Earlier this week, the iconic American department store chain Macy’s announced its plans to shut over 125 stores and cut down over 2000 jobs. The company has shut down its headquarters in Cincinnati and tech offices in San Francisco. These changes are a result of massive restructuring exercise underway at Macy’s to reduce their burden and optimize their footprint by focusing on small format stores and exiting the struggling mall stores.
The company mentioned that majority of about 500 employees in company’s Ohio HQ will be moved to Springdale, and the company will add about 600 new jobs in its call center at Mason. The announcement regarding job cuts and trimming down operations by exiting unprofitable locations came just before a meeting with investors on February 5, where the company was expected to present its plan for next few years to get the business on track. These changes are expected to generate annual gross savings to the extent of $1.5 billion by 2022.
The restructuring plan is called – Polaris Strategy, and is focused on stabilizing profitability and position the company for growth.
In the company’s statement, CEO Jeffrey Gennette, said –
“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work.”
“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.”
“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.”
The company has not been quick to respond to changing demands and expectations of the market and changing purchase habits of shoppers. The company has lost market share in its core categories –fashion and apparels and have been under pressure for profits, as most shoppers end up buying at online retailers.
One of the key components of Polaris strategy, is to Accelerate Digital Growth, where in the company will invest in delivering a superior fashion experience and build financial profitability. Towards this macys.com HQ will relocate from San Francisco to New York City. As per the company statement, “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. This includes adding positions to its current Johns Creek, GA, facility, as well as opening an office in Atlanta.”
Amongst its other priorities as per the plan, the company plans to focus on a new store format, Market by Macy’s, supply chain modernization, and consolidation of campuses.
Macy’s was founded in 1858 by Rowland Hussey Macy, and became a division of the Cincinnati-based Federated Department Stores in 1994, as a Bloomingdale’s department store chain affiliate. As of 2015, Macy’s was the largest U.S. department store company by retail sales. The company operates over 800 department and specialty stores under the Macy’s, Bloomingdale’s and Bluemercury brands.