Will Macy’s Restructuring Work?

So Macy’s has just introduced a detailed new plan that management hopes will “position the company for increased sales, profitability and cash flow,” reducing expenses by about $400 million a year.

As part of the initiative, the department-store company will lay off about 7,000 positions across its operations, with the biggest cutbacks taking place in its central offices.

It seems that a big part of the new strategy, called “My Macy’s” is to make shopping at locations across the country a more local experience. The stores will now be grouped into 69 geographic “districts” each representing about a dozen units, instead of the four regional divisions now in operation.

The company started the My Macy’s pilot program last year that created 20 of these districts, and apparently, some of the chain’s highest sales were at stores within this framework.

While all of this is localization is happening – and this is where we start to get a little confused – the company is streamlining its central operations. “Central buying, merchandise planning, stores senior management and marketing functions” will all be done out of New York City.

So Macy’s is becoming less centralized and more centralized at the same time, right?

But we guess the most important question is: Will more of a local focus on individual markets make a difference? Or will shoppers even notice…or care?


13 Responses to “Will Macy’s Restructuring Work?”

  1. 1 Randy Rawson February 3, 2009 at 9:36 am

    No, Macy’s restructuring will NOT work as long as they rely on phony savings coupons that have more exclusions than an asbestos insurance policy. All these companies that are falling by the wayside need to understand that it is the consumer that ultimately makes them profitable, and Macy’s has regrettably not paid attention to its customers for years!

  2. 2 Chris February 3, 2009 at 9:55 am

    I agree that Macy’s strategy is confusing. I think they blew it several years ago when they threw away longstanding legendary local brands and made everything Macy’s. Now they seem to be going back to a local emphasis (sort of) Maybe somebody feels like he has to come out with a bold new strategy every year when sales are falling if he wants to keep his job. Activity can only hide lack of results for so long.

  3. 3 CalamityJane February 3, 2009 at 10:02 am

    That’s funny: “Macy’s is becoming less centralized and more centralized at the same time.” But it just might work, they may need to have operations decentralized and buying centralized. I’ve never had a problem with buyers and fashion experts coming out of our Fashion Capital, New York City. After all, people don’t even know how to dress anywhere else, save Los Angeles. And, it usually is better to give more autonomy to operations, locally.

  4. 4 Peter M. February 3, 2009 at 7:05 pm

    I agree with Jane. The theory is sound and could work. Functions that are homogenous throughout the country can be centralized, such as accounting (though it would be cheaper to perform this function in the mid-states) and HR administration. However customer facing activities should be as close to the customer as possible. Having 69 smaller groups of 12 stores IS BETTER than four massive regions where one end of one region is completely different in customer makeup to the other end of the same region.

    So as a business model within a category it has merits. The true question continues to be “do department stores have a future”?

  5. 5 Brad Ellman, February 4, 2009 at 11:14 am

    In theory it makes sense. It all depends on the mix and how it is managed executed and integrated on the local and national levels. It’s not really new.
    I’m dating myself here, but remember Allied Stores before Federated & Campeau bought them? Local names sold under various local and national brands/names and nationally coordinated.

  6. 6 Dunkin'man February 5, 2009 at 10:52 am

    Shopping to shop is highly overated and will be for the forseeable future; probabbly forever. Going to a Department store that is vanilla in its approach to marketing and merchandising is yesterdays news. Make it fresh, exciting and understand the shelf life of “new concepts”

    Stores have to respond to their segemnts of the market, not to everyone. Ask Sears, who they are and what they want to be.
    Somebody tell ’em that they are a tool and home appliance store…nothing else. They won’t get it, and they will be next.
    Their “business unit” makes their real estate decisions and has worked so well with the Sears Essentials concept. Talk about hjolding on to a failed concept….

  7. 7 Dealmaker February 5, 2009 at 12:56 pm

    Whether or not it works isn’t the question as long as it works better than the competiton, which for Macy’s on one side are all the other mall based moderate priced department stores (Sears, J C Penney, Boscovs, Bonton etc….) and on the other side is the winner of the Walmart vs Target, K mart, Kohls, battle. The longer this economy stays depressed, the better the chance Macy’s and Walmart emerge as most of this country’s only shopping choices in the future.

  8. 8 NO name February 5, 2009 at 1:08 pm

    One should look at the pay and bonus these “top executives” got year-end 2008, and then laid off 7,000 employees. It will be an eye opener

  9. 9 Belinda February 6, 2009 at 4:17 pm

    Federated Dept Stores did NOT buy Allied Corp. Campeau Corp acquired Allied Stores Corp through a hostile takeover in 1986. Then in 1988 Campeau Corp acquired FDS through a hostile takeover that started 1/88. The FDS and Allied divisions that were left after Robert Campeau’s “rape & pillage” were consolidated in 1988 and were forced to file for bankruptcy reorganization in Jan 1990 due to the heavy debt resulting from the highly leveraged Campeau takeover. Robert Campeau ended up losing control of his own company. Yes, I worked for FDS until Campeau took over in 5/88)

  10. 10 TheTerminator February 8, 2009 at 3:03 pm

    We top executives love to line our pockets by shearing the sheep then slitting their throats. They taught us this method in our MBA Operations 101 class: Fire the workers and get the stock price up. You see, we executives are never around long enough to actually have to PRODUCE results by managing a corporation, we just take out the butcher knife and leave MAYHEM in our wake. THEN we collect our big CHUNK OF DOUGH and FLY THE COOP.

  11. 11 Brad Ellman, February 9, 2009 at 4:49 pm

    My bad Belinda. There were an awful lot of unnecessary casualties back then, and I’m sorry you were one of them. However, the marketing & merchandising setup at ASMC had some good points…

  12. 12 macysemployee December 10, 2009 at 10:19 pm

    As a macys employee all i see is a temperory cover up to save the top brass,s skin.There is no flexibility in the my macys program to react to regional needs like it sounds. Its just a 5% varience. All the ads are national and the core merchandise is national . Reacting to a local market is going to be hard because of the lower flexibility in the buying and the layers of decision makers knock down local initiatives. It sounds good but is flawed. There are no better results, the sales are going down and the buying is the same just a little different.

  13. 13 Joe Blow January 25, 2010 at 6:21 pm

    As a Macy’s employee, there are times that drastic measures need to be taken to survive.

    My Macy’s strategies may come to fruition once things really start to gain momentum. It is possible for these changes to be positive but not at the beginning while telling employees to take a hike and keep the existing employees motivated.

    The top executives should really take a long look in the mirror and see how to avoid wasted expenses. Their poor excuse for being ‘green’ is a joke, just take a look at the waste in paper alone could save big big bucks and maybe save a few jobs.

    Lastly, computers have taken the place of people in many instances and you never get a live person on the phone anymore, but how do you replace people who provide the customer service physically LIVE to your faithful customers?

    Hope and pray for all of us not to lose their job.

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