Macy's Inc

Business Strategy
Case Analysis

By: Group 4
BSMM8510 Section 1

Presented to:
Taiba Rahman 110081342
Dr. Ira Lawrence Cohen Xiaoling Qiang 110041676
Fariha Shafi 110085052
Oluwafunmilayo 105143914
Adeleye
Mingtao Wu 110071947
 Table of Contents

01 Introduction 02 Analysis
History, mission statement Internal and external
and key issues analysis, SWOT

03 Recommendations 04 Implementation
Strategy formation and Financial and organizational
options implementation
contingency plan
2
Macy’s Inc
Overview
History:
 Founded in 1858 by R. H. Macy in New
York, USA
 First woman promoted to retail executive
for the first time
 Operates more than 690 department
stores worldwide
Mission and Vision:
 For mission statement (paraphrase)-“to
be a retailer with the ability to see
opportunity on the horizon and have a
clear path for capitalizing on it”.
 For vision statement (paraphrase)-“to
operate Macy s and Bloomingdale s as
dynamic national brands while focusing on
the customer offering in each store
location”.
 Key Issues

Marketing Financial Competition

Challenges
Lack of integrated Extreme competition
marketing Ineffective cost without
promotional management and core competitive
channels post-pandemic advantages in
recovery current retail
landscape

01 4
Introduction
02
Analysis

5
Financial Position

Source: macysinc.com

6
2021 Q4

7
Source: macysinc.com
 Financial Comparison with Competitors (EOY 2021)

Macy’s J.C. Penny Nordstrom

85,000 when filing
Number of Employees 88,857 60,000
bankruptcy
Number of Stores in US 787 846 when filing bankruptcy 354
Revenue ($ M) $25,292 n/a $14,789
Net Income ($ M) $ 1,430 n/a $ 178
EPS Ratio (basic) 4.55 n/a 1.10
P/E Ratio 5.5 n/a 19.95

Source: wsj.com

02 8
Analysis
Internal Analysis
Competitive Advantages
Scope of Improvement
▪ Strong brand identity worldwide
▪ Maintain a sustainable ROI on
marketing
▪ Rich history as a market leader in retail
▪ Rapidly recover financially post-
▪ Wide variety of product offerings covid

▪ Excellent customer relationship ▪ From Brick And Mortar To Click

management And Order

▪ Constantly adopt
▪ Effective marketing and branding technological innovations

9
 Rating Weighted
Strength Weight 1 is low
score
4 is high
Internal Brand awareness and identity 0.08 1 0.08
Factor Growth of loyalty program 0.14 2 0.28
Evalution Growth in store unique visit and conversion 0.13 2 0.26
(IFE) Constant increase in digital penetration and sales 0.17 3 0.51
Matrix Weakness Weight Rating
Weighted
score
High cost on promotion and store operations 0.1 4 0.4

Product diversification challenges 0.14 4 0.56

Less advantage to overseas market expansion 0.12 2 0.24

Organizational structure disfunctions 0.09 3 0.27

Total 1.0 2.60

02 10
Analysis
 External Analysis

Technological Economic Competitive

Force Force Force
Digital - Global recession Strong financial
transformation in and slow economy position of existing
traditional retail - Less interest in competitors and fast
industry spending money growth of newcomers
in the market

02
Analysis
External Factor Evaluation Matrix (EFE)

Weight Rating Score

Opportunities
• Growth rate in online retail spending 0.14 4 0.56
• Increased packaging and quality in private label brands 0.08 3 0.24
• Expanding Macy’s backstage stores to attract cost-conscious customers 0.10 3 0.30
• There’s growth through overseas operation 0.13 2 0.26
• Sold underutilized upper floors of its humongous stores to reduce operating 0.08 2 0.16
cost
• Tailoring merchandise assortments by stores to improve sales productivity. 0.06 2 0.12
• Department stores offering differentiated products & engaging multi-channel 0.05 1 0.05
shopping experiences will gain market share

Threats
• Market share concentration slightly decreased because of competitors 0.04 2 0.08
• Intense competition in the retail stores such as Nordstrom 0.07 3 0.21
• Macy faces merchandise localization challenges 0.02 2 0.04
• High labor cost because of increased minimum wage 0.06 2 0.12
• Negative impact of economic recession 0.08 2 0.16
• Shoppers make more purchases online 0.09 1 0.09

Totals 1 2.39
Macy’s Inc SWOT Analysis

S
• Excellent global brand reputation and household name
• Diversified Products and Services
• Established good relationship with customers

•
Controlling business costs will be a major hurdle for
Macy’s
Lack of proper store management and control W
•
•
Product diversification to gain more market share
Grow online shopping and get more new customers O
• Stores like Walmart and Target will be Macy's main
business competition
T
13
Macy’s Inc SWOT Matrix

WT Strategy ST Strategy

S O
Build big data analysis
Hire a professional financial capabilities, build an enterprise-
management team to get more level digital interaction platform,
investment projects and build a and fight against threats from
distinctive brand online stores

SO Strategy
W T
WO Strategy
Introducing products and
Brands are rapidly expanding in
services made with sustainable
overseas markets
energy technologies

14
03
Recommendations

15
STRATEGIC FORMULATION!
Cutting Costs and Downsizing Stores
To address the key issue: Financial Challenges

Reinventing the Brand

To address the key issue: Competition

Expanding Global Reach

To address the key issue: Marketing

16
 IMPLEMENTATION OF STRATEGY

Source: Strategic Management A Competitive Advantage Approach (17th Edition) 17

 Option 1: Cutting Costs and Downsizing Stores
(Existing Strategies to Be Continued)

● In addition to generating revenue through real estate transactions by steady closures

of large full-line retail stores, Macy’s restructuring would allow the company to reduce
payroll costs by simultaneously downsizing the large retail stores others due to a
reduction in middle management intended to streamline the company’s decision-
making processes along with expanding the Macy’s Backstage stores. Through these
cost-cutting initiatives, Macy’s would be able to focus on investing more heavily in its
online operations and 150 best-performing stores.

18
 Option 2: Reinventing the Brand
(New Strategies to Be Started)
Cost-cutting measures alone would not enough, a unique strategic plan that would rejuvenate Macy’s image and
entice consumers back to the department store and away from competitors.
Related Diversification
● The first initiative is to introduce a new section in Macy’s stores that would be specifically for marked-down
merchandise. This section would help improve profits by allowing for the quick removal of old merchandise
from the shelves.
● The second change is to be the restructuring of Macy’s coupon system, aimed to benefit both customers and
vendors. This type of indirect discounting would allow Macy’s to offer value to its customers in a more creative
way, and keep vendors from complaining about the store constantly discounting its products.
● In keeping with its strategy to increase margins by lowering payroll, Macy’s third change is to introduce a self-
service shoe departments. More merchandise would be presented on the floor, rather than in back rooms,
allowing customers to find products on their own. The idea is intended to save customers time when they did
not want to wait for a sales associate.

19
 Option 2: Reinventing the Brand
(New Strategies to Be Started)(Cont.)

Unrelated Diversification
● Macy’s entering into the food sector of retail and invest into opening a few stores at first that offer
apparel, housewares, footwear, groceries, and everyday items. Doing this would open Macy’s up to a whole
new set of consumers.

Joint Ventures
● Macy’s can announce changes in merchandising. Department stores such as J. C. Penney had been
reporting approximately 50 per cent of their sales coming from in-house private labels, compared to
Macy’s, which was only reporting 20 per cent from in-house private labels. These exclusive brands tend to
carry higher margins, which would benefit Macy’s bottom line and give it more control over the
manufacturing and sourcing of the products.

20
Option 3: Expanding Global Reach
(New Strategies to Be Started)

As the retail e-commerce sector grew rapidly, Macy’s looked to expand its online global presence as well.
Macy’s had been selling products to Chinese customers since 2011 through Macys.com, but in 2015, it
expanded its e-commerce operation by starting a pilot with Alibaba’s Tmall platform.
● Through Tmall, Macy’s had managed to attract 300,000 customers since it launched, and Tmall
reported that Macy’s had become one of the site’s most popular sellers. With the success of this
pilot, Macy’s can launch its own Chinese site in order to further increase its global e-commerce
presence.
● With almost 80% online sales growth Macy’s can focus on investing more on marketing and
advertising activities. This can be done through establishing a strong presence using social media
and by introducing 24/7 customer chatting service for online shoppers.

21
 Recommendations

Continuity in Extended Product

Transformation Categories Innovation

22
 Justifications for the Recommendations

● Continuity in transformation
○ Despite hurdles Macy’s could concentrate on expanding its market share by acknowledging the changes
in consumer shopping preferences.
■ Pros: Macy will gain more market share and create competitive advantage to local markets
■ Cons: Macy may face sabotages from local competitors.
● Extended Categories
○ Macy could concentrate more on adding new categories to increase the order value from each
individual consumer also making customer life much easier
■ Pros: Products varieties may help increase sales and adapt consumer needs
■ Cons: Additional costs may generated for new product lines and potential risk to new product
adaptability
● Product Innovation
○ Macy could take the advantage of the new available technology in the market for example introducing
AI to try new clothes and feel without actually wearing them making it more comfortable to consumer
■ Pros: Innovation in technology may help Macy adapt the microenvironment in marketing
■ Cons: Additional costs may generated to introduce

03 23
Recommendation
04
Implementation

24
Financial Task

01
Financial Task

26
Projected Income Statement and Balance Sheet

The predicted income statement and balance sheets above

indicate the financing needs required to achieve the
company's identified goals with 100 percentage debt
financing. Earnings forecasts predict a continuous 7 percent
increase annually throughout 2019 as well as 2020, with extra
traction from African marketplace penetration as well as
Wellness Market growth driving 8 percent rise during 2021,
accompanied by much more significant momentum at 27 ten
percent throughout 2021 until 2022.
Organizational Structure (Current)

28
 Organizational Structure (Proposed)

CEO

EVP
EVP EVP EVP Chief Chief Chief Chief
Supply EVP
Human Legal and Financial Peoples MKT Stores
Chain Finance
Resource Affairs CIO Officer Officer Officer Officer

29
Implementation Timeline

30
 IMPLEMENTATION: CONTINGENCY PLAN

31
Source: Strategic Management A Competitive Advantage Approach (17th Edition)
 Thanks!
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