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Memo Of Macy's Department Stores Repositioning

605 words - 3 pages

Memo of Macy’s Department store repositioning

Case Synopsis
The traditional department store was the dominant player in the American retail industry in the first half of the 20th century, which was designed to provide a unique shopping experience for consumers. However, only 50 years later, this mainstay of retail world was experiencing declining sales and serious questions were being raised as to whether its demise was imminent.
Firstly, this case gives us a brief introduction of Macy’s, which is consolidated by 15 regional department stores with 810 store locations across the country. The company repositioned the consolidated Macy’s in the overall retail landscape in an attempt to differentiate the new company from its competitors.
Secondly, the case provides a situation analysis of the factors Macy’s is facing, which includes the general economic environment, industry (product and services and segments), ...view middle of the document...

General economic environment: the country was entering a significant recession. (Negative)
b. Industry life cycle model: traditional department store industry is in the “mature” phase or even “decline” phase. (Negative)
c. Intense competition between the existing companies and the rise of online shopping. (Negative)
Here are the internal factors I believe that could affect the success of the company’s strategy:
a. Macy’s is recognized as a national brand with national advertising
b. Customer bases
c. New stores in prime location
d. Strong management

2. Evaluate Macy’s 2005 consolidation and repositioning strategy: what are its strengths and weaknesses?

Strength:
a. The consolidation
b. Macy’s image as “America’s department store”
c. Remodeling stores to promote a pleasant shopping experience
d. Affordable luxury
e. Changing the brand to focus on attracting customers interested in fashion
Weakness:
a. The quality of merchandise and service has deteriorated
b. Macy’s attempt to standardize merchandise and pricing across all 810 stores

3. Porter argues that the goal of strategy, and a key to achieving a sustainable competitive advantage, is finding a unique and valuable position. In your opinion, has Macy’s found a unique and valuable position in the retail landscape through its new strategy? Explain?

In my opinion, Macy’s has attempted to place their stores in a unique position as a “mid-level” store which is a good positioning for its new strategy. However, the decision to consolidation is not unique.

4. What is your prediction for the future of Macy’s? Where do you think the company will be in 10 years if it continues with the strategy outlines in the case? Explain the reasons for your prediction in some detail.

As far as I am concerned, Macy’s cannot success with the strategy outlines in the case. Although Macy’s has launched a bold strategy, the external environment especially the industry life cycle is in decline and competition is growing rapidly. I believe that Macy’s should count more on the technology development, such as E-commerce, to open an online shop is a good try for Macy’s.

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