SWOT Analysis of Macy
Macy is a widely known company that represents its brand with the help of retail chain of departmental stores. It operates under two brand names, Macy and Bloomingdale, and delivers its products including furniture, jewelry, clothing, and footwear to forty-five states of the U.S. The business also provides online shipping service to the customers of numerous countries. Thus, the paper examines the operation of Macy with the help of SWOT analysis that is aimed at identifying its strong and weak aspects, opportunities, and threats which might significantly affect the company and help to eliminate existent problems.
The first stage of SWOT analysis is the identification of the company’s strong sides. Macy is a suitable choice for wealthy clients because it offers such fashion brands as Burberry, Christian Dior, and Armani (Kim, 2015). The excellence of the brand is comprised in its positioning as a store for selling items of the hottest fashion trends, which attracts the high-net-worth customers ready to spend a lot of money. A crucial factor also lies in the fact that Macy offers private brands that meet peculiar needs of the clients and provide them with the greatest value (Kim, 2015). The exclusiveness of these brands is proved by the collaboration with such well-known people as Sean Combs and Madonna who are associated only with popular and high-quality trade-names (Kim, 2015).
Another strength of Macy is included in its reduction of the expenses as it has at its disposal several stores in the best locations (O’Connell & Halzack, 2016). Besides, the company immediately closes the stores in case of identification of possible decrease of revenues and switches to the strategy that would bring more profit (O’Connell & Halzack, 2016). The stores offer localized product assortment that depends on the store placement and focuses on the preferences of the locals, which are then reflected in a style, color, size and fit of a specific store bringing good profits.
One more crucial stage of SWOT analysis is the study of the company’s weaknesses. The first weakness of the Macy is a big number of competitors among which are Amazon, Coat Factory, Bon Ton, Neiman Marcus, and Ross Stores (Kim, 2015). However, except for current competitors, the great threat to the company pose recently emerged companies that started to strengthen their positions in the market. For examples, Penney and Kohl reported about their second-quarter earnings; both companies made great strides in integrating their e-commerce and stores (Kim, 2015). Additionally, the companies renewed their own stores brands, which provided them with more pricing power, and thus, helped to attract numerous clients. Another example is T.J. Maxx which continues to grow squeezing Macy due to the effective development of more interesting variants of department store business (Kim, 2015).
The next weakness that should be taken in consideration is making clients use coupons for retail purchase, which most of them find inconvenient. However, the management of the company believes that the elimination of coupons would be a great mistake bringing a big loss to the company (Garcia, 2016). Clients say that such tactics only gives more restrictions to their existing coupons. For example, present coupon offers 26% off for $100 purchase but it can be used only in select sale and clearance apparel. Thus, a customer cannot buy other items in the store, which often irritates him or her (Garcia, 2016). The coupons are also invalid for buying cosmetics, perfumes, electronics, Last Act, Everyday Issue, and many others. Consequently, numerous clients consider the usage of coupons an annoying practice and change the brand.
To begin with, the analysis of the company showed that it closed more than 100 stores because most people started choosing online shopping, which holds huge potential for the company (Wallace, n.d.). Understanding this fact, the company began to focus on the establishment of mobile application for iPhone and decided to expand its staff with the aim of investing in new technology that would change commercial landscape (Wallace, n.d.).
Furthermore, an important issue for the company will be to study major retailers in order to adapt to the environment. The company also needs to orientate itself more on the mobile-enabled procurement platform that could allow completing the order and shopping online in general more easily. The application of mobile procurement solution will provide the opportunity to discover new vendors, attract talents, and integrate up-to-date technologies (Wallace, n.d.). Such approach will allow the company to meet the expectations of its customers as well as attract new investors. Thus, the application of a special mobile application for procurement can in the long run bring great revenues to the company.
Another significant opportunity of the business is constant development of retail innovations. Macy utilizes technological innovations that facilitate physical shopping for clients with the help of new digital installations (“Macy’s Leading the Way in Retail Innovation,” 2014). The company is focused on the expansion of its iBeacon technology as well as the creation of smart fitting rooms in several flagship stores. The management of the company also decided to make appropriate tests for further development of the Shopkick app (“Macy’s Leading the Way in Retail Innovation,” 2014) as formerly used technology was underwritten by iBeacon. Thus, the improvement of the technology will allow Macy to enhance mobile location-based option. Besides, such retail innovation will help to target its customers and identify their location within the store (“Macy’s Leading the Way in Retail Innovation,” 2014″>). Besides, the company should start collaborating with Apple in order to provide the Apple Pay to the clients, which would help to pilot an immediate delivery service as well as enhance buy online, pickup in store project.
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The most crucial external risks that the company faces are numerous competitors and new entrants to the retail market. For example, Nordstorrm plans to open 90 new Rack stores that are very productive when Macy still relies on the one-day sales approach to clear items (Kim, 2015). Besides, Nordstoms is closely tied to the Etsy and Sephora which form the new business model focused on offering specific products that will attract numerous customers. The example of new entrant is the biggest retailor of Japan – Uniglo that opens its operation in America and is going to collaborate with TESCO and Retail Group of the U.S., which can significantly affect revenues of Macy (Kim, 2015).
The development by the Amazon a loyalty program that might negatively influence the level of Macy’s income poses another threat to the business. Besides, the competitor launched Sunday shipping and other innovations in the market place that will attract clients. “Home” goods that are proposed by the JCPenny and Dillard also present a great jeopardy for Macy because this category generates 16% of Macy’s revenues (Kim, 2015).
According to the Chief Executive Officer of Macy Terry Lundgreb, the raise of minimal wage is also a serious threat that can significantly affect the revenues of the company. The man is sure that such phenomenon will result in shortening the number of jobs for Americans (Lutz, 2014). Consequently, this decrease will lead to the less potential customers. Lundren is strongly convinced that raising the minimum wage will also result in the increase of layoffs (Lutz, 2014). For example, in 2014, Macy eliminated 2500 jobs because of the raise of minimum salary that affected fast processing of orders and caused fall of revenues (Lutz, 2014). Besides, CEO is sure that such aspect will lead to the problems with the offset of expenses, which is a problematic issue for the company as well.
To summarize, the analysis of Macy showed that the company has numerous benefits, for example, selling exclusive brand clothes that both wealthy clients and customers with the lower income can afford. However, despite many advantages the company has some weaknesses that significantly impede its development and hinder Macy from having high profits. Thus, the company should pay special attention to the opportunities and threats that it faces, which further will help it to take an advantageous position in the market.