Macy's Restructuring Aims for Omnichannel Alignment

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Macy's Restructuring Aims for Omnichannel Alignment

01/08/2015
Striving to keep up with the times, Macy's Inc. is restructuring the merchandising and marketing functions at Macy's and Bloomingdale's to better execute its omnichannel approach to retailing. The company also is making a series of adjustments to its field and store operations to increase productivity and efficiency.

"Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed – to prepare for what's next," said Terry J. Lundgren, Macy's chairman and CEO. "Macy's, Inc. has benefited in recent years by having invested early and aggressively in our M.O.M. strategies (My Macy's localization, Omnichannel integration and Magic Selling customer engagement). This has included talent, technology, omnichannel infrastructure and fulfillment capability.

"We remain committed to M.O.M. as our strategic roadmap. We are continuing to learn from our experiences and to mold our business model and M.O.M. strategies around what our customers are telling us and how they are behaving so that we can continue to succeed in this environment. We are moving quickly. In many ways, this is a race to remain best-in-class – and to win with the customer. We fully expect to remain an industry leader and innovator," Lundgren said.

With these changes, Macy's, Inc. will be increasing its workforce in some functions and locations while decreasing in others so all of the company's resources can be deployed for maximum results. The company's workforce headcount is expected to stand at about 175,000 associates.

Restructuring in merchandising/marketing
Both Macy's and Bloomingdale's are restructuring their respective central merchandising and marketing functions so each brand can develop and present its assortments seamlessly across channels and provide a single omnichannel view in all product categories. Going forward, one unified merchandising and marketing organization – a hybrid of store and online buying – will support the entire Macy's business to encourage both store and digital growth. The same is true at Bloomingdale's. Previously, store and online assortments were bought and marketed by separate organizations at Macy's and at Bloomingdale's. These changes support continued growth and an enhanced shopping experience online and via mobile, as well as in stores.

"Going forward, Macy's and Bloomingdale's will be better able to move more quickly and nimbly to select merchandise, assort inventories and serve total customer demand, no matter how, when or where the customer shops. Some redundant activity also can be avoided to accelerate speed to market, partner more effectively with vendor resources and ensure the merchandising organizations are more responsive to the marketplace in making and implementing decisions," Lundgren said.

Simultaneously, Macy's will make selected changes to its merchandising-related functions in local districts (administrative grouping of Macy's stores) around the country as it continues to improve its ability to localize assortments by size, color, fabric weight, style, fit, category and brand. The company will discontinue district planner positions and reinvest in new regional teams devoted to specific themes of merchandise localization. These teams will intensify Macy's successful warm-weather strategies, as well as address topics such as meeting the needs of more traditional customers who live in northern climate zones, and better understand and support the diverse needs of multicultural customers. Macy's field team will continue to represent a significant competitive advantage in reacting quickly to changes in customer demand and in gaining market share.

These changes in merchandising and marketing are expected to affect approximately 115 associates in Macy's and Bloomingdale's central offices in New York City, as well as about 150 associates in local markets nationwide. The company is working to place as many affected associates as possible in other open positions.

Adjustments in stores/field
Macy's and Bloomingdale's are adjusting certain aspects of store and field operations and refocusing the staffing in each store location to facilitate growth, increase productivity and improve efficiency. Selling service and support are being modified to match business opportunity in each department. An average of two to three associates will be affected in each of Macy's and Bloomingdale's approximately 830 stores (out of an average workforce of approximately 150 associates in each store), for a total of about 2,200 affected associates nationwide. The company is working to place as many affected associates as possible in other open positions.

Also, two existing Macy's stores districts are being merged into nearby districts – thus reducing the ongoing number of stores districts to 58 from the current 60.

Growth investments planned for 2015
The company will reinvest savings from merchandising, marketing, store and field initiatives so it can continue to invest for growth as it focuses its resources and molds its business model around emerging customer preferences. Plans for 2015 include:
  • Creating a team within the company to explore potential opportunities for a Macy's off-price business. While this exploration is in its early stages, the company believes that Macy's omnichannel infrastructure and insight could lead to innovative ways to deliver value to additional segments of the customer marketplace.
  • Continued progress in digital retailing, including further developing the technology, speed and customer experience of macys.com and bloomingdales.com as they are accessed via desktop, smartphones, tablets and apps. In 2015, Macy's is expected to grow its San Francisco-based digital technology organization by hiring more than 150 people.
  • Advancements in business systems and information technology, including security infrastructure, to deliver the information and functionality required to support a growing Omnichannel business.
  • Increasing direct-to-consumer fulfillment capacity in every full-line Macy's and Bloomingdale's store and at the five existing dedicated fulfillment centers located in Arizona, California, Connecticut, Tennessee and West Virginia. In addition, as many as 1,500 new year-round and seasonal associates will be hired this year at a new 1.3 million-square-foot direct-to-consumer fulfillment center now being built in Tulsa County, OK. Initial operations at the Tulsa facility are expected to begin in April 2015, with a total workforce of more than 2,500 associates (1,500 year-round associates and more than 1,000 holiday seasonal associates) expected in future years as the fulfillment center reaches full capacity.
  • Opening new Macy's, Bloomingdale's and Bloomingdale's Outlet stores as opportunities arise in new and existing markets. New stores to be opened in fall 2015, as previously announced, include a Macy's in Ponce, PR, which will employ about 275 associates, as well as a new Bloomingdale's in Honolulu, with an expected workforce of 250 associates.