of Macy’s. Therefore, the organization is developing strategies to ensure that its online business is booming, and more traffic is attracted towards shopping in Macy’s Inc.
Strategic Partnership: Macy’s is also looking for new ways of establishing new relationships through franchising. The company is partnering with Lady Gaga and Elton John to develop new accessories and clothing line called Love Bravery (Monica, 2016). This strategy could move a long way in ensuring that consumers are excited with greater newness and even more exclusive merchandise. This could help in increasing the traffic to Macy’s Physical stores and online shopping portals as consumers would love to shop these products associated with celebrities. On the same note, the company is planning to sell more gadgets from Brookstone and Samsung especially during peak holiday seasons to promote greater traffic to the Company’s front stores and online shopping site.
There are key issues that Macy’s should consider to improve its operations and attain greater sales as well as increase its brand awareness. The consumer demands are constantly evolving, and thus Macy’s must consider restructuring of its Macy’s and Bloomingdale’s by its omnichannel approach to retailing to increase its efficiency and productivity.
Some of the key operation and strategic operation and strategic questions include:
Restructuring in Merchandising and Marketing
One of the primary operational and strategic concerns is how to restructure merchandising and marketing to present the organization assortment in a seamless manner across its different channels and offer a single omnichannel view of product categories. The management should concern itself in restructuring both Macy’s and Bloomingdale’s central marketing and merchandising functions to be unified. The organization should unify its hybrid store and online buying to support the entire of Macy’s business operations and stimulate both store and digital growth. In the past, store and online assortments were procured, marketed and sold by separate organizations at Macys’. However, streamlining the merchandising and marketing process could lead to continued growth and enhanced shopping experience for customers visiting the organization stores or online shopping via the internet.
On the same note, the organization should develop strategies that could enable Macy’s and Bloomingdale’s to better procure merchandise, assort inventories and provide customer demands seamlessly no matter how, when or the channel in which a customer shops. On the same note, some redundant activities should be reduced to accelerate customer service.
Similarly, Macy’s should make selected changes in its merchandising-related functions in an administrative grouping of Macy’s stores in the country to improve its ability to localize assortments by style, size, fabric weight, color, category, brand, and fit. According to XXXX, Macy’s inc. will withdraw district planner positions and instead reinvest in regional teams who will be dedicated to detailed themes of merchandise localization. These regional teams will in addressing issues concerning localization, promotion of warm-weather strategies, and dealing with multicultural customers.
Strategic Changes in Stores and Field
Another area of concern is improving operation efficiency and increase productivity. Therefore, the management is making some adjustments in Macy’s and Bloomingdale’s store and field operation. On the same note, the organization is refocusing the staffing in each store location to facilitate growth, improve efficiency and increase productivity. Adjustments are also made in the selling service and support to match business opportunities in the respective department. On the same note, some of the Macy’s stores in different districts are being merged together to reduce the ongoing number of stores.
Store Closings and Openings
Macy’s Inc. have done massive adjustment portfolio of shops across the whole nation. The omnichannel strategy is dependent on how Macy’s and Bloomingdale’s stores welcome shoppers in their stores and offer outstanding shopping experience. On the same note, the success of the organization is also dependent on the ability of the organization to fulfill orders that are shipped to customers directly in different locations within the country. The company continues to maintain a strong supply chain network by selectively adding new locations and at the same time phasing out those stores that no longer meet performance requirements of the organization. Te organization is opening more stores within the United States.
For example, Bloomingdale’s opened a three-storey building of 150, 000 square feet in the Westfield Valley fair shopping center in the year 2015. All the Bloomingdale’s stores being constructed are expected to be complete and open by the end of this year. On the same note, plans are underway for Macy’s to build a new 155,000 square feet to replace the existing 136,000 square foot shop located in Westfield Century City in Los Angeles. The new shop is expected to open before January 2017. On the same note, other Macy’s and Bloomingdale’s shops are under planned construction or have been previously announced at the organization’s annual general meeting. For instance, Macy’s are planning to open a store in Plaza Del Caribe, Ponce, Ka Makana Ali’I, Kapolei, and a mall at Miami World Center. On the other hand, Bloomingdale is planning to open a store in Miami world center, and Ala Moana in Honolulu.
These organization operation and strategic changes are estimated to generate more revenues of approximately $140 million per year if the plan is properly implemented. The firm is expected to reinvest savings especially in growth initiative and technology to ensure that the organization brand is growing more extensively.
However, the implementation of these strategies may cost the company a substantial amount of money. According to Macy’s Press release, the merchandising, market restructuring, adjustments as well as opening new stores could cost an estimate of about $100 million. However, the benefit of the restructuring and the new strategic operation decision outweighs the costs that the company will incur in the long run. Therefore, the organization would engage in improving its productivity, efficiency, and effectiveness by making operational adjustments to suit customer needs and match advancement in technology.
Macy’s incorporation is one of the strongest brands in the United States. The company is headquartered in the United States and runs under Macy’s and Bloomingdale brand. The company has stores in more than 45 states across the nation. Be as it may, the organization specializes in a wide range of products such as clothing, footwear, jewelry, as well as household items among others. Macy’s faces threat from other international brands as well as local brands such as Nike, TJX companies, VF Corporation, Dillard’s Inc, J.C Penney Corporation, Inc as well as Saks Incorporation among others.
The company source most of its products from China then followed by India. The demand for India textile products is because of availability of raw materials, low labor cost and friendly international trade policies that allow India to trade with the rest of the world. Apart from strong competition, the company faces some challenges which may occur in both internal and external environment. However, the organization’s financial fundamental advantage, strategies, and a team of dedicated leaders could enable the company to turn around and become one of the most premier brands not only in the United States but also globally.