Blog: Leonie BarrieOne size doesn't fit all at Macy’s

Leonie Barrie | 8 February 2008

Three years after acquiring May Department Stores, it’s clear that Macy’s vision for a nationally branded store chain just isn’t working. It now plans to axe 2,300 jobs and restructure into three divisions in an attempt to reduce costs but also to tailor merchandise so that it meets the needs of customers near each Macy's store. 

The reasoning is that if consumers can find the brands, the colours, the fabric and size that they want, then they’re going to buy – and keep coming back.

There’s no doubt that the retailer needs to try something new. Since buying May Department Stores in 2005, Macy’s (formerly called Federated Department Stores) has converted more than 400 May outlets to the Macy's name.

But this doesn’t seem to be having the desired effect: same-store sales fell 7.1% in January, and for fiscal 2008, Macy’s is predicting profit of $1.85 to $2.15 a share, excluding costs, which at its lower end is almost flat with 2007's $1.81 a share.

The chain obviously under-estimated the loyalty for the small, fun, department stores like Marshall Field's, Hecht's and Filene's which were also rebranded following the May acquisition – and the resistance from shoppers to the New York based Macy’s brand which had little resonance with people in states like Illinois or Ohio. 

Until Macy’s learns how to cater to the customer, and do what’s right from the customer’s point of view, then it’s unlikely to make any headway. But the retailer's acknowledgement that a one-size-fits-all approach isn’t the answer to its problems is definitely seen as a step in the right direction.

Macy's to axe 2,300 jobs in restructuring


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