Abstract
The purpose of this paper was to conduct a case study to determine whether or not Macy’s plan will enable the company to remain competitive in the rapidly evolving retail business. The study starts with an investigation into the history of Macy’s, during which it is discovered that Macy’s Inc. is one of the largest department store chains in the United States. The five-point plan is outlined here so that its objective can be comprehended, as can how each program will be included in a strategy for the organization’s advantage.
Macy’s will be exposed to significant risk due to the vendor’s direct fulfillment and off-price backstage stores. The tactics will not enable the company to maintain a presence in the retail business. In its final section, the study examines the likelihood that Macy’s approach will enable the company to thrive in the dynamic retail industry.
Introduction
Macy’s Inc., founded in 1858, is the largest department store company in the United States. Rowland Macy established the company in New York City, and it has since become one of the most successful enterprises in the country. The company currently has hundreds of locations nationwide. Traditional brick-and-mortar firms in the retail industry have been affected in recent years by the growth of e-commerce and the emergence of new retail models.
Macy’s Inc.’s main mission is to dominate the retail industry by employing cutting-edge methods like e-commerce and introducing innovative features like smart fitting rooms. The company intends to achieve this objective by providing a diverse selection of products via its physical stores and Internet channels.
The expansion of Macy’s e-commerce capabilities and the growth of its online presence are two of the company’s many stated and unstated goals. The strategy is geared towards enhancing its omnichannel strategy and giving customers a uniform shopping experience across all platforms. It focuses on lowering the number of stores it operates and maximizing its physical footprint’s efficiency. The research paper will examine whether Macy’s Inc. has the potential to thrive in the retail industry through a comprehensive evaluation of its current state and prospects.
Company’s Competitive Strategies
Macy’s Inc. emphasizes customer experience, digital transformation, data and analytics, and brand variation to differentiate itself from competitors and obtain a competitive advantage. The company places a high value on the customer experience and strives to provide customers with one-of-a-kind shopping options tailored to their needs.
Furthermore, the firm places great importance on long-term customer retention (Badal & Gamble, 2022). The organization prioritizes digital transformation, as indicated by its investment in cutting-edge digital technology such as artificial intelligence and machine learning (Bieliaieva et al., 2020). This is done to improve the overall quality of the client experience provided by the organization. They are doing this to understand their customer’s needs and preferences better; as result, data and analytics are becoming essential components of their strategy (Cocco & De-Juan-Vigaray, 2022).
Finally, brand diversification is an essential component of their strategy, and they are reaching this goal by introducing new product lines and expanding into new product categories (Badal & Gamble, 2022). This will enable them to expand their market presence.
External Environment Analysis
Industry Five Forces Analysis
There are five types of competitive threats: the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, and the bargaining power of buyers. Due to the high capital costs and widespread identification of brands associated with the retail industry, the risk of new competitors entering the market is minimal (Collis, 2019). The retail industry faces a modest level of competition from alternative suppliers because there are many different channels via which customers can buy products.
As a result of the high number of available retail suppliers, the bargaining strength of suppliers is minimal (Collis, 2019). Customers have significant leverage in negotiations since they can choose from various alternatives. Since so many distinct brands are vying for customers’ attention in the retail industry, competition among businesses is particularly fierce.
PESTEL Analysis
Applying the PESTEL framework to Macy’s retail industry analysis leads to a stable political climate in the retail business. This is due to the need for significant changes in laws or regulations that might influence merchants. The retail industry’s economic situation is hopeful, owing to increased consumer expenditure and a sustained desire for goods. The presence of a diverse clientele contributes to the retail industry’s positive social climate.
As new technologies are developed to improve the shopping experience for consumers, the retail industry’s technology landscape is always changing (Hanelt et al., 2020). Due to the rising emphasis on ecologically responsible conduct and sustainability, the retail business works in a favorable environmental atmosphere. The retail industry operates in a stable legal environment because no significant changes to the rules or regulations may affect merchants.
Internal Resources/Capabilities Analysis
Value Chain Analysis and SWOT Analysis
Macy’s Inc. offers dependable inbound logistics, including a network of suppliers and distributors, allowing for on-time product delivery to customers. The store has a well-developed operations system with comprehensive processes and procedures to ensure customer satisfaction. It has a strong outbound logistics system comprising a network of warehouses and stores to ensure that its products are delivered to its customers on time (Hanelt et al., 2020). The company has an effective marketing and sales strategy emphasizing the quality of service delivered to consumers and their loyalty to the Macy’s brand. Finally, it has a large customer service department, and the corporation highly values customer satisfaction and retention.
Macy’s SWOT analysis would examine the company’s internal opportunities and threats, as well as its strengths and weaknesses on the internal side. Macy’s Inc. benefits from having a reputable brand name, many devoted customers, and a comprehensive selection of goods. Macy’s Inc. needs more innovation and is sluggish in responding to shifting market trends, all of which are weaknesses of the company (Hanelt et al., 2020). It has the opportunity to expand into new markets and use digital technologies to improve the shopping experience for its customers. Macy’s Inc. faces competition from traditional and internet stores, which threatens the company.
Financial Data
An analysis of Macy’s Inc.’s financial statistics shows that the company is in excellent financial standing, with a return on equity of 16.7 percent, a return on assets of 8.7 percent, and a debt-to-equity ratio of 0.65. The company is profitable based on these numbers. This was uncovered due to an audit of the company’s books. In addition, the company can meet its short-term financial obligations, as indicated by its current ratio of 1.57 and quick ratio of 1.08 (Badal & Gamble, 2022). The company’s current ratio of 1.57 shows it can meet its short-term obligations without resorting to long-term borrowing.
Statement of Problems and/or Purpose of Analysis
This study examines Macy’s Inc.’s strategic position in the dynamic retail industry, identifies potential possibilities and dangers the firm may encounter, and proposes recommendations for the company’s future course of action. The most significant issue is that the company is competing against Internet merchants and other traditional retailers (Collis, 2019). They need to devise a strategy that will allow them to maintain their competitive edge in the ever-evolving retail landscape.
Identification of Strategic Alternatives
One of the essential aspects of the examination in the case study of Macy’s Inc. is the identification of viable strategic options. This entails identifying and analyzing numerous potential strategies the company could employ to address its difficulties and achieve its objectives in the continually changing retail market (Hanelt et al., 2020). Alternatives to Macy’s present strategy include Expanding into New Markets, which is the strategy that Macy’s Inc. might use to grow both its client base and its income by entering new markets. These new markets could include overseas markets or internet markets.
Advantages of Expanding into New Markets
- Increased customer base.
- Increased revenue.
- Increased brand recognition.
Disadvantages of Expanding into New Markets
- Increased costs associated with expansion.
- Increased competition in new markets.
- Risk of failure in new markets.
Advantages of Focusing on Digital Transformation
- Improved customer experience.
- Increased efficiency.
- Improved customer service.
Disadvantages of Focusing on Digital Transformation
- Increased costs associated with digital transformation.
- Increased competition from online retailers.
- Risk of failure in new markets.
Advantages of Increasing Brand Diversification
- Increased customer base.
- Increased revenue.
- Improved customer loyalty.
Disadvantages of Increasing Brand Diversification
- Increased costs associated with diversification.
- Increased competition from other brands.
- Risk of failure of new products.
Recommended Strategic Alternative
Focusing on digital transformation as a strategic choice is the one that is recommended for Macy’s Inc. because it is the one that offers the greatest likelihood of success for the company to continue to be competitive in the shifting retail market. By placing a greater emphasis on digital transformation, the business will be able to enhance the quality of the client experience it provides and raise its efficiency and level of customer service.
Implementation Plan
For the firm to reach new clients and boost its revenue, it needs a plan for its implementation, and one way to do that is by building an online store. To provide a more satisfying shopping experience for its customers, Macy’s, Inc. should invest in cutting-edge digital technologies like artificial intelligence and machine learning (Hanelt et al., 2020). It should invest in customer care technologies such as chatbots and virtual agents to provide better customer support (Bieliaieva et al., 2020).
It would be beneficial for Macy’s Inc. to use consumer data to better understand client preferences and requirements. In order to improve the diversity of its brand and appeal to a broader range of customers, Macy’s, Inc. needs to develop new product lines.
Evaluation and Control Plan
In order to ensure that it is on track to achieve its objectives, Macy’s Inc. ought to evaluate the development of its digital transformation strategy. To determine the success of its digital transformation activities, Macy’s Inc. ought to keep an eye on the input provided by its customers. Tracking sales, levels of customer happiness, and other critical metrics should be among the primary ways that Macy’s Inc. measures the success of its digital transformation activities (Kreutzer, 2022).
In order to ensure that it is successful in achieving its objectives, Macy’s Inc. should make any required modifications to the digital transformation strategy it has developed (Lehn, 2021). The digital transformation plan at Macy’s Inc. should have targets set, and the company should monitor its progress toward those goals.
Conclusion
In summary, the retail business is undergoing significant upheavals, posing significant challenges for Macy’s Inc. The firm must deal with various difficulties, such as declining sales and market share, rising competition from internet retailers, and the epidemic’s impact on the retail industry. By completing an in-depth analysis of the company’s internal resources and external environment, including a review of its financial data, it was possible to find several strategic options available to Macy’s Inc.
The recommended strategy is to use technology to expand the company’s online presence and improve the customer experience. Furthermore, cost-cutting initiatives should be implemented to improve the organization’s financial performance. The successful implementation of this approach will necessitate a well-planned implementation procedure that includes strong departmental coordination and communication.
References
Badal, A., & Gamble, J. E. (2022). Macy’s. Inc.: Will its strategy allow it to survive in the changing retail industry?
Bieliaieva, N., Krushelnytskyi, M., Voliak, L., Usata, N., & Sova, O. (2020). From survival to business prosperity: The financial aspect of managing an organization in a crisis. Independent Journal of Management & Production, 11(9), 2275–2290. Web.
Cocco, H., & De-Juan-Vigaray, M. D. (2022). A typology of omnichannel retailer activities during the COVID-19 pandemic. International Journal of Retail & Distribution Management, 50(8/9), 1062–1094. Web.
Collis, D. J. (2019). Why has strategy become irrelevant? Understanding the complete strategy landscape. SSRN Electronic Journal. Web.
Hanelt, A., Bohnsack, R., Marz, D., & Antunes Marante, C. (2020). A systematic review of the literature on Digital Transformation: Insights and implications for strategy and organizational change. Journal of Management Studies, 58(5), 1159–1197. Web.
Kreutzer, R. T. (2022). Analysis and design of a Digital Business Performance. Management for Professionals, 61–120. Web.
Lehn, K. (2021). Corporate governance and corporate agility. Journal of Corporate Finance, p. 66. Web.
