Macy’s operates within the highly competitive retail industry. While there are many retailers across the globe with different specializations, Macy’s focuses predominantly on men’s and women’s apparel, home accessories, and cosmetics.
The retail sector used to rely solely on physical stores, but with the rise of the internet and online shopping, companies have been forced to innovate to keep up with the popularity of e-commerce.
Macy’s has handled this transition successfully, boasting on its website, “our customers can shop how they live – anytime and through any channel.” It is this willingness to move with the times that has consolidated Macy’s position as an iconic American retail company.
Macy’s: An Overview
Macy’s is headquartered in New York, New York – which is also the location of its flagship store – and was founded in 1858. It operates over 700 stores across 45 states, as well as in Guam and Puerto Rico.
Across its three banners – Macy’s, Bloomingdale’s, and Bluemercury – it sells apparel for men, women, and children; cosmetics; home furnishings; and accessories. Although Macy’s flagship store in Herald Square no longer holds the title of the largest department store in the world, it is still the largest in the US.
The company operates in three key ways: in-store, through e-commerce, and on mobile. In 2020, Macy’s global net sales amounted to over $17 billion. This figure represents almost a 30% drop from the previous year’s revenue, $24.560 billion. However, this decrease was likely unavoidable due to the global pandemic.
Macy’s mission statement is “to be a retailer with the ability to see opportunity on the horizon and have a clear path for capitalizing on it.” If you are interested in reading more about companies’ values, we have compiled a list of the most powerful and enduring mission statements.
Macy’s Business Strategy
In 2020, Macy’s announced a new business strategy called “Polaris,” which intends to transform its omnichannel retail business.
The company aims to do this by focusing on areas of growth (particularly digital), as well as strengthening customer relationships, reducing costs, optimizing its store portfolio, and expanding assortments.
The Polaris revitalization strategy also includes the closure of 125 stores and 2,000 employees being laid off. Other efforts include experimental concept stores, corporate office downsizing, and an improved customer loyalty scheme.
Macy’s has had to adapt to the shift from in-store shopping to e-commerce relatively quickly; while some adjustment time can be expected, it has already proven itself more than capable of keeping up.
Consequently, it is expected that Macy’s will continue to thrive as a department store in the future. Executives within the company have, in recent years, expressed their confidence that the future is in digital sales; Forbes predicts that Macy’s is on track to become a digital retailer within three years.
Macy’s has a markup revenue model and a mass-market business model.
Macy’s SWOT Analysis
A SWOT analysis assesses the strengths, weaknesses, opportunities, and threats to a business. It is cost-effective and extremely useful for generating business insights.
Strengths
Branding
Macy’s brand is recognizable to many people throughout the world, although the company operates predominantly in the US. Quality products and fantastic customer service have contributed to Macy’s becoming a household name.
Marketing
In 2019 Macy’s spent over a billion dollars in marketing, and its successful advertising campaigns play a considerable role in its success.
This year, the company also announced a new media network that generates $35 million annually. Clearly, despite Macy’s high expenditure on advertising, it is ultimately a worthwhile pursuit.
Omnichannel presence
Many traditional department stores that rely on in-person sales have begun to struggle due to the rise of online shopping.
However, Macy’s has seen this as an opportunity to expand its business by moving into e-commerce. Customers can visit a store in person or shop on their laptop or mobile device, and it is this accessibility makes them more likely to return to the brand in the future.
Weaknesses
Dependence on the US market
While other retail companies operate internationally, Macy’s is almost entirely dependent on the US market. Not only does this put the company at the mercy of one economy and the political climate of one country, but it also limits Macy’s customer reach, impacting the potential for sales growth.
Decreasing market share
The retail sector is becoming increasingly competitive – particularly in the e-commerce space – and as a result, Macy’s is losing its market share.
Technology
Many of Macy’s competitors have used the latest technologies to encourage business growth and connect with more customers, but this is one area where Macy’s lags behind.
Opportunities
Expansion
While Macy’s ships to over 200 countries worldwide, it is still based in the US and is perceived as a typically American brand. However, the company has a lot of potential in terms of branching into new markets. This could increase its customer base, lower costs and increase its market share.
Diversification
Competitors like Amazon have achieved so much because of their diverse range of products. Macy’s has the opportunity to expand its product lines and move into new retail categories.
Threats
Lack of innovation
Many of Macy’s recent product developments have been in response to its competitors; in this way, Macy’s is somewhat behind the times. To be an industry leader, it must innovate frequently and be ahead of trends.
Economic conditions
Macy’s is very much at the mercy of the US economy. Any slight changes have the potential to directly impact the company. Coming out of the Covid-19 pandemic, the economic situation is even more uncertain; governments and consumers alike are likely to be cautious with spending.
New Companies
Large retail chains entering the market have the potential to decrease Macy’s market share and decrease profitability. These chains pose even more of a threat if they demonstrate impressive innovations and use new technologies to their advantage.
Macy’s Competitor Analysis
The retail industry is highly competitive, and the landscape is constantly shifting. To stay on top, companies must innovate, evolve, and adapt. This is particularly true when it comes to taking advantage of technological advances and consumer trends.
Below you can find a brief analysis of Macy’s key competitors.
Amazon
Amazon.com, Inc., is an American multinational technology company headquartered in Seattle, Washington. It was founded by Jeff Bezos in 1994 and offers e-commerce, digital streaming, artificial intelligence, and cloud computing.
Amazon’s retail offering functions in two ways: selling products purchased for resale through third-party sellers and manufacturing and selling its own electronic devices like Kindle.
Amazon’s total revenue in 2020 was an incredible $386 billion. The Covid-19 pandemic played a role in this impressive figure; many people were forced to shop online due to personal safety concerns and government restrictions.
Since Amazon offers an almost unparalleled range of products – over 12 million – and has next-day delivery options available through Prime, it was the go-to for millions of shoppers.
Currently, Amazon is the 4th most prominent company in the whole world. Part of its success can be attributed to the tailored services for local people, whose needs it endeavors to understand and accommodate.
As a company, Amazon is both innovative and increasingly environmentally conscious. It has pledged to have over 100,000 electric vans delivering parcels by 2039.
eBay
eBay, Inc. is an American multinational e-commerce company headquartered in San Jose, California. It was founded in 1995, its primary purpose being the facilitation of consumer-to-consumer and business-to-consumer sales. It is known as the world’s largest marketplace, serving over 190 markets across the globe.
eBay ranks 276 on the Fortune 500 list, a significant improvement from its 2020 ranking of 295. Indeed, by the end of 2020, eBay managed to acquire 11 million new customers, bringing the number of active buyers on its site up to 185 million.
Like many e-commerce companies, eBay saw its 2020 growth peak in the second quarter, the height of Covid-19 related restrictions. Growth is likely to continue as more people come to realize the ease of online shopping.
In the past few years, online scams have rapidly increased, and eBay, in particular, has seen a lot of activity from scammers sending emails in the name of the company asking for people’s bank and account details. These scams have certainly impacted people’s trust in the company, the full extent of which remains to be seen in 2022.
Taking advantage of new technologies is crucial for the ongoing success of online retailers, and eBay has certainly done this by creating its own app. In 2020, it was downloaded 50 million times.
Walmart
Every week over 200 million customers and members visit Walmart stores and e-commerce sites in 24 countries worldwide.
The company was founded in 1962 and is headquartered in Bentonville, Arkansas. It is a global retailer selling a range of merchandise for low prices, including family apparel, health and beauty products, toys, sporting goods, electronics, and much more.
In 2020, Walmart’s revenue hit an impressive $559 billion. It is most well known for one-stop shopping and its commitment to everyday low costs (EDLC). However, its business strategy has been revolutionized by same-day delivery.
One of the defining features of Walmart’s success is the company’s willingness to invest in new technology that can streamline its digital infrastructure.
Walmart’s business model consists of three key components: Walmart US (64% of net sales), Walmart International (24% of net sales), and Sam’s Club (12% of net sales). Each component has multiple formats, including hypermarkets, e-commerce, supermarkets, warehouse clubs, and supercenters.
In 2021, Walmart announced a new name for its media business, Walmart Connect, to reflect the company’s strategic vision. This demand-side platform (DSP) emphasizes Walmart’s commitment to connecting brands and customers at scale using innovative ad solutions.
Wayfair
Wayfair was founded in 2002 and is headquartered in Boston, Massachusetts, and Berlin, Germany. It is a global e-commerce company specializing in furniture and home goods.
As of June 2021, Wayfair’s net revenue for the previous 12 months was $14.8 billion. It employs more than 16,000 people throughout North America and Europe, offering 22 million products to over 31 million active customers.
Wayfair claims on its website, “we are here to help everyone, anywhere create their feeling of home,” indicating a truly global vision. Here are some of the most powerful and enduring mission statements from companies around the world.
The company’s business strategy focuses on providing a wide selection of products to its large customer base using a ‘drop ship’ revenue model, which involves Wayfair acting as a marketplace. There are positives and negatives to this model; while it has helped the company to scale, it also puts pressure on Wayfair’s margins.
While Wayfair is good at acquiring customers, it spends a significant amount of money doing so. A 2017 study found that the company paid approximately $69 to acquire a customer but would lose $10 on that same customer over time.
Surprisingly, Wayfair did not turn a profit until 2020, but the continued growth of e-commerce should allow the company to stay profitable into the future.
Nordstrom
Nordstrom, Inc. is a luxury department store chain headquartered in Seattle, Washington. Founded in 1901, it began life as a shoe store and eventually transformed into a full-line retailer. The company has 100 stores and 248 Nordstrom rack locations in 40 US states and Canada.
Nordstrom’s annual revenue for 2020 was $15.524 billion, a 2.21% decline from 2019. While many retailers benefited from e-commerce growth due to the global pandemic, Nordstrom may not have seen a positive increase in sales due to economic uncertainties preventing consumers from purchasing luxury products and merchandise.
One of Nordstrom’s strengths is its diversified portfolio, including Nordstrom Rack (discount shops), Trunk Club (subscription box service), Haute Look, and Bevy Up. Each of these helps the company accommodate all the needs of a modern shopper in the digital age.
In addition to its impressive portfolio, Nordstrom has also positioned itself well amongst the competition by partnering with strategic brands like Reformation and Glossier.
Crucially, Nordstrom has been ahead of the game when it comes to technological innovations. For example, it has opened a flagship store in New York where customers are able to try on clothes virtually. It also offers free shipping without a minimum spend.
Though small, these features help to reinforce the kind of streamlined luxury experience one would expect from a brand such as Nordstrom.
Kohl’s
Kohl’s is an American department store retail chain founded in 1962 and headquartered in Menomonee Falls, Wisconsin. It has stores in every US state apart from Hawaii and employs over 110,000 people. Kohl’s department stores are family-oriented, offering a range of merchandise, including apparel, footwear, accessories, home products, and beauty products.
In 2020, Kohl’s net revenue amounted to $15.03 billion, which was a 20% decrease from the previous year.
The company has extremely strong merchandising with a consistent range of products across different stores. Furthermore, its private brands like Apt. 9 and Croft & Barrow are well established in the American market.
One area in which Kohl’s falls short compared to some of its competitors is visibility within the international market. This could provide an area of lucrative growth for the company should it decide to operate in other countries and emerging economies.
As of August 19, 2021, Kohl’s beat its quarterly sales estimates, with net sales rising to $4.22 billion from $3.21 billion in the second quarter, which ended July 31st.
How Macy’s Stands Out
The primary reason that Macy’s stands out is down to its image as an iconic American brand. The company has a long history and has, in many ways, become synonymous with the American way of life.
That being said, Macy’s is not stuck in its old ways, refusing to move forward with the times. On the contrary, the company has demonstrated the ability to seamlessly integrate physical stores with an exceptional online e-commerce experience. By continuing to utilize technological advances, Macy’s can maintain its iconic status while forging a new image as a modern and desirable brand.
Frequently Asked Questions
Question: Which is the Largest Brick-and-Mortar Retail Company in the World?
Answer: Walmart is the world’s largest retailer, with annual revenue of $559 billion in 2020. It has achieved this by positioning itself as an internationally recognizable and desirable brand with a wide range of merchandise at everyday low costs.
Question: Which is the Largest Department Store in America?
Answer: Macy’s won the title of the largest department store in America in 2020, with sales amounting to $17.35 billion. Whether it will retain this position in 2021 remains to be seen. It was followed closely by Kohls with $15 billion in sales.
Question: How Has Retail Been Affected by the Covid-19 Pandemic?
Answer: The global pandemic has rapidly accelerated the move to e-commerce, forcing many retailers to reassess the viability of their physical stores.
Retailers with strong online platforms and digital services have seen growth due to government restrictions largely preventing in-person shopping. However, those who rely on physical stores have seen forced closures and plummeting sales.
To succeed in the future, retailers will need to embrace the switch to digital commerce.
Question: What is Macy’s Competitive Advantage?
Answer: Macy’s CEO claims: “Our competitive advantage is the ability to combine the human touch in our physical stores with cutting-edge technology.”
However, it could also be argued that another prominent advantage stems from Macy’s strong branding and position as a household name.
Question: Who is Macy’s Biggest Competitor?
Answer: Macy’s biggest retail competitor is Walmart, while the biggest department store competitor is Kohl’s.
However, all of the companies listed within this analysis have their own set of unique offerings, strengths, and weaknesses; to continue to grow and maintain an advantage, Macy’s must closely monitor the activity of all rival brands.
Question: Why Choose Macy’s?
Answer: Macy’s has shown that it is an exciting and innovative omnichannel retailer which puts the customer first. With this iconic brand name comes reliability, quality, and excellent customer service.
The company’s Polaris strategy has a strong focus on customer relationships, and this, combined with affordable prices, makes Macy’s a smart retail choice for any consumer.
Conclusion
Though Macy’s has faced doubts about its ability to adapt to the new digital age of e-commerce, it has proven in recent years that it will continue to put customers first, whether in-store or online.
Department stores, in general, are facing a make-or-break situation in the post-covid world, where they must either move with the times or be left behind.
Fewer people are choosing to shop in person, with many relishing the ease of online browsing and fast delivery straight to your door. Thus, e-commerce will play a crucial role in the continued success of department stores like Macy’s.
Here are a few similar companies to read about:
- Home Depot 5 Biggest Competitors.
- All You Need to Know About Amazon.
- How Does Ikea Stand Out?
- Amazon Flywheel Explained.
- Amazon CEO Jeff Bezos Bio.
Research:
Macy’s SWOT Analysis | Business Strategy Hubhttps://bstrategyhub.com › Macys-swot-analysis
https://www.swotandpestle.com/macys/
https://www.macysinc.com/investors/company-information
https://finance.yahoo.com/quote/M/profile/
- OpenAI Competitors Analysis - April 11, 2023
- How Does Chime Make Money? - March 20, 2023
- Insurance Value Chain Explained - January 31, 2023