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This is an in-depth analysis on Macy's. Working together, we examined Macy's retail strategy, format, and overall mix. We identified key issues and offered recommendations to address the specific problems. The analysis and presentation was delivered in early December.
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Presented by: Alex King, Laura Robinson, Jennifer Yu, Brittany Frownfelter
Macy’s : The History
• Opened in New York City in 1858
• Claimed to be an innovator
• Acquired by Federated Department Stores, Inc. in 1994
• Became Macy’s, Inc. in 2007
Competitors
• Mid to High range department store
• Main competitors include: Nordstrom’s, Belk, Dillard’s
• Less extent: JC Penney, Kohl’s, Sear’s
Current Technology• 1997: Online
retailer through macys.com – Home, Bed & Bath– Women, Juniors,
Mens, Kids– Beauty & Fragrance– Shoes– Handbags &
Accessories– Jewelry & Watches– Deals & Promotions– Gifts Cards– Wedding Registry– American Express
Card• Mymacys.net for
employees
Maintaining Growth
• Acquired Broadway, Emporium, Weinstocks
• 2005: Acquired Hecht’s and Lord and Taylor
• Grown from 240 locations in 2005 to over 800 locations now
• Every geographic location nationwide
• Must maintain superior customer service and
continuously adapt to change in fashion for target market
Target Market• Age 35-54
– Many different
departments to serve
wide range of markets
• Higher than average
income consumers
– Cosmetics
– Accessories
– Clothing
• Emphasis on “affordable
fashion”
• International expansion
Retail Format• Enclosed shopping
mall/outlet
• Broad and deep
assortment
• Service
representatives in
different departments •Spine layout
•Higher than average
pricing strategy
•Coupons and store credit
card
Competitive Advantage• “Strongest year-over-
year- sales growth at 7%”
• Exclusivity– Private labels– Exclusive deals on
brand names• Example: Tommy
Hilfiger, Sean JohnProfitability Macy’s Industry Median Market Median
Gross Profit Margin
40.51% 36.02% 28.77%
Net Profit Margin 1.49% 2.59% 5.53%
Return on Equity 7.5% 10.5% 10.1%
Return on Assets 1.6% 3.7% 1.5%
Return on Invested Capital
2.5% 6.1% 4.4%
Data from Hoovers
Macy’s at PG Plaza Location
Tactical Problems
• Insufficient inventory in Women‘s Clothing– lost sales– disappointed customersNOTE: Macy's is a leader in inventory management overall
• No fitting room attendant– Merchandise susceptible to theft– Garments not returned to racks
promptly– Possible fitting room and merchandise
damages
What could happen…
What could happen…
"After I removed my shoes so I could try on the clothes, I stepped in a wet puddle on the ground. I was not sure of it at first, because I thought I may have just stepped on some cold metal, so I touched my foot. My hand became
wet, and it smelled like urine.“
–Macy's customer, Bridgewater, NJhttp://www.planetfeedback.com/macys+east/cleanliness/condition/urine+in+fitting+room/159337
Recommendations: PG Plaza
•Hire fitting room attendant•Job description: “Supervise the fitting room area, count & limit the amount of clothes customers bring into the fitting room, thorough check of stalls.”
-careerleak.com•Improve inventory management•Emphasize advantages over Big Box Retailers
•Customer service•Located in mall
Retail Mix
Store LocationMerchandise AssortmentStore Layout and Design
Customer ServicesPricing
Promotion
Store Location•Shopping Mall location
•Produces additional traffic•Mall events bring more people•More expensive
•Overall the decision to locate in a mall is not one they should change
Merchandise Assortment•Macys sells a huge variety of products
•Men’s, Women’s and Children’s clothing•Accessories•Cologne and Makeup•Shoes, Jewelry and Watches
•They have a broad and deep assortment•Need to improve the sizes of clothing in the Women’s section
Store Layout and Design
•A spine layout•Main aisles and the rest of the store is split into different sections according to the category (Ex. Men’s, Women’s) •Is easy to navigate and understand for the customer
Customer Service
•Macys has sales representatives in each department who ring customers up, and assist them with making purchases•Lack of effectiveness from these associates
•Not present•Do not know the area•Are not outgoing
Improving Customer Service
•Empower employees to understand that the department is theirs and they are responsible for its success•Develop store leaders better so they can teach and coach employees effectively•Create powerful incentives so that they engage customers to make sales
Pricing
•Utilize both luxury and economic pricing
•Have luxury brands that bring in wealthier customers•Have economic pricing so that lower income individuals can shop in a nice store for high quality cheaper merchandise
•Two pricing points help to increase the market they can sell to
Promotion
•Sales promotions•Have annual, semi-annual, and strategically timed promotions to gain traffic•Are very popular and effective
•Celebrity endorsements•Have had many celebrities endorse products•Is a good idea, but is expensive and they need do their due diligence to be sure that each celebrity signed is worth the price
THANK YOU!!