Why Challenged Macy's is Pursuing the Omnichannel

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Following a difficult fourth quarter and holiday season and rising digital sales, Macy's has announced that it will close stores, reduce costs and reinvest in its omnichannel strategy.

Previously: Omnichannel Study Reveals Shifting Retail Patterns

The company noted that November/December sales fell 5.2% year-over-year. Macy's chairman and CEO, echoing many of his retail peers, cited unusually warm weather, which he claimed accounted for as much as 80% of the seasonal decline. The strong U.S. dollar also had an impact. Full-year 2015 sales may fall as much as 2.7%, according to the company.

“[W]e believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy’s and Bloomingdale’s omnichannel businesses faster and with more intensity."

Further reading: Omnichannel a Two-way Street for Beauty and Personal Care

The digital business, meanwhile increased in the double digits, comprising 17 million online orders via Macy's and Bloomingdale's (25% higher than 2014).

As a result, the company will cut about $400 million in costs and invest in omnichannel at Macy's and Bloomingdale's. Forty of 770 Macy's stores will be closed, 36 of which will be shuttered this spring; the remaining four were closed in 2015.

“[W]e believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy’s and Bloomingdale’s omnichannel businesses faster and with more intensity," said Lundgren.

He added, "[W]e will continue to add stores selectively while also being disciplined about closing stores that are unproductive or no longer robust shopping destinations because of changes in the local retail shopping landscape.”

The company will:

  • pare down its portfolio of stores and technologies
  • cut about 3,000 jobs at its going-forward stores (50% of affected associates may be placed in other positions)
  • reduce senior executive positions and office and support staff at Macy's and Bloomingdale's; bout 35% of executive positions will not be replaced
  • reduce an additional 600 positions in back-office organizations; about 150 of these associates will be reassigned to other positions.
  • consolidate four existing Macy’s, Inc. credit and customer services center facilities into three
  • close its St. Louis call center, impacting 750 employees
  • add 640 positions at other credit and customer service centers across the country
  • cutting travel, meeting and consulting service budgets
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