Macy’s steps up its online investments

January 8, 2015 03:50 PM

Macy’s Inc. announced today that it will merge its online and store merchandising marketing teams, hire 150 more employees for its digital center in San Francisco, close 14 stores while opening two new ones, and trim the number of workers in each store.

"Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones,” says chairman and CEO Terry J. Lundgren.” We must continue to invest in our business to focus on where the customer is headed—to prepare for what's next."

Much of that investment will go to furthering integrating the web and store operations of Macy’s, No. 8 in the Internet Retailer 2014 Top 500 Guide, with 2013 web sales of $4.150 billion, according to Internet Retailer’s estimate.

That includes combining the retailer’s merchandising and marketing teams into single units, instead of having separate teams buying and marketing for the web and stores. That will also be true at Bloomingdale’s, which is owned by Macy’s Inc.

"Going forward, Macy's and Bloomingdale's will be better able to move more quickly and nimbly to select merchandise, assort inventories and serve total customer demand, no matter how, when or where the customer shops. Some redundant activity also can be avoided to accelerate speed to market, partner more effectively with vendor resources and ensure the merchandising organizations are more responsive to the marketplace in making and implementing decisions," Lundgren says.

Macy’s move to create what it calls “one unified merchandising and marketing organization—a hybrid of store and online buying,” one team for Macy’s and another for Bloomingdale’s, is unusual, says Nikki Baird, managing partner at Retail Systems Research, a research and consulting firm. She says most retailers rethinking their organizations “are looking at combining merchandising teams across channels, and combining marketing teams across channels, but not both together. In fact, I know more retailers that are looking at splitting marketing off of merchandising so that it’s not so product focused. The intent is to let marketing focus more on brand and customer, and let merchandising focus more on product.”

Macy’s announcement, Baird says, is “a bold move, definitely more aggressive than most retailers I know on the organizational front, and clearly a result of their omnichannel strategy work. But it’s not a sure-fire solution to the challenges that tend to put merchandising and marketing at odds with each other in most organizations. Other retailers should certainly take note, but be aware that this is more an experiment than a tried-and-tested solution to omnichannel pressures.”

Besides the new hires planned for the e-commerce center in San Francisco, Macy’s also announced plans to hire this year as many as 1,500 full-time and seasonal workers for its new direct-to-consumer fulfillment center in Tulsa County, OK.  The company announced plans for that facility in December 2013.  

Macy’s also announced plans to increase its ability to fulfil orders from all full-line Macy’s and Bloomingdale’s stores as well as from its five web-focused fulfillment centers in Arizona, California, Connecticut, Tennessee and West Virginia. Macy’s has been shipping some online orders from stores for two years. The retailer shipped about $1 billion of the company’s direct-to-consumer shipments came from Macy’s and Bloomingdale’s stores, Lundgren said today.

The retailer also announced plans for two new bricks-and-mortar stores—a Bloomingdale’s at the Westfield Valley Fair Shopping Mall in San Jose, CA, and a replacement for an existing store at the Westfield Century City mall in Los Angeles. The company also announced plans to close 14 stores.

In addition, Macy’s says it will reduce by two or three workers the headcount in each of the 830 Macy’s and Bloomingdale’s stores, which on average employ 150 people each. In all, Macy’s says it will lay off about 2,200, or 1.3%, of its 175,000 employees.

J.C. Penney Co. Inc., No. 37 in the Top 500, also announced today plans to close 39 stores and lay off 2,250 workers.




Top Solution Providers