SWOT Analysis

Victoria Bartlett, Drew Beck, Brent Bender, John Bubenhofer, Sophia Cortes, Alex Giesige,
Antonio DiLonardo, Myles Edwards, Kyle Gibboney, Kathryn Johnson, Brian Kemper, Natalie
Kokoska, Emily Lambert, Katie Martin, Hannah Meyer, and Jack Reger
Brady Dean
PACE Leader

Professor Ric Sweeney

Essentials of Business I, 010

31 October 2016

Carl H. Lindner College of Business

University of Cincinnati
Cincinnati, Ohio 45219

Macys 1

Table of Contents
Introduction ---------------------------------------------------------------------------------------- 3
Macys Strengths ----------------------------------------------------------------------------------- 5
Expansion of Name to Public -------------------------------------------------------------5
New Technology ----------------------------------------------------------------------------6
Abundance of Stores -----------------------------------------------------------------------7
Decision to Close Stores -------------------------------------------------------------------7
International Launch -----------------------------------------------------------------------7
Socially Responsible and Ethical ---------------------------------------------------------8
Macys Weaknesses --------------------------------------------------------------------------------9
Internet Presence ---------------------------------------------------------------------------9
Relationship to Target Market -----------------------------------------------------------10
Public Perception --------------------------------------------------------------------------11
Putting off Expansion
---------------------------------------------------------------------11
Brand Dilution-----------------------------------------------------------------------------12
Low Turnover Rate -----------------------------------------------------------------------12
Macys Opportunities ----------------------------------------------------------------------------14
Macys Backstage -------------------------------------------------------------------------14
Market Segmentation ---------------------------------------------------------------------16
Personal Shopping ------------------------------------------------------------------------17
Macys Threats ------------------------------------------------------------------------------------18
Amazon -------------------------------------------------------------------------------------18
Traditional Competition ------------------------------------------------------------------20
Recession -----------------------------------------------------------------------------------21
Stock Market -------------------------------------------------------------------------------23

Macys
Recommendation--------------------------------------------------------------------23
Social Media -------------------------------------------------------------------------------24
Macys Website
----------------------------------------------------------------------------25
Technology in Store
-----------------------------------------------------------------------26
Star Rental Collection --------------------------------------------------------------------27
In store Recommendation ----------------------------------------------------------------28
Additional Recommendations------------------------------------------------------------28
Works Cited
----------------------------------------------------------------------------------------32
Macys 2

Macys 3

Introduction
Macys is a company that has stood the test of time. They have done this by maintaining a loyal
customer base and changing their strategies as the times, trends, and customers preferences
change. Ever since Macys opened on the corner of 14th street and 6th avenue in 1858 as an
upscale dry goods store it has used its failures and successes to learn and improve. Through all
their ups and downs Macys grew continuously, first into a full-fledged department store and
then into one of the largest retailers in the world.
Macys has featured a culture of innovation and ingenuity from the start. They were even the
first to promote a woman to an executive position and introduce products such as colored bath
towels. However, even while changing the game with their innovative ideas they still managed to
become a constant in the lives of Americans everywhere. They, over time, became a household
name and the company prides themselves in this. To this day they feature a family atmosphere in
their work places, an atmosphere that is hard to find anywhere else. A key element to this family
atmosphere is the element of tradition. With a culture of innovation Macys has been known to
break traditions but there are certain things they have not and will not change. A prime example
of this is the Thanksgiving Day Parade. This parade is a yearly tradition that has occurred for the
last 90 years with 2016 being the 90th anniversary. The parade is something that Macys take
pride in and something that has become a comfort for Americans as the one thing that remains
the same year to year in a world that is changing very rapidly. The parade is in essence a symbol
for the character of Macys because it represents creativity, innovation, tradition, and American
heritage all in one package.

Macys 4

The CEO of Macys describes their success to Robin Report "We think of Macys today as the
Great American Department Store because we have kept alive our heritage while also changing
for the future." However, with these factors changing more quickly than ever and new and
innovative companies increasing competition every day, how can Macys keep up? Some may
say this is not a concern for Macys since it is still considered Americas number one retailer but,
as a company, Macys has to look at their strengths, weaknesses, opportunities and threats in
order to improve.

Macys 5

Macys Strengths
Macys is a successful and ever growing company and this can be shown by their gross profit of
$10.58 billion in 2016. Their stores are known all throughout America, becoming a household
name. This success is characterized by Macys exclusive brands, the large amount of stores that
they have across the country, their strategic closing of stores to focus their efforts, expanding
internationally to Dubai, and by being socially responsible and ethical as a company.
Expansion of Name To Public
Macys has been attempting multiple strategies to try and enhance their name to the public.
These strategies range from bringing in high quality accessible brands such as Armani Chanel
and Prada, to using celebrities to sponsor their exclusive brands and products. Macys has used
these strategies to try and expand upon their strengths and to possibly create new strengths so the
company can continue its success and make a name for themselves.
Macys Exclusive Brands- One of the biggest strengths that Macys has is its wide range of
exclusive brands and celebrity sponsored brands that make up its Only at Macys brand.
Their exclusive brand names build up a sense of exclusivity which makes the Macys name
seem of a much higher quality. Through exclusive brands such as Club Room, Style&co and
the JM Collection, Macys sets itself apart from other department stores that dont carry such
high quality brands. Most of Macys competitors such as Sears, Kohls and JCPenney dont
have the same level of quality of their exclusive brands that one can find at Macys. Each of
Macys competitors have exclusive brands, but they are not as a high of quality, so Macys
competitors cannot create the same level exclusivity that can be created at Macys. When
shopping these exclusive brands, customers may feel as if they are part of an exclusive club
Macys 6

and that will make them happier with their shopping experience and with the products that
they are purchasing.
Celebrity Endorsements- Another side of Macys, Only at Macys line is their wide array
of celebrity product lines that are sold by the company. Macys has partnered with a wide
array of popular celebrities to help to build their reputation of quality products. Celebrities
such as Madonna, Mariah Carey, Usher and even Donald Trump have partnered with Macys
to sell their clothing lines. This helps both parties because it allows Macys to carry products
associated with prominent public figures and build the sense of quality and success exuded
by the company. It also helps the celebrities that sell their brands at Macys because Macys
gives them the perfect outlet to sell their product lines in a place that people are going so that
they can purchase high quality products and their product lines can become associated with
high quality.
New Technology
After the closing of 100 stores, Macys plans to reallocate the money made from selling the
store buildings into the existing Macys stores. Macys wants to make the in-store shopping
experience as easy as possible. The extra money spent towards new technology in the stores will
include installing new lighting systems where lights will dim, or turn off when there are no
shoppers in the area. This relates to Macys idea of going green and lowering the amount of
unnecessary energy use. Another rapid advancement of technology within Macys department
stores is the new Artificial Intelligence (AI). In July of 2016, Macys launched this program in
hopes to improve the shopping experience of the customer, as well as increasing the efficiency of

Macys 7

staff. Customers can find anything they need on any shopping floor theyre on without saying a
word to a staff member.
Abundance of Stores
One already existing strength of Macys is their abundance of stores across the country in just
about every major geographic market. Being present in so many different locations has multiple
benefits. It gives shoppers the opportunity to shop Macys conveniently, even if they are visiting
somewhere out of town. It also creates a well-known name for the company because shoppers
from all over will recognize Macys. The broad range of stores makes shopping available for
new customers to come in and to ensure already existing customer loyalty.
Decision To Close Stores
Macys is planning to potentially close down 100 stores next year. Although this may seem like a
sign of weakness for the company, it actually depicts their strength and intelligence. They are
deciding to close down 100 stores to give the new CEO a fresh set of stores across the country.
This closing down of stores also allows more time to invest in the stores that still stand. Though
the Macys that are being closed were not losing profit or performing poorly, they were located
next to other Macys stores in close range. When there are two Macys that are so close to each
other, it is unreasonable to have both open. Therefore, Macys chose the store that was more
profitable for the company. When there are less stores to take care of, internal improvements are
much easier to manage.
International Launch
On the opposite side of planning to close down stores nationally, Macys will be launching their
first international store in Dubai. The reason for deciding on a launch internationally is the great

Macys 8

success of the Bloomingdales store currently placed in Dubai. After seeing how well the
Bloomingdales store performed in that location, they decided to build a Macys store there as
well to create potential success.
Socially Responsible and Ethical
Along with its financial strengths, one of Macys strongest aspects is its take on social
responsibility and giving back to the community. Macys is also very active in green initiatives.
The department stores are currently replacing the lighting with newer, greener lighting to help
save energy and cut costs. With the increase in technology use by Macys, they are trying to
grow more and more paperless, again to help the environment. Lastly, regarding the green
initiatives, Macys was recently named San Francisco's number one recycler. Other than just
going green, Macys has proven to give back to the community through both donations and
through employee volunteering. Macys has donated over seventy-one million dollars to give
back to those less fortunate than others. Some of this money has gone to the charities called
Make a Wish, for child cancer patients, and Got Your Six, for veterans treatment. Locally, the
Cincinnati headquarters has just ended a United Way Campaign. As far as volunteerism,
corporate Macys has created a program for employees called Partners in Time, which includes
nearly 35,000 participants. This community of volunteers has given over 2.5 million hours of
service totaling 47 million dollars in work given to others. Macys has certainly proven through
all of activities that they are driven to give back to the community of consumers that help their
company grow.

Macys 9

Macys Weaknesses
Macys Inc. is one of the biggest names in retail, but they still show some weaknesses that must
be addressed if they want to keep up with the competition. Specifically, the company has shown
an underdeveloped internet presence, a weak connection to target market, a lack of focus on
existing products, and a late start in expansion. Not to mention that recent closings and turnover
ratios are creating vulnerabilities both in finances and public perceptions.
Internet Presence
Macys has selected millennials as their target market with the goal of having customers start
their relationship with Macys when theyre young, and continuing to stay loyal through all their
life milestones. However, it appears that Macys is doing little to actually support this strategy, a
weakness most prominently seen through their substandard internet presence. According to a
recent report from ComScore, consumers ages 18-34 are now making about 54% of their
purchases online (USATODAY). Clearly a strong online presence is essential in this market
environment, yet Macys leaves a lot to be desired. There are many customer complaints
concerning the website such as, Very frustrating website. I want to pay my bill! But it wont
accept payment--keeps telling me there is an error and to try again later. (Macys Down) .
Additionally, there are numerous reports of online purchases not being shipped out because they
were no longer available, despite being shown on the website. This will likely discourage
customers from attempting future purchases. Outside of their official website, Macys has a
somewhat mediocre social media presence. Their Facebook page is relatively popular with over
14 million likes, but Macys Community Team does a poor job of responding to comments,
especially complaints. Macys seems to have difficulties adapting their content to different social

Macys 10

media platforms. For example, their Twitter account usually posts the exact same messages as
the Facebook account. As a result, they miss out on the unique features of each platform and on
the opportunity to give customers new information. Social media users may prefer one site over
others, so it is important to use the features they prefer to communicate to them. Furthermore,
Macys does not have a separate Twitter account for customer service. This increases the risk of
having the marketing messages drowned out by customer complaints and questions. These
tweets may clog users feeds and cause people to unfollow the Macys account. Although
Macys does have other sub profiles, they are incredibly inactive. Likewise, Macys Google+
account is essentially vacant. This reflects poorly on Macys as a whole. If they arent capable of
maintaining a social media account, how are they maintaining over 800 stores? The account
should be used or removed altogether.
Relationship To Target Market
Beyond just struggling to connect with their target market, Macys has not effectively
communicated the concept of growing up with Macys.Their goal is for parents to take their
kids to the stores, and for the kids to remain loyal to the store as they grow older. Macys wants
customers to come shop with them for all of lifes milestones, like purchasing a house or having
a baby, but they do a poor job of advertising any products outside of clothes. Consequently,
Macys isnt the first store a college freshman may think of visiting for dorm supplies. Moreover,
their commercials are repetitive and outdated, reinforcing the misconception that Macys is
old-fashioned. Although it is important to keep Macys traditional values, it is necessary to keep
up with the trends. If Macys wants to turn millennials into lifelong customers, theyre going to
have to make some changes.

Macys 11

 Public Perception of Closings

In the last year, Macys Inc. has closed over 100 stores (CNN Money). The company firmly
believes this to be a good thing; they close down underperforming locations in order to reallocate
funds to new ventures and expansions. However, to the public this could portray a negative
image. Macys wants customers to grow up with them, but if consumers are under the impression
that Macys is going out of business then they probably wont be interested in starting a
relationship with them. Afterall, it doesn't make sense to open a credit card with a store you
expect to be closed in a few months.
Putting Off Expansion
Even though Macys has done a great job shipping internationally, they have not made a full
transition into the world market. Bloomingdales, which is owned by Macys inc., opened up the
first brick and mortar store in Dubai in 2010, which has seen great success. Macys however,
wont open up their first international brick and mortar store until 2018 in Abu Dhabi (Mcbee).
Macys has extensively looked into all of the options of expanding internationally. They have a
partnership in the United Arab Emirates, in which they are learning how do business, and what
the standards of customer service is (McBee). Although this may seem good they are taking time
to expand, it is too much time. They have a partnership with the Chinese company FUNG, to
look into if China would be a good place for Macys to invest in (Mcbee). Macys has built up a
strong international presence online with having the ability to ship internationally but now they
have waited too long to put up the stores. With having successful online international sales, this
means that people will buy in the stores so Macys just needs to have the stores. They have lost
customers by having customers impressed with Macys but not having any place to actually try

Macys 12

on the clothes. Macys is turning their focus to a selling culture, which they would continue
through the stores but they don't have that ability online. Macys is spending too long on how to
look into expansion when they could already be expanded and have thousands of more
customers.
Brand Dilution
Not only is Macys closing 100 stores domestically, they are expanding what they sell in the
stores exponentially. According to the 2016 Factbook published on Macys Inc., Macys
acquired Bluemercury, a high end cosmetics and beauty line, and also started to increase sales
productivity through licensed departments. Macys accomplished this by starting ventures with
LensCrafters, Mens Wearhouse, Apple and Best Buy. With taking on so many new ventures,
Macys will lack in some areas. Macys will be focusing on all new and different areas of
retail/merchandising, when they should be focusing on already existing ones. Macys is
accumulating many different brands and their own brand will get weakened. When going into a
Macys store one would expect the Macys exclusive brands not other pilot store in Macys.
Eventually the Macys brand will be changed and they will want to pull out of their partnerships
to get back to their original image. This has already been seen with them closing down their
domestic locations because of oversaturation in the market, if Macys doesnt slow down and
focus on their own brand they will be masked by their new partnerships.
Turnover Ratios
Turnover ratio is the number of times a company can sell its inventory in a given period of time.
Low Turnover Ratio is one weakness Macys stores has been facing as of late. Since the third
quarter of last year, Macys has seen a decrease in turnover ratio of about .3 from 2.88 in August

Macys 13

of 2015 to 2.59 last July. The average ratio among the retail sector is 2.72 which shows that
Macys is taking a longer time to sell its inventory when compared to its competitors
(CSIMarket).A higher turnover rate typically means higher profit because the company is able to
sell and replace its inventory more rapidly. Opposite of a higher turnover ratio equalling a higher
profit, having a low inventory turnover can often times mean that the cost of carrying and storing
inventory is higher than competitors whose turnover is quicker. Combatting a turnover ratio can
be done by making the shopping environment more intriguing for consumers which would
compel them to shop longer and more frequently. This decrease can be interpreted as a
slowdown in customer traffic and or a decrease in the amount customers are buying, because
consumers are not purchasing as much and moving inventory as quickly. One possible reason for
Macys lower inventory turnover is that consumers are becoming increasingly particular about
where and how they spend their income. With the increase in millennial shoppers and number of
retail stores in which consumers can shop it is necessary to keep consumers interested so that
they are willing to come back and buy goods (Crains New York Business). This is important
because Macys wants to be the store that millennials go to throughout their life. Ranking at
#148 among retail stores in inventory turnover makes it evident that initiatives need to be taken
in order to hopefully raise the ratio above the sector average (CSIMarket).
Macys has also experienced a higher than average employee turnover rate meaning that
they are losing and replacing employees at a higher rate than the industry average. Employee
turnover is a part of the retail industry and it is expected for large companies to have a moderate
amount of employee turnover, but by interviewing and training so many new employees Macys
is losing money. This could be fixed by better relations within the company as many former

Macys 14

employees have said that the in store management is unfriendly and uncaring. Fixing this issue
could allow Macys to cut costs and decrease money spent on hiring new employees.

Macys Opportunities
With Macys Inc. currently leading the world in retail sales, one would barely be able to
comprehend the idea that they could improve anywhere. Besides this fact, Macys has many new
programs they can build upon, and also a target market that is in need of being segmented. Due
to the ever-growing successes of other companies like Nordstrom and Amazon, Macys must
always be ready to reinvent themselves and their concepts while still keeping the quality and
service of their famous brand in order to continue relationships with current customers, and
hopefully attract the eyes of new ones.
Macys Backstage
Macys Backstage is a discount retailer that stems off of Macys Inc., established to display both
new and past styles at a discounted price to customers.
Convenience- Due to the ever-growing demands of everyday life, Macys Backstage has
implemented creative ways to make the shopping experience for all customers both fast and
enjoyable. Installing on-the-go checkout, charging stations for devices, and providing free
Wifi to all customers does just that, giving the millennial generation everything they want:
effortless shopping and easy accessibility to all of their technological devices (Business
Wire). It is evident that this is very important to this age group as 74% of millennials say
technology makes their lives easier and 54% say it helps them stay better connected to
friends and family (Nielsen). Equipping Macys Backstage stores with technology that is
going to make shopping simpler, and provide customers with the tools they need to stay
Macys 15

connected is going to give them an advantage over other top-discount retailers such as TJ
Maxx and Kohls, to attract customers of that demographic (Hawthorn).
Low prices- All styles and fashions offered at Macys Backstage locations are 20-80% off
regular retail prices found at regular Macys locations (Macys), providing a different type of
store for dedicated Macys customers to shop at. Despite the low pricing of Macys
Backstage items, retailers like Nordstrom Rack and TJ Maxx offer coupons and reward
programs, but Macys Backstage does not accept coupons, due to the very recent opening of
their stores (Macys). This will repel a bulk of their target market as 48% of older millennials
and 33% of younger millennials consistently use (and prefer) loyalty programs (Cohen). As
Macys Backstage becomes more mature and has a stable footing in the market, Macys
might need to consider to implement these very important aspects, but for now must continue
the Macys brand, even in their discount store.
Give Backstage- In all great companies, there is most often a great cause being supported,
whether that be funding cancer research or donating to a disaster relief center, it is always
important to portray the cause behind the company, as millennials are becoming more and
more socially aware. Macys Backstage currently has a charity known as Give Backstage that
is location specific to all stores, with every store donating to the local fund of their choosing,
some examples including the Brooklyn Public Library, the variety Boys and Girls club of
Queens, and the Ronald McDonald House of Long Island (Business Wire). Customers have
the option at checkout to donate $1 to this cause, with 100% of those proceeds going directly
to that charity (Business Wire). This newer generation of customers are becoming more and
more socially aware, making millennials much more likely to either work for, or shop with a

Macys 16

company that exercises social responsibility and gives back to the community, than one that
does not (Cohen). Nordstrom stores currently have many organizations they support, while
Nordstrom Rack is just piggybacking on those organizations, but does not house its own
(Nordstrom). Because Macys Inc. has its own charitable contributions and social
responsibility programs apart from Macys Backstage, which has its own, Macys Inc. is
providing itself with a major incentive for shoppers to shop with them, rather than one of
their top competitors.
Maintaining high-quality products- Being a discount retailer of one of the largest department
stores in the nation, Macys Backstage has a huge opportunity to grow its own small empire,
only if they make sure to maintain quality in all products. The millennial generation is one
that loves a good bargain, but they are only willing to go through with a purchase if they
know that what they are getting is high quality (Honigman). With half of this generation
shopping full-sale at retailers like Lush and Sephora, and the other half pinching pennies at
Costco and Target, Macys Backstage needs to represent each kind of customer (Honigman).
This can be accomplished by providing both high-end and lower-end products at a good price
and great quality, which is Macys Backstage entire premise. In order to make way to the top
of the largest discount retailers, Macys Backstage must incorporate all types of merchandise
for every social class, and maintain the Macys quality, no matter what is being sold.
Market Segmentation
Issues in the segment- It is almost impossible to tailor a successful strategy for groups that
different in age. Thirteen year olds buy what they believe is the most important thing to them at
the time, whether that be superheroes or sports stars. Nineteen year olds however dress to

Macys 17

impress others. It is hard to tailor the strategy to work for a group like this. The idea behind the
Mstylelab is very effective. The premise of the strategy is to build loyalty and also create a
wardrobe for younger/new shoppers. This idea can be a huge concept for Macys but the age that
is serviced should be amended. Impulse is another great idea that with some tweaks could
make Macys the millennial store it is trying to become. The plan is there but the
implementation must be changed.
Personal Shopping

Independence for Millennials- The millennial generation is full of teenagers and young
adults who are newly independent and tend to want to shop on their own. When a teenage
girl first begins to go shopping without a parent there are still things they might have
questions about. With a personal shopper on the floor a young girl will be able to ask
questions about the fit, price, and other things to wear each item with. Millennials also tend
to be more willing to spend money on an experience instead of an item, so a personal shopper
will add the value of an experience to any purchase a millennial makes. When shopping,
millennials they prefer an experiential retail environment, where shopping is more than a
transaction and the pleasure of being in the store isnt limited to the goods that customers
take home (Solomon). Adding the experience of a personal shopper will therefore make
shopping at Macys more worthwhile to millennials.

Helpfulness- Another small segment within the target market that will benefit from personal
selling is college students. College students are often away from home and beginning their
transition into the working world. This transition will bring about a need for a new wardrobe
that many college students are clueless about. A personal shopper will be able to provide

Macys 18

insight on what to look for in a suit or professional attire. They also will be able to talk
someone through which outfits are appropriate for which situations and how they are
supposed to fit.
Finances- Personal shoppers provide a flexible marketing tactic that can tailor selling
methods to each customer. This can save the company a lot of money that they would spend
on marketing campaigns that only appealed to certain types of customers. Also personal
shopping tends to boost sales. At high street retailer Jigsaw, any personal shopping
interaction boosts the average transaction value from [$121.78] to between [$426.22] and
[$487.11](Abnett). Building personal connections with customers makes the experience
someone can get at a Macys store better than a competitors store.

Macys Threats
Macys is one of the largest retail/department stores and has seen great success throughout their
countless decades in the business. Macys has hundreds of department stores around the country
and even has online shopping options for their international customers. Macys has a strong
brand name which can be recognized by almost every American in the United States of America.
However, with the rise of; technology, competitors, and the speed of life, Macys has found
themselves struggling more than ever to keep up. Threats from different areas of business
continue to terrorize the department store business as going out to a store to shop is quickly
becoming a thing of the past.
Amazon
Macys not only sees competition from other retail/department stores, but also from the online
shopping sites which offer quicker and more convenient ways to shop. Traditional retailers are

Macys 19

falling flat in the battle for apparel sales against e-commerce juggernaut Amazon. Amazon has
exploded in this past decade offering everything Macys can and more. Online shopping has
become extremely popular and has captivated America with its fast, user-friendly, and
convenient set up. While Macys competes with all kinds of online sites such as Zappos and
Barneys, their main competition and most relevant threat is Amazon. According to analysts at
Stifel, Consumers visit stores less as they feel less urgency to visit the mall and instead shop
and buy online. With this change in lifestyle, Macys, as well as other stores are beginning to
see tremendous losses when compared to the technologically based Amazon. For example,
Macys shares are down 13% percent while Sears, Target, and Nordstrom all dropped 5%. On
the other hand, Amazon, currently, is trading at an all-time high of roughly $778 a share. This
drop in share value is a huge threat because Macys continues to lose value and profits in their
stocks/assets, while Amazon is continuing to grow and increase in overall value.
The threat Amazon poses to Macys is very dangerous as Amazons stock and performance
continue to flourish while Macys has seen a drastic decline in stock, performance, and size.
Furthermore, in May 2016, Figure 1 shows Target had a -4.68% change, Walmart had a -14.28%
change, and Macys had -49.88% change. Meanwhile, Amazon had an incredible 67.07%
positive change while Macys had a steep downward spiral, much worse than any other
department store, thus demonstrating the strong competition in their area. Amazons large
selection, convenient style, and quick delivery have propelled them to the top. They are projected
to replace Macy's as the largest US apparel retailer by 2017, reflecting a clear shift in consumer
behavior and a huge threat to the economic success of Macy's.. As stated, the e-commerce
shopping trend has really been a downfall for Macys, which is reflected by the fact that Amazon

Macys 20

captured 41.2% of the e-commerce market share between January and April of 2016 while
Macys captured only 1.5% of market share (Slice Intelligence). Due to the shift in consumer
shopping behaviors from large retail stores to online websites, Amazon is an imminent and
significant threat to the overall well-being of Macys. Amazon also poses a threat due to their
extensive social media presence, a presence Macys severely lacks. For example, Amazon has
2.41 million followers on Twitter while Macys only has 938k (Twitter) . Amazon has 26.8
million likes on Facebook and Macys only has 14.1 million likes (Facebook). This may seem
insignificant but is in fact a very real concern because Amazon is communicating with and
ultimately selling to far more people than Macys through these channels. Overall, the
convenience of online shopping with Amazon replaces the time-consuming trudges around
department stores like Macys. Additionally, the renowned Amazon Prime allows for price cuts,
deals, and same day delivery which can be easily accessed for Amazon shoppers while Macys is
still trying to stay up-to-date with trends regarding online shopping. Furthermore, Amazons
same day delivery is marketed very well thus allowing most of the public to know about it. On
the other hand, Macys has not done a good job marketing their shipping options in which have
left people choosing Amazon because they know exactly what they're getting in terms of service
when they buy with Amazon. Last, the huge inventory Amazon offers gives shoppers unlimited
options and deals while Macys still encounters inventory issues on their site with limited deals
and styles in their stores. This then causes consumers to go elsewhere when shopping retail
because of lower higher prices, higher convenience, and more options.
Traditional Competition

Macys 21

Macys must also compete with other retail stores that also offer the more traditional shopping
experience. In 2015, Kohls surged with its new marketing strategy and its effects on Macys
were very apparent. Kohls was trading at a 24% premium to Macys in late 2015, which is the
largest the premium has been in four years. Kohls began to spend a lot of money promoting its
sale of major outdoor brands such as Nike. In 2015 alone, Kohls sales of Nike increased by
24%. Kohls promotions and new marketing approach bolstered holiday sales at a rapid rate.
Since 2010, Kohls holiday-quarter sales have risen about 3.7%. In comparison, Macys
holiday-quarter sales have risen only 1.9%. Macys previous method of combatting major
competitors was relying on its exclusive products and private labels; while this was successful in
maintaining customers loyal to those exclusive products, it was not effective in acquiring new
customers. Macys also used to have a large advantage over competitors with its rewards
program. Kohls has mimicked it and seen a great response from customers. The Kohls rewards
program now has about 25 million members, according to Jen Johnson, a spokesperson for
Kohls. Kohls rewards program has been very beneficial for the low and middle-income
families that are the stores target market. It does not require the use of a store credit card, which
previously dissuaded many from joining the program. Repeat visits have soared since the launch
of the new rewards program. While Macys targets the upper-middle to upper class, lower and
lower-middle class were recently more attracted higher end store such as Macys, according to
Bloomberg, due to consistently low gas prices, putting Macys and Kohls in more direct
competition. Kohls recent success is a threat to the continued growth of Macys.

Macys 22

 Recession
Macys, like every company, faces economic threats. When faced with an economic recession,
consumers do not spend on clothes and home items that retailers like Macys sell. When money
is tight, food and rent are much higher priorities than a new jacket, purse, or comforter.
Macys lowest stock point was during the 2008 recession as illustrated in figure 2, making it the
biggest economic threat to Macys, and according to BusinessInsider, the most concerning threat
to a recession is that the United States Dollar may be entering a mega bull market. The rising
dollar cost combined with the fact that low interest rates in the United States have led to an
explosion of borrowing dollars around the world--especially in emerging markets--the biggest
consequence is that huge loans from the United States will not be able to be repaid, and the result
will be a major blowback on the United States and other developed markets.
The dollar denominated debt held outside of the United States has increased from $5.6 trillion to
$9.7 trillion between 2008 and 2015--almost doubling in well under a decade as shown in figure
3. This alarming rate of loaning could likely cause a major blowback on the United States, which
could cause another recession, which in turn would indubitably cause Macys stock and profits to
plummet once again.
Stock Market
Macys stock has been plummeting, and when stocks go down investors pull out, and when a
critical number of investors pull out the company crashes. According to Fortune and real estate
and investment experts, Macys real estate portfolio is worth approximately $21 billion, while
Macys total enterprise value is only about $19 billion. Further, and worse, if one includes the
valuable credit card business that is part of Macys the actual market value of its retail operations

Macys 23

is -$10.4 billion. However, Macys maintains its status as a very profitable company, so they
must hope that their investors try to remember that instead of looking at the daunting, large, and
looming numbers that the market determines as value.

Conclusion
Macys has proven itself to be the #1 retailer in America through decades of service and devotion
to its customers. This successful company can only continue to grow and progress if it can assess
itself honestly and understand its strengths, weaknesses, opportunities, and threats to its business.
The recent trials and tribulations of business for Macys have brought about a need for change in
its assessment of its business model. The strengths of Macys have enabled to maintain a strong
presence in the retail market and utilizing these strengths is how Macys can continue to prosper.
However, many new opportunities have arisen and in an always changing world, and Macys
must exploit opportunities to remain competitive. Pressure from new age companies such as
Amazon have put strain on Macys business due to its accessibility and convenience, and not
only threaten Macys but have exposed weaknesses in many aspects of its business. These
weaknesses if properly corrected can become strengths and allow Macys to elevate its business
by increasing its internet presence as well as improving various aspects of its expansion and
image.

Macys Recommendation
After performing a thorough SWOT analysis on the household company Macys, both
negative and positive aspects were discovered. Macys expresses their strength with the
expansion and abundance of stores, technology, and their increasing brand recognition. On the
other hand, Macys portrays weaknesses in their poor relationship to their target market and
Macys 24

overall perception of their company to the public. Macys is also presented with many threats
from competition, especially from Amazons ability to satisfy a customer through convenience
and quality service. However, Macys has numerous opportunities to improve their company and
further their success both overall as a company and individually in the stores. Through the
research done on Macys and all aspects of their company, we as a team compiled a list of
recommendations that could help Macys act on the opportunities available to them.
Social Media
A large source of inefficiency for Macys would be their social media sites. They are present on
multiple sites including Twitter, Instagram, Facebook, and Google+. However, the lack of
consistency amongst these sites is putting a harmful effect on the company in the eyes of all
customers. On multiple occasions, Macys has repeated a post on two or more different social
media sites, which is not ideal for a user of those same sites. Seeing the same post repeated and
popping up on ones feed multiple times can create annoyance and could ultimately result in that
user unfollowing the Macys page, therefore losing public support. Another negative aspect of
Macys social media sites is the lack of response from their customer service team. On
Facebook, there was evidence of customers posting negative comments about Macys, but had
no response from customer service. The same incident had also occurred on Twitter with
customers expressing their aggravation, but receiving no feedback. Not only does this upset the
customers expressing their thoughts, but also the customers following Macys, as their timeline
is cluttered with hundreds of tweets they do not want to see. Lastly, Macys has a Google+
account that appears inconsistent because of the non-updated nature of the page (the most recent
post being 22 weeks ago). This can create a misperception of the company and make them
Macys 25

appear lazy or uncaring for their sites. After analyzing Macys social media and the major areas
they are not performing well in, we recommend that they have a designated task force that is
responsible for keeping up with social media sites and customer service responsibilities so that
customers can instead be assisted in a timely manner. With social media becoming such a large
communication device among all age groups, Macys needs to clean up their accounts and stay
customer oriented in order to keep their loyal following customers.
Macys Website
As stated before, one of Macys largest competitors is Amazon and what they offer to their
customers. The fast and free shipping, convenience of online shopping, and large selection of
items poses a threat to Macys. However, with minor improvements to Macys own personal
website, they could succeed further and become a larger threat to Amazon. Improvements as
simple as personalizing a shoppers experience by recommending they create an account once on
the website and promoting the benefits that could stem from creating an account could increase a
customers satisfaction. Better promoting the benefits of becoming a Macys cardholder can
increase a shoppers experience both online and in the store. However, consumers are lacking
this knowledge and are unaware of all the advantages to becoming a loyal Macys member.
Creating a larger population of loyal members can immediately improve any company, and is
something Macys is capable of succeeding in. An increase in customer satisfaction could also be
achieved through more benefits such as same-day shipping or specific deals and discounts for
customers. Additionally, more tabs such as a recently viewed or customers who bought this
also bought section can present the variety Macys has to offer even if the shopper wasnt
necessarily looking for an item in that category. Tabs like these can attract a customer and result
Macys 26

in them looking around the website more and ultimately leading to more sales. This is not easily
shown when a customer is simply going on the website looking for a particular item and not
having a chance to run across other items on the website as well. However, beyond the shopping
alone, some customers run across issues when on the website. When a customer has a question,
they want a quick response so that their shopping is not delayed. Having readily available
customer service on the website can substantially improve a customers experience by showing
them that Macys is available at all times to assist a concerned customer. All of these small
suggested improvements can add up and significantly increase customer satisfaction. Consumers
have high expectations for a website of such a prominent company, and a simple renovation of
ones website can result in benefits for both the company and the customer.
Technology in Store
As technology becomes more prevalent in all aspects of our lives, Macys must also keep up on
the trend and advertise the technology they have within their stores. Macys should and must
continue to implement new technology into their stores across the country. Through the use of
iPads throughout the store and green lighting, Macys has already begun the transition into the
modern use of technology. However, this is just scratching the surface of what Macys could be
doing. Macys has also already incorporated the use of Beacons, which connect to ones phone
through bluetooth and helps streamline the shopping process, allowing the customer to find their
product much easier. However, nobody really knows about this new technology and thus a lot of
customers do not use it because Macys has not been advertising it. Macys can also continue to
grow and advertise their Macys Magic Fitting Room. Not many Macys stores have these, but
this technology allows customers to try on different clothes and colors of those clothes without
Macys 27

physically having to try them on. This allows customers to try on hundreds of outfits within
minutes and could potentially boost sales because the more items customers can try-on, the
more items they will buy. However, Macys has not implemented this into many of their stores
and has failed to advertise this fully to the public, leaving customers unaware of the benefits
Macys has to offer. Technology is a huge aspect of our everyday lives and as Macys dives
further into the realm of possibilities, they must keep the public notified to increase popularity
and sales.
Star Rental Collection
One of Macys biggest opportunities to appeal to Millennials is through its Star Rental
Collection. Currently, they are piloting this new concept in California, giving customers the
ability to rent fine jewelry for up to 5 days. This is giving consumers the ability to experience the
novelty of wearing such an expensive and high-end product by only paying a fraction of the cost.
With Macys especially wanting to appeal to millennials, who mainly are attracted experiences
rather than material items, this is a perfect way segway into the market of millennials who are
maturing and needing items of this nature, without wanting to pay the high price. One
recommendation we have for this is to expand into more than just fine jewelry, but also evening
wear for weddings and events, prom and homecoming dresses, and nice professional wear that
one may wear to a job interview. With millennials going through many different experiences in
such a short amount of time, they need a company that is going to be there for each one of them.
A main focus of Macys is to grow with a customer, to experience each one of the stages of their

Macys 28

lives and by incorporating more products into this rental collection, Macys would be doing just
that.
In Store Recommendations
Currently Macys has started BOPS, which means, buy online, pickup in store. While this
program has a lot of potential, it needs to be approached from a different angle. People often use
online shopping as a way to avoid having to venture out to a store. Having to pick up in store
after buying online more or less defeats the purpose of making an online purchase. Instead of
offering this program as an option for purchase prior to visiting the store, Macys should make it
an option for selection of products prior to the store visit. This would mean that customers would
have the opportunity to go online, make an account, select their store and browse the store
content online. From there customers can select a number of pieces and have those picked out for
them by a Macys employee. By having the pieces waiting for customers when they get to the
store, they are able to save time by avoiding having to search for the pieces themselves and can
also ensure they are pleased with what they chose prior to purchase. This system would allow
people who are not sure of their size, have a special event coming up, like to try on things before
purchase, or simply do not like to spend time looking through items in store, to gain the most out
of their shopping experience. By simply changing the buy online pickup in store system, to a
select online pickup in store system, Macys will be able to ensure they attract more customers to
their stores by offering a time saving, innovative, and convenient shopping experience.
Additionally, this system will allow Macys to play into their selling culture by giving employees

Macys 29

the opportunity to have a more personalized interaction with the customer, all while making the
customer feel catered to and important.
Additional Recommendations
Additional ideas on how Macys can open its appeal to its target market, millennials, is through
areas like advertising and working to improve brand recognition. Advertising comes in many
forms and on many different platforms, allowing for diversity over these many platforms and the
ability to target different groups. First, Macys must change the format of its television
commercials. Despite its timeless and classic feel, this style of commercial does not appeal to
Millennials. One suggestion in particular would be to enlist the help of a celebrity spokesperson
for these advertisements. This form of Testimonial Advertising has proven effective amongst
younger generations and is used by many companies including Sprite, Samsung, Verizon, and
many others. If Macys is able to employ this advertising technique we believe it will increase
the number of millennial shoppers. Second, Macys needs to work on improving their brand
recognition. Macys is one of the most recognizable companies in America, and has become so
through its numerous stores and timeless traditions like the Macys Thanksgiving day parade.
However, the identity of the store is often unknown to millennials. Macys is often seen as a
clothing or department store focused on an older demographic, so by increasing brand
awareness, Macys can show millennials the true facets of its business and can illustrate its
appeal. If awareness can be brought to the line of home items and various partner brands such as
Nike, Calvin Klein, and Michael Kors, the attention of the younger generation can be captured.

Macys 30

By implementing these extra recommendations, Macys will be putting themselves in a much

better position to appeal to the millennial generation.
Through years and years of effort, Macys has established itself as a fantastic global
retailer that follows many families through all of the main events of their life. This is Macys
overall focus as they want to keep their customers satisfied and happy. By taking a thorough look
at the opportunities, threats, and recommendations we have proposed, Macys will be putting
themselves in a much better place to keep their loyal customers and attract new ones just as they
have been.

Macys 31

Figure 1

Figure 2

Figure 3

Macys 32

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Macys 34