Macy's case Essay Example | Topics and Well Written Essays - 1500 words

Macy's case - Essay Example Macy’s has for some period has been one of the most influential and innovative players in departmental store sector, contributing to adoption of numerous managerial and technological innovations that include data processing, store merchandising, inventory control, among others. By the 50s, almost every state, in America, had its own departmental store. However, fifty years later, this had changed drastically with a decline in sales. Macy’s decided on converting regional departmental stores into one brand while also repositioning the store in order to differentiate it from its competitors. While the move was derided in some quarters as futile due to the demise of the departmental store as a whole, some analysts were of the idea that the store’s strategy was vital in revitalizing the declining industry. Which factors in the external environment could affect (positively and negatively) the success of Macy’s new strategy? Which internal factors could affect th e success of the company’s strategy? Departmental stores are currently in danger of extinction. While there were thirty-five major chains of departmental stores in the 80s, there are only thirteen left in operation today. Conventional departmental stores in the 90s accounted for two and a half percent of total income for American households, which have dropped to 1.6%, forcing departmental stores to reinvent their business strategies or suffer the risk of being run out of business. This results in the emergence of two models in for the departmental store sector in search for a profitable return. One has been the strong retail brand. The approach has been successful for departmental stores in the promotion and creation of in-house merchandise brands. Departmental stores are, therefore, able to promote their brands and name, assuming that the brands will reach a significant level of popularity, as opposed to relying on individual third party brands. Another model involves the s howcase approach that involves leveraging vendors of brands that are accountable for a substantial share of the retail process. The key, in this model, is the promotion of the shopping experience attraction, although this model leads to lower margins of profit. One factor that affects retail sales is the economic environment that dictates the consumer’s expendable income. At Macy’s 2005 consolidation, the retail business operated under positive economic conditions. This changed in 2008 with the advent of the economic recession that stretched throughout 2010. Some improvement was noted in 2011, although this was tempered by the increased oil prices and an increase in cotton prices. Another factor was industry products and services with the new departmental store model of the 90s utilizing decreased space and coming to resemble specialty-clothing stores. Women’s products, such as cosmetics and apparel wear accounted for sixty percent of floor space, men, and child ren accessories accounted for 20%, and household goods accounted for 20%. The new model did away with traditional departmental store wares. Departmental stores placed increased emphasis on fashion, differentiating them from low-end competitors and responding to complaints of blandness from customers. Departmental stores also began attempts at developing unique positions from a selection of five categories including low end, lower middle, upper-middle, high-end