{"id":26991,"date":"2017-11-16T00:00:08","date_gmt":"2017-11-16T05:00:08","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/can-macys-stay-competitive\/"},"modified":"2017-11-16T00:03:53","modified_gmt":"2017-11-16T05:03:53","slug":"can-macys-stay-competitive","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-macys-stay-competitive\/","title":{"rendered":"Can Macy\u2019s Stay Competitive?"},"content":{"rendered":"

Macy\u2019s is a retailer operating under three brands (Macy’s, Bloomingdale’s, and Bluemercury) that sells merchandise including apparel, accessories, cosmetics, furnishings, and other consumer goods. Founded in 1858, Macy\u2019s pioneered many marketing practices such as a one-price system for all customers (instead of bargaining), money-back guarantees, Santa Claus during the Christmas season, and illuminated window displays to attract the attention of those passing by.[1]<\/a><\/p>\n

However, in recent years, Macy\u2019s has been challenged by headwinds driven by the digitalization of competitors\u2019 supply chains and subsequent increase in market share. According to Rigby, retailers like Macy\u2019s have lost traffic and have faced pressure on prices from eCommerce retailers such as Amazon, as their \u201cselection is vast yet remarkably easy to search. The prices are good and easily compared. It\u2019s convenient: You can do it at home or at work, without using gasoline or fighting to park\u2026product reviews and recommendations are extensive.\u201d[2]<\/a> BI Intelligence<\/a> estimated that \u201cU.S. consumers will spend $385 billion online in 2016\u201d and \u201cthat number will\u00a0grow\u00a0to $632 billion in 2020.\u201d[3]<\/a> While the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce.\u201d[4]<\/a><\/p>\n

To respond to the business headwinds in the short-term, Macy\u2019s management has announced the closures of 68 stores in 2016 and early 2017, and its intention to close approximately 30 additional stores. Macy\u2019s has hired Jeff Gennette as the new CEO, who joined the company in early 2017. Macy\u2019s has equipped hundreds of stores to ship online orders, speeding up the process and making better use of unsold store inventory.[5]<\/a> In the long-term, Macy\u2019s is attempting to increase the health of its physical store portfolio, while trying to drive the growth of its e-commerce channel.<\/p>\n

Macy should think critically about its value proposition to customers and continue to blend its physical and digital retail models into one omnichannel strategy that best matches consumer preferences. Macy\u2019s owns most of the properties supporting its store locations. Starboard Value (an activist investor) \u201cestimates Macy’s real estate holdings to be worth\u00a0at least $21\u00a0<\/a>billion<\/a>.\u201d[6]<\/a> Macy\u2019s should divest or sell and lease back all of its owned stores, which would free up capital that Macy\u2019s could use to aggressively invest in its business. Macy\u2019s future strategy should be to become a modern omnichannel retailer, showroom, and experience center that maximizes convenience for the customer. Macy\u2019s could \u201cuse digital technologies to improve in-store visual merchandising, help customers connect with in-store associates (or chatbots or remote experts, if they preferred), speed checkout times and customize offers.\u201d[7]<\/a> Macy\u2019s could entice its customers to pick up most online orders in stores, which would reduce shipping costs and driving incremental sales as customers bought additional items when they came to pick up their orders.[8]<\/a> Additionally, Macy\u2019s could leverage Nordstrom\u2019s ideas by using data from Pintrest to influence its merchandizing and allowing customers to see Instagram images and reviews of products on large screens.[9]<\/a> Macy\u2019s could position the physical store as a social experience of shopping with friends or family that could not be replicated online. Macy\u2019s could also utilize space in the store for services photography, professional make-up artists, hair salons, and spas. Lastly, Macy\u2019s could also utilize location based services and sensors to track customers behavior and optimize the store and product displays appropriately.<\/p>\n

Though my proposed solutions may allow Macy\u2019s to better address consumer demand, there are still large looming questions: Can Macy\u2019s make changes quickly enough to avoid a significant erosion in market share? Will Macy\u2019s be able to meet consumers dynamic and increasingly complex demands for service while staying profitable? Will Macy\u2019s brand still retain value and resonate with the market? (800 words)<\/p>\n

[1]<\/a> Keri Hanson, \u201cThe History of Macy’s: From Humble Beginnings to Stunning Success,\u201d June 9, 2015, https:\/\/www.visitmacysusa.com\/blog\/history-macys-humble-beginnings-stunning-success<\/a>, accessed November 2017.<\/p>\n

[2]<\/a> Darrell K. Rigby, \u201cThe Future of Shopping,\u201d Harvard Business Review, December 2011 Issue, https:\/\/hbr.org\/2011\/12\/the-future-of-shopping<\/a>, accessed November 2017.<\/p>\n

[3]<\/a> BI Intelligence, \u201cMacy’s restructuring to focus on digital,\u201d Business Insider, http:\/\/www.businessinsider.com\/macys-restructuring-to-focus-on-digital-2017-1<\/a>, January 9, 2017, accessed November 2017.<\/p>\n

[4]<\/a> BI Intelligence, \u201cMacy’s restructuring to focus on digital,\u201d Business Insider, http:\/\/www.businessinsider.com\/macys-restructuring-to-focus-on-digital-2017-1<\/a>, January 9, 2017, accessed November 2017.<\/p>\n

[5]<\/a> Aaron Cheris, Darrell Rigby and Suzanne Tager, \u201cThe Power of Omnichannel Stores,\u201d Bain & Company Insights: Retail Holiday Newsletter 2016-2017, December 19, 2016, http:\/\/www.bain.com\/publications\/articles\/retail-holiday-newsletter-2016-2017-4.aspx<\/a>, accessed November 2017.<\/p>\n

[6]<\/a> Starboard Value, \u201cUnlocking Value at Macy\u2019s,\u201d Powerpoint Presentation, January 11, 2016, Starboard Value, New York, NY.<\/p>\n

[7]<\/a> Aaron Cheris, Darrell Rigby and Suzanne Tager, \u201cThe Power of Omnichannel Stores,\u201d Bain & Company Insights: Retail Holiday Newsletter 2016-2017, December 19, 2016, http:\/\/www.bain.com\/publications\/articles\/retail-holiday-newsletter-2016-2017-4.aspx<\/a>, accessed November 2017.<\/p>\n

[8]<\/a> Aaron Cheris, Darrell Rigby and Suzanne Tager, \u201cThe Power of Omnichannel Stores,\u201d Bain & Company Insights: Retail Holiday Newsletter 2016-2017, December 19, 2016, http:\/\/www.bain.com\/publications\/articles\/retail-holiday-newsletter-2016-2017-4.aspx<\/a>, accessed November 2017.<\/p>\n

[9]<\/a> Trips Reddy, \u201c13 Retail Companies Using Data to Revolutionize Online & Offline Shopping Experiences,\u201d Umbel, May 18, 2015, https:\/\/www.umbel.com\/blog\/retail\/13-retail-companies-already-using-data-revolutionize-shopping-experiences\/<\/a>, accessed November 2017.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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