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Friday, January 9, 2015

Macy's, Continues Evolution with Changing Consumer Landscape

Merchandising and marketing to be restructured for single omnichannel view of business; Store and field organization adjustments supporting M.O.M. strategies; $140 million in savings to be reinvested primarily in technology, talent and business development.

Macy's, Inc. yesterday announced a series of initiatives to evolve its business model and invest in continued growth opportunities as consumers change the way they shop.  Actions include a restructuring of merchandising and marketing functions at Macy's and Bloomingdale's consistent with the company's omnichannel approach to retailing, as well as a series of adjustments to its field and store operations to increase productivity and efficiency.

With changes being announced yesterday, Macy's, Inc. will be increasing its workforce in some functions and locations while decreasing in others so all of the company's resources can be deployed for maximum results. In total, the Macy's, Inc. workforce is expected to remain at a level of approximately 175,000 associates.

Restructuring in Merchandising/Marketing:

Both Macy's and Bloomingdale's are restructuring their respective central merchandising and marketing functions so each brand can develop and present its assortments seamlessly across channels and provide a single omnichannel view in all product categories. Going forward, one unified merchandising and marketing organization - a hybrid of store and online buying - will support the entire Macy's business to encourage both store and digital growth. The same is true at Bloomingdale's. Previously, store and online assortments were bought and marketed by separate organizations at Macy's and at Bloomingdale's. These changes support continued growth and an enhanced shopping experience online and via mobile, as well as in stores. 

Simultaneously, Macy's will make selected changes to its merchandising-related functions in local districts (administrative grouping of Macy's stores) around the country as it continues to improve its ability to localize assortments by size, color, fabric weight, style, fit, category and brand. The company will discontinue district planner positions and reinvest in new regional teams devoted to specific themes of merchandise localization. These teams will intensify Macy's successful warm-weather strategies, as well as address topics such as meeting the needs of more traditional customers who live in northern climate zones, and better understand and support the diverse needs of multicultural customers. Macy's field team will continue to represent a significant competitive advantage in reacting quickly to changes in customer demand and in gaining market share.
These changes in merchandising and marketing are expected to affect approximately 115 associates in Macy's and Bloomingdale's central offices in New York City, as well as about 150 associates in local markets nationwide. The company is working to place as many affected associates as possible in other open positions.
Adjustments in Stores/Field
Macy's and Bloomingdale's are adjusting certain aspects of store and field operations and refocusing the staffing in each store location to facilitate growth, increase productivity and improve efficiency. Selling service and support is being modified to match business opportunity in each department. An average of two to three associates will be affected in each of Macy's and Bloomingdale's approximately 830 stores (out of an average workforce of approximately 150 associates in each store), for a total of about 2,200 affected associates nationwide. The company is working to place as many affected associates as possible in other open positions.
Also, two existing Macy's stores districts are being merged into nearby districts - thus reducing the ongoing number of stores districts to 58 from the current 60.
Growth Investments Planned for 2015
The company will reinvest savings from merchandising, marketing, store and field initiatives so it can continue to invest for growth as it focuses its resources and molds its business model around emerging customer preferences. Plans for 2015 include:
  • Creating a team within the company to explore potential opportunities for a Macy's off-price business. While this exploration is in its early stages, the company believes that Macy's omnichannel infrastructure and insight could lead to innovative ways to deliver value to additional segments of the customer marketplace.

  • Continued progress in digital retailing, including further developing the technology, speed and customer experience of macys.com and bloomingdales.com as they are accessed via desktop, smartphones, tablets and apps. In 2015, Macy's is expected to grow its San Francisco-based digital technology organization by hiring more than 150 people.
  • Advancements in business systems and information technology, including security infrastructure, to deliver the information and functionality required to support a growing Omnichannel business.
  • Increasing direct-to-consumer fulfillment capacity in every full-line Macy's and Bloomingdale's store and at the five existing dedicated fulfillment centers located in Arizona, California, Connecticut, Tennessee and West Virginia. In addition, as many as 1,500 new year-round and seasonal associates will be hired this year at a new 1.3 million-square-foot direct-to-consumer fulfillment center now being built in Tulsa County, OK. Initial operations at the Tulsa facility are expected to begin in April 2015, with a total workforce of more than 2,500 associates (1,500 year-round associates and more than 1,000 holiday seasonal associates) expected in future years as the fulfillment center reaches full capacity.
  • Opening new Macy's, Bloomingdale's and Bloomingdale's Outlet stores as opportunities arise in new and existing markets. New stores to be opened in fall 2015, as previously announced, include a Macy's in Ponce, PR, which will employ about 275 associates, as well as a new Bloomingdale's in Honolulu, with an expected workforce of 250 associates. 
Store Closings/Openings

The company announced two new stores yesterday:
  • A three-story Bloomingdale's of 150,000 square feet will be added in an expansion of Westfield Valley Fair Shopping Center in San Jose, CA. The all-new Bloomingdale's store is expected to open in fall 2017 and employ an estimated 250 associates. Westfield Valley Fair's current anchors include a Macy's women's store, a Macy's men's/home store and a Nordstrom. This will be Bloomingdale's third store in northern California, joining Westfield San Francisco Centre in downtown San Francisco (opened in 2006) and Stanford Shopping Center in Palo Alto (originally opened in 1996 with a new replacement store opened in October 2014).
  • Macy's will build a new 155,000-square-foot store on two levels to replace its existing 136,000-square-foot Westfield Century City location in Los Angeles, CA, which was opened in 1976. The existing Macy's will be closed in January 2016 and razed to accommodate new development in the mall. The all-new Macy's, expected to open in November 2016, will be built in a highly visible location along Santa Monica Boulevard. Westfield Century City also includes an existing Bloomingdale's store which will be completely remodeled in 2016 and connected to new development in the mall.
Seven other new Macy's and Bloomingdale's stores are currently planned and/or under construction, as previously announced.
  • New Macy's stores will be opening in:
    • Plaza Del Caribe, Ponce, PR (150,000 square feet; to open in fall 2015; approximately 275 associates);
    • Ka Makana Ali'i, Kapolei, HI (103,000 square feet; to open in fall 2016; approximately 180 associates).
    • Mall at Miami Worldcenter, Miami, FL (195,000 square feet; to open in fall 2017; approximately 150 associates).
  • New Bloomingdale's stores will be opening in:
    • Ala Moana, Honolulu, HI (167,000 square feet; to open in fall 2015; approximately 250 associates);
    • Mall at Miami Worldcenter, Miami, FL (120,000 square feet; to open in fall 2017; approximately 225 associates).
In addition, new Macy's and Bloomingdale's stores are planned to open in Al Maryah Central in Abu Dhabi, United Arab Emirates, in 2018 under license agreements with Al Tayer Group.

The company also is announcing that it will close the following 14 Macy's stores (out of a current total of about 790 Macy's stores) in early spring 2015. Final clearance sales will begin on Monday, Jan. 12 and run for between eight to 12 weeks.

  • Metro Center, Phoenix, AZ (107,000 square feet; opened in 1973; 88 associates);
  • Cupertino Square Mall, Cupertino, CA (177,000 square feet; opened in 1997; 111 associates);
  • Promenade (main store), Woodland Hills, CA (192,000 square feet; opened in 1993; 112 associates);
  • Promenade (furniture gallery), Woodland Hills, CA (81,000 square feet; opened in 1993; 19 associates);
  • Gulf View Square, Port Richey, FL (84,000 square feet; opened in 1981; 78 associates);
  • Northland Center, Southfield, MI (504,000 square feet; opened in 1954; 170 associates);
  • Wendover, Greensboro, NC (141,000 square feet; opened in 2002; 83 associates);
  • Ledgewood Mall, Ledgewood, NJ (73,000 square feet; opened in 1994; 79 associates);
  • ShoppingTown Mall, DeWitt, NY (120,000 square feet; opened in 1993; 94 associates);
  • Rotterdam Square, Schenectady, NY (120,000 square feet; opened in 1995; 98 associates);
  • Kingsdale Shopping Center, Columbus, OH (108,000 square feet; opened in 1970; 115 associates);
  • Richmond Town Square, Richmond Heights, OH (165,000 square feet; opened in 1998; 105 associates);
  • Upper Valley Mall, Springfield, OH (156,000 square feet; opened in 1971; 79 associates);
  • Southland Mall, Memphis, TN (150,000 square feet; opened in 1966; 112 associates).
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