Macy’s Announces a Restructuring Plan to Improve Digital Retail
Within two weeks of reporting another quarter of slumping comparable store sales, Macy’s Inc (NYSE:M) is making a major push into digital retail to take on rivals, primarily Amazon.com, Inc. (NASDAQ:AMZN).
Department store chain, Macy’s, has just poached a senior executive from eBay Inc (NASDAQ:EBAY)—an Amazon competitor—and has announced a major restructuring effort under him, which will result in dozens of layoffs.
Macy’s has hired the Senior Vice President of eBay’s North American division, Hal Lawton, as the new President of Macy’s and will utilize his digital expertise to improve Macy’s online sales channels.
The decision comes at a time when America’s traditional brick-and-mortar retail sector is facing serious survival threats at the hands of digital retailers, particularly the likes of Amazon and eBay.
At the same time, the company has also announced a restructuring move to streamline its merchandising operations.
As part of the restructuring effort, the company will be consolidating three functions including merchandising, planning, and private brands. A single “Merchandising” function will be born out of the integration of the three units.
The consolidation is also expected to result in layoffs in the said departments. Macy’s is expected to trim its workforce by 100 employees, as part of the restructuring move.
Although the restructuring will cost the company about $20.0 million to $25.0 million in one-time expenses, the company expects to save nearly $30.0 million in annual costs, going forward.
The consolidation will be led by Jeff Kantor, the Chief Stores and Human Resources Officer, who will be reporting to the newly appointed President, Hal Lawton.
As part of the lately announced restructuring initiative, Macy’s will be greatly focusing on the technological aspect of its retail business by studying customer insights and employing data analytics to improve both in-store and online sales.
In the press release announcing these initiatives, Macy’s Chief Jeff Gennette said, “The changes we are making today maintain our core merchandising skills while massively simplifying our structure and processes for greater speed and flexibility. We are also further strengthening our consumer insights and data analytics capabilities so we can make better decisions faster, balancing the art and science of retail.”
The significant changes in the corporate structure and strategic direction are being overseen by Gennette, who took charge as Macy’s CEO just four months ago. Gennette is making an effort to bring the company back on the track of revenue growth, by getting rid of redundancies in the business structure in order to achieve company-wide efficiencies.
Macy’s is one of the leading department stores in the country and has announced dozens of store closures this year as it faces declining foot traffic at its physical store locations.
Companies operating physical stores are pressured by the debt load they take on to lease or buy large physical spaces, which ultimately translate into higher selling prices for customers. On the contrary, online retailers like Amazon are able to sell on cut-throat pricing.
As a result, a growing number of American shoppers are choosing to make purchases online on web sites where they are able to find better deals on pricing—a trend that is hurting brick-and-mortar retailers across the board.
“Hal Lawton Named President of Macy’s,” Macy’s Inc, August 21, 2017.