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 DeanPACE Leader

Professor Ric SweeneyEssentials of Business I, 010

31 October 2016

Carl H. Lindner College of BusinessUniversity of CincinnatiCincinnati, Ohio 45219

Macy’s 1

Table of Contents

● Introduction ---------------------------------------------------------------------------------------- 3● Macy’s 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

● Macy’s Weaknesses --------------------------------------------------------------------------------9○ Internet Presence ---------------------------------------------------------------------------9○ Relationship to Target Market -----------------------------------------------------------10○ Public Perception --------------------------------------------------------------------------11○ Putting off Expansion ---------------------------------------------------------------------

11○ Brand Dilution-----------------------------------------------------------------------------12○ Low Turnover Rate -----------------------------------------------------------------------12

● Macy’s Opportunities ----------------------------------------------------------------------------14○ Macy’s Backstage -------------------------------------------------------------------------14○ Market Segmentation ---------------------------------------------------------------------16○ Personal Shopping ------------------------------------------------------------------------17

● Macy’s Threats ------------------------------------------------------------------------------------18○ Amazon -------------------------------------------------------------------------------------18○ Traditional Competition ------------------------------------------------------------------20○ Recession -----------------------------------------------------------------------------------21○ Stock Market -------------------------------------------------------------------------------23

● Macy’s Recommendation--------------------------------------------------------------------23○ Social Media -------------------------------------------------------------------------------24○ Macy’s Website ----------------------------------------------------------------------------

25○ Technology in Store -----------------------------------------------------------------------

26○ Star Rental Collection --------------------------------------------------------------------27○ In store Recommendation ----------------------------------------------------------------28○ Additional Recommendations------------------------------------------------------------28

● Works Cited ----------------------------------------------------------------------------------------32

Macy’s 2

Introduction

Macy’s 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 Macy’s 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 Macy’s grew continuously, first into a full-fledged department store and

then into one of the largest retailers in the world.

Macy’s 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 Macy’s 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 Macy’s 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 Macy’s because it represents creativity, innovation, tradition, and American

heritage all in one package.

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The CEO of Macy’s describes their success to Robin Report "We think of Macy’s 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 Macy’s keep up? Some may

say this is not a concern for Macy’s since it is still considered America’s number one retailer but,

as a company, Macy’s has to look at their strengths, weaknesses, opportunities and threats in

order to improve.

Macy’s 4

Macy’s Strengths

Macy’s 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 Macy’s 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

Macy’s 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. Macy’s 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.

○ Macy’s Exclusive Brands- One of the biggest strengths that Macy’s has is its wide range of

exclusive brands and celebrity sponsored brands that make up it’s “Only at Macy’s” brand.

Their exclusive brand names build up a sense of exclusivity which makes the Macy’s name

seem of a much higher quality. Through exclusive brands such as Club Room, Style&co and

the JM Collection, Macy’s sets itself apart from other department stores that don’t carry such

high quality brands. Most of Macy’s competitors such as Sears, Kohl’s and JCPenney don’t

have the same level of quality of their exclusive brands that one can find at Macy’s. Each of

Macy’s competitors have exclusive brands, but they are not as a high of quality, so Macy’s

competitors cannot create the same level exclusivity that can be created at Macy’s. When

shopping these exclusive brands, customers may feel as if they are part of an exclusive club

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and that will make them happier with their shopping experience and with the products that

they are purchasing.

○ Celebrity Endorsements- Another side of Macy’s, “Only at Macy’s” line is their wide array

of celebrity product lines that are sold by the company. Macy’s 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 Macy’s

to sell their clothing lines. This helps both parties because it allows Macy’s 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 Macy’s because Macy’s

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, Macy’s plans to reallocate the money made from selling the

store buildings into the existing Macy’s stores. Macy’s 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 Macy’s idea of going green and lowering the amount of

unnecessary energy use. Another rapid advancement of technology within Macy’s department

stores is the new Artificial Intelligence (AI). In July of 2016, Macy’s launched this program in

hopes to improve the shopping experience of the customer, as well as increasing the efficiency of

staff. Customers can find anything they need on any shopping floor they’re on without saying a

word to a staff member.

Macy’s 6

● Abundance of Stores

One already existing strength of Macy’s 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 Macy’s 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 Macy’s. 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

Macy’s 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 Macy’s that are being closed were not losing profit or performing poorly, they were located

next to other Macy’s stores in close range. When there are two Macy’s that are so close to each

other, it is unreasonable to have both open. Therefore, Macy’s 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, Macy’s will be launching their

first international store in Dubai. The reason for deciding on a launch internationally is the great

success of the Bloomingdale’s store currently placed in Dubai. After seeing how well the

Bloomingdale’s store performed in that location, they decided to build a Macy’s store there as

well to create potential success.

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● Socially Responsible and Ethical

Along with its financial strengths, one of Macy’s strongest aspects is its take on social

responsibility and giving back to the community. Macy’s 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 Macy’s, they are trying to

grow more and more paperless, again to help the environment. Lastly, regarding the green

initiatives, Macy’s was recently named San Francisco's number one recycler. Other than just

going green, Macy’s has proven to give back to the community through both donations and

through employee volunteering. Macy’s 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 Macy’s 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. Macy’s has certainly proven through

all of activities that they are driven to give back to the community of consumers that help their

company grow.

Macy’s Weaknesses

Macy’s 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

Macy’s 8

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

Macy’s has selected millennials as their target market with the goal of having customers start

their relationship with Macy’s when they’re young, and continuing to stay loyal through all their

life milestones. However, it appears that Macy’s 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 Macy’s 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 won’t

accept payment--keeps telling me there is an error and to try again later.” (Macy’s 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, Macy’s has a

somewhat mediocre social media presence. Their Facebook page is relatively popular with over

14 million likes, but Macy’s Community Team does a poor job of responding to comments,

especially complaints. Macy’s seems to have difficulties adapting their content to different social

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,

Macy’s does not have a separate Twitter account for customer service. This increases the risk of

Macy’s 9

having the marketing messages drowned out by customer complaints and questions. These

tweets may clog user’s feeds and cause people to unfollow the Macy’s account. Although

Macy’s does have other sub profiles, they are incredibly inactive. Likewise, Macy’s Google+

account is essentially vacant. This reflects poorly on Macy’s as a whole. If they aren’t 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, Macy’s has not effectively

communicated the concept of “growing up with Macy’s.”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. Macy’s wants

customers to come shop with them for all of life’s milestones, like purchasing a house or having

a baby, but they do a poor job of advertising any products outside of clothes. Consequently,

Macy’s isn’t the first store a college freshman may think of visiting for dorm supplies. Moreover,

their commercials are repetitive and outdated, reinforcing the misconception that Macy’s is old-

fashioned. Although it is important to keep Macy’s traditional values, it is necessary to keep up

with the trends. If Macy’s wants to turn millennials into lifelong customers, they’re going to

have to make some changes.

● Public Perception of Closings

In the last year, Macy’s 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. Macy’s wants customers to grow up with them, but if consumers are under the impression

that Macy’s is going out of business then they probably won’t be interested in starting a

Macy’s 10

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 Macy’s has done a great job shipping internationally, they have not made a full

transition into the world market. Bloomingdale’s, which is owned by Macy’s inc., opened up the

first brick and mortar store in Dubai in 2010, which has seen great success. Macy’s however,

won’t open up their first international brick and mortar store until 2018 in Abu Dhabi (Mcbee).

Macy’s 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 Macy’s to invest in (Mcbee). Macy’s 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 Macy’s just needs to have the stores. They have lost

customers by having customers impressed with Macy’s but not having any place to actually try

on the clothes. Macy’s is turning their focus to a selling culture, which they would continue

through the stores but they don't have that ability online. Macy’s 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 Macy’s closing 100 stores domestically, they are expanding what they sell in the

stores exponentially. According to the 2016 Factbook published on Macy’s Inc., Macy’s

Macy’s 11

acquired Bluemercury, a high end cosmetics and beauty line, and also started to increase sales

productivity through licensed departments. Macy’s accomplished this by starting ventures with

LensCrafters, Men’s Wearhouse, Apple and Best Buy. With taking on so many new ventures,

Macy’s will lack in some areas. Macy’s will be focusing on all new and different areas of

retail/merchandising, when they should be focusing on already existing ones. Macy’s is

accumulating many different brands and their own brand will get weakened. When going into a

Macy’s store one would expect the Macy’s exclusive brands not other pilot store in Macy’s.

Eventually the Macy’s 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 Macy’s doesn’t 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 Macy’s stores has been facing as of late. Since the third

quarter of last year, Macy’s has seen a decrease in turnover ratio of about .3 from 2.88 in August

of 2015 to 2.59 last July. The average ratio among the retail sector is 2.72 which shows that

Macy’s 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

Macy’s 12

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

Macy’s 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 (Crain’s New York Business). This is important

because Macy’s 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).

Macy’s 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 Macy’s

is losing money. This could be fixed by better relations within the company as many former

employees have said that the in store management is unfriendly and uncaring. Fixing this issue

could allow Macy’s to cut costs and decrease money spent on hiring new employees.

Macy’s Opportunities

With Macy’s 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, Macy’s 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, Macy’s must

always be ready to reinvent themselves and their concepts while still keeping the quality and

Macy’s 13

service of their famous brand in order to continue relationships with current customers, and

hopefully attract the eyes of new ones.

● Macy’s Backstage

Macy’s Backstage is a discount retailer that stems off of Macy’s 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, Macy’s 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 Macy’s Backstage stores with technology that is

going to make shopping simpler, and provide customers with the tools they need to stay

connected is going to give them an advantage over other top-discount retailers such as TJ

Maxx and Kohl’s, to attract customers of that demographic (Hawthorn).

○ Low prices- All styles and fashions offered at Macy’s Backstage locations are 20-80% off

regular retail prices found at regular Macy’s locations (Macy’s), providing a different type of

store for dedicated Macy’s customers to shop at. Despite the low pricing of Macy’s

Backstage items, retailers like Nordstrom Rack and TJ Maxx offer coupons and reward

programs, but Macy’s Backstage does not accept coupons, due to the very recent opening of

their stores (Macy’s). 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

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Macy’s Backstage becomes more mature and has a stable footing in the market, Macy’s

might need to consider to implement these very important aspects, but for now must continue

the Macy’s 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. Macy’s 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 Boy’s and Girl’s 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

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 it’s own

(Nordstrom). Because Macy’s Inc. has it’s own charitable contributions and social

responsibility programs apart from Macy’s Backstage, which has it’s own, Macy’s 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, Macy’s Backstage has a huge opportunity to grow it’s own small empire,

only if they make sure to maintain quality in all products. The millennial generation is one

Macy’s 15

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, Macy’s 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 Macy’s Backstage entire premise. In order to make way to the top

of the largest discount retailers, Macy’s Backstage must incorporate all types of merchandise

for every social class, and maintain the Macy’s 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 old’s buy what they believe is the most important thing to them at

the time, whether that be superheroes or sports stars. Nineteen year old’s however dress to

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 Macy’s but the age that

is serviced should be amended. “Impulse” is another great idea that with some tweaks could

make Macy’s 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

Macy’s 16

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 isn’t limited to the goods that customers

take home” (Solomon). Adding the experience of a personal shopper will therefore make

shopping at Macy’s 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

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 Macy’s store better than a competitor’s store.

Macy’s 17

Macy’s Threats

Macy’s is one of the largest retail/department stores and has seen great success throughout their

countless decades in the business. Macy’s has hundreds of department stores around the country

and even has online shopping options for their international customers. Macy’s 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, Macy’s 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

Macy’s 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

falling flat in the battle for apparel sales against e-commerce juggernaut Amazon. Amazon has

exploded in this past decade offering everything Macy’s can and more. Online shopping has

become extremely popular and has captivated America with its fast, user-friendly, and

convenient set up. While Macy’s 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, Macy’s, as well as other stores are beginning to

see tremendous losses when compared to the technologically based Amazon. For example,

Macy’s 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

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drop in share value is a huge threat because Macy’s 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 Macy’s is very dangerous as Amazon’s stock and performance

continue to flourish while Macy’s 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 Macy’s had -49.88% change. Meanwhile, Amazon had an incredible 67.07%

positive change while Macy’s had a steep downward spiral, much worse than any other

department store, thus demonstrating the strong competition in their area. Amazon’s 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 Macy’s, which is reflected by the fact that Amazon

captured 41.2% of the e-commerce market share between January and April of 2016 while

Macy’s 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 Macy’s. Amazon also poses a threat due to their

extensive social media presence, a presence Macy’s severely lacks. For example, Amazon has

2.41 million followers on Twitter while Macy’s only has 938k (Twitter) . Amazon has 26.8

million likes on Facebook and Macy’s 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 Macy’s through these channels. Overall, the

convenience of online shopping with Amazon replaces the time-consuming trudges around

department stores like Macy’s. Additionally, the renowned Amazon Prime allows for price cuts,

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deals, and same day delivery which can be easily accessed for Amazon shoppers while Macy’s is

still trying to stay up-to-date with trends regarding online shopping. Furthermore, Amazon’s

same day delivery is marketed very well thus allowing most of the public to know about it. On

the other hand, Macy’s 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 Macy’s 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

Macy’s must also compete with other retail stores that also offer the more traditional shopping

experience. In 2015, Kohl’s surged with its new marketing strategy and its effects on Macy’s

were very apparent. Kohl’s was trading at a 24% premium to Macy’s in late 2015, which is the

largest the premium has been in four years. Kohl’s began to spend a lot of money promoting its

sale of major outdoor brands such as Nike. In 2015 alone, Kohl’s sales of Nike increased by

24%. Kohl’s promotions and new marketing approach bolstered holiday sales at a rapid rate.

Since 2010, Kohl’s holiday-quarter sales have risen about 3.7%. In comparison, Macy’s holiday-

quarter sales have risen only 1.9%. Macy’s 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.

Macy’s also used to have a large advantage over competitors with its rewards program. Kohl’s

has mimicked it and seen a great response from customers. The Kohl’s rewards program now has

about 25 million members, according to Jen Johnson, a spokesperson for Kohl’s. Kohl’s rewards

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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 Macy’s targets the upper-middle to upper class, lower and lower-middle class

were recently more attracted higher end store such as Macy’s, according to Bloomberg, due to

consistently low gas prices, putting Macy’s and Kohl’s in more direct competition. Kohl’s recent

success is a threat to the continued growth of Macy’s.

● Recession

Macy’s, like every company, faces economic threats. When faced with an economic recession,

consumers do not spend on clothes and home items that retailers like Macy’s sell. When money

is tight, food and rent are much higher priorities than a new jacket, purse, or comforter.

Macy’s lowest stock point was during the 2008 recession as illustrated in figure 2, making it the

biggest economic threat to Macy’s, 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

Macy’s 21

could cause another recession, which in turn would indubitably cause Macy’s stock and profits to

plummet once again.

● Stock Market

Macy’s 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, Macy’s real estate portfolio is worth approximately $21 billion, while

Macy’s total enterprise value is only about $19 billion. Further, and worse, if one includes the

valuable credit card business that is part of Macy’s the actual market value of its retail operations

is -$10.4 billion. However, Macy’s 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

Macy’s 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 Macy’s have brought about a need for change in

its assessment of its business model. The strengths of Macy’s have enabled to maintain a strong

presence in the retail market and utilizing these strengths is how Macy’s can continue to prosper.

However, many new opportunities have arisen and in an always changing world, and Macy’s

must exploit opportunities to remain competitive. Pressure from new age companies such as

Amazon have put strain on Macy’s business due to its accessibility and convenience, and not

only threaten Macy’s but have exposed weaknesses in many aspects of its business. These

weaknesses if properly corrected can become strengths and allow Macy’s to elevate its business

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by increasing its internet presence as well as improving various aspects of its expansion and

image.

Macy’s Recommendation

After performing a thorough SWOT analysis on the household company Macy’s, both

negative and positive aspects were discovered. Macy’s expresses their strength with the

expansion and abundance of stores, technology, and their increasing brand recognition. On the

other hand, Macy’s portrays weaknesses in their poor relationship to their target market and

overall perception of their company to the public. Macy’s is also presented with many threats

from competition, especially from Amazon’s ability to satisfy a customer through convenience

and quality service. However, Macy’s 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 Macy’s and all aspects of their company, we as a team compiled a list of

recommendations that could help Macy’s act on the opportunities available to them.

● Social Media

A large source of inefficiency for Macy’s 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, Macy’s 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 one’s feed multiple times can create annoyance and could ultimately result in that

user unfollowing the Macy’s page, therefore losing public support. Another negative aspect of

Macy’s social media sites is the lack of response from their customer service team. On

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Facebook, there was evidence of customers posting negative comments about Macy’s, 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 Macy’s, as their timeline

is cluttered with hundreds of tweets they do not want to see. Lastly, Macy’s 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

appear lazy or uncaring for their sites. After analyzing Macy’s 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, Macy’s needs to clean up their accounts and stay

customer oriented in order to keep their loyal following customers.

● Macy’s Website

As stated before, one of Macy’s 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 Macy’s. However, with minor improvements to Macy’s own personal

website, they could succeed further and become a larger threat to Amazon. Improvements as

simple as personalizing a shopper’s 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

customer’s satisfaction. Better promoting the benefits of becoming a Macy’s cardholder can

increase a shopper’s experience both online and in the store. However, consumers are lacking

this knowledge and are unaware of all the advantages to becoming a loyal Macy’s member.

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Creating a larger population of loyal members can immediately improve any company, and is

something Macy’s 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 Macy’s has to offer even if the shopper wasn’t

necessarily looking for an item in that category. Tabs like these can attract a customer and result

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 customer’s experience by showing

them that Macy’s 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

one’s 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, Macy’s must also keep up on

the trend and advertise the technology they have within their stores. Macy’s 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”, Macy’s has already begun the transition into the

modern use of technology. However, this is just scratching the surface of what Macy’s could be

doing. Macy’s has also already incorporated the use of Beacons, which connect to one’s phone

Macy’s 25

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 Macy’s has not been advertising it. Macy’s can also continue to

grow and advertise their Macy’s Magic Fitting Room. Not many Macy’s stores have these, but

this technology allows customers to try on different clothes and colors of those clothes without

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, Macy’s 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

Macy’s has to offer. Technology is a huge aspect of our everyday lives and as Macy’s dives

further into the realm of possibilities, they must keep the public notified to increase popularity

and sales.

● Star Rental Collection

One of Macy’s 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 Macy’s 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

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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 Macy’s is to grow with a customer, to experience each one of the stages of their

lives and by incorporating more products into this rental collection, Macy’s would be doing just

that.

● In Store Recommendations

Currently Macy’s 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, Macy’s 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 Macy’s 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, Macy’s 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 Macy’s to play into their selling culture by giving employees

Macy’s 27

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 Macy’s 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, Macy’s 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 Macy’s is able to employ this advertising technique we believe it will increase

the number of millennial shoppers. Second, Macy’s needs to work on improving their brand

recognition. Macy’s is one of the most recognizable companies in America, and has become so

through its numerous stores and timeless traditions like the Macy’s Thanksgiving day parade.

However, the identity of the store is often unknown to millennials. Macy’s is often seen as a

clothing or department store focused on an older demographic, so by increasing brand

awareness, Macy’s 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.

By implementing these extra recommendations, Macy’s will be putting themselves in a much

better position to appeal to the millennial generation.

Macy’s 28

Through years and years of effort, Macy’s has established itself as a fantastic global

retailer that follows many families through all of the main events of their life. This is Macy’s

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, Macy’s will be putting

themselves in a much better place to keep their loyal customers and attract new ones just as they

have been.

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Figure 1

Figure 2

Figure 3

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