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Polaris strategy of Macy's to stabilise profitability
10 Feb '20
3 min read
Pic: Macy
US retailer Macy’s recently announced an updated strategy and a three-year plan to stabilise profitability and position itself for growth. It has a clear vision of where its brands—Macy’s, Bloomingdale’s and Bluemercury—fit into retail and is confident its Polaris strategy will return it to sustainable, profitable growth, said its chairman Jeff Gennette.
“We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams. Over the past three years, we have shown we can grow the top-line; however, we have significant work to do to improve the bottom-line. We are confident the strategy we are announcing today will allow us to stabilize margin in 2020 and set the foundation for sustainable, profitable growth,” Gennette, who is also the chief executive officer of the New York-based retailer, said in press release.
“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment,” she continued.
The five major components of the Polaris strategy are strengthen customer relationships, curating quality fashion, accelerating digital growth, optimising store portfolio and resetting cost base.
The company is focusing on building customer lifetime value, accelerating personalisation and monetisation programs and expanding its loyalty program. It is driving disciplined merchandise product category roles to be the top destination for the best brands, while balancing sales and margin.
The company has a scaled and growing digital business across its brands that generates more than $6 billion per year in sales. The macys.com headquarters will relocate from San Francisco to New York City, the heart of the fashion industry. This will allow for better coordination and increased collaboration and better access to Macy’s brand partners. The company will also expand its presence in the Atlanta area, which will serve as the primary technology hub for the company.
After completing a rigorous evaluation of its store portfolio, the company plans to close nearly 125 of its least productive stores over the next three years, including 30 stores that are in the process of closure now. Across the remaining store fleet, the company is adjusting its staffing with reductions in some stores and increases in others.
Macy’s will expand its growth treatment to the remaining store portfolio, including upgrading an additional 100 stores in 2020. The treatment includes improvements to the physical store, as well as investments in merchandising strategies, technology improvements, talent and local marketing.
The company is also testing a new store format, Market by Macy’s. This new format is smaller than an average Macy’s store and will be located off-mall in lifestyle centres.
Macy’s, Inc. is streamlining its organisation with a net reduction in its corporate and support function headcount of 9 per cent, or approximately 2,000 positions.
“We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams. Over the past three years, we have shown we can grow the top-line; however, we have significant work to do to improve the bottom-line. We are confident the strategy we are announcing today will allow us to stabilize margin in 2020 and set the foundation for sustainable, profitable growth,” Gennette, who is also the chief executive officer of the New York-based retailer, said in press release.
“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment,” she continued.
The five major components of the Polaris strategy are strengthen customer relationships, curating quality fashion, accelerating digital growth, optimising store portfolio and resetting cost base.
The company is focusing on building customer lifetime value, accelerating personalisation and monetisation programs and expanding its loyalty program. It is driving disciplined merchandise product category roles to be the top destination for the best brands, while balancing sales and margin.
The company has a scaled and growing digital business across its brands that generates more than $6 billion per year in sales. The macys.com headquarters will relocate from San Francisco to New York City, the heart of the fashion industry. This will allow for better coordination and increased collaboration and better access to Macy’s brand partners. The company will also expand its presence in the Atlanta area, which will serve as the primary technology hub for the company.
After completing a rigorous evaluation of its store portfolio, the company plans to close nearly 125 of its least productive stores over the next three years, including 30 stores that are in the process of closure now. Across the remaining store fleet, the company is adjusting its staffing with reductions in some stores and increases in others.
Macy’s will expand its growth treatment to the remaining store portfolio, including upgrading an additional 100 stores in 2020. The treatment includes improvements to the physical store, as well as investments in merchandising strategies, technology improvements, talent and local marketing.
The company is also testing a new store format, Market by Macy’s. This new format is smaller than an average Macy’s store and will be located off-mall in lifestyle centres.
Macy’s, Inc. is streamlining its organisation with a net reduction in its corporate and support function headcount of 9 per cent, or approximately 2,000 positions.
Fibre2Fashion News Desk (DS)
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