Like many other traditional retailers, Macy’s has been losing money in recent years due to online shopping. In an effort to boost sales and improve profitability, the chain of more than 600 U.S. department stores revealed its restructuring plan on Tuesday, February 26.
“We’re operating with speed,” Macy’s CEO Jeff Gennette said about the company’s latest strategies that will, hopefully, save the company $100 million annually, as reported by CNBC.
These initiatives were announced as Macy’s reported a drop in profits and total sales during the crucial fourth quarter of 2018.
One part of the new plan that is supposed to directly appeal to customers is the company’s goal of opening 45 additional Macy’s Backstage shops within existing Macy’s locations. This special section of the store, similar to TJ Maxx and Nordstrom Rack, sells heavily discounted merchandise. In 2018, 120 Backstage shops were opened and sales in those stores were up 5 percent on average.
The second area that will excite consumers is Macy’s continued efforts to upgrade its app in order to make shopping on mobile devices a smoother experience. The company said that purchases made via mobile devices is the fastest-growing channel for sales right now.
The company will expand its “Growth50” plan in which some of the more profitable Macy’s stores have been receiving lighting, fixture, and other cosmetic upgrades, and a better assortment of merchandise. Approximately 100 new locations will be improved in 2019 as part of this initiative.
As for merchandise, Macy’s will be working with some of its top vendors to make sure that hot and trendy items are available for sale at a faster pace than in the past. Additionally, Macy’s will put an extra focus on four categories that it believes will be most profitable: dresses, fine jewelry, women’s footwear, and beauty.
Behind the scenes, Macy’s will be cutting about 100 upper management positions, starting at the vice president level.
But will any of these efforts help revive Macy’s?
“The problem for Macy’s is that if it cannot deliver a strong set of numbers against the backdrop of a good consumer economy, its fortunes for the upcoming year — when economic growth will cool — do not look good. In our view, this underlines the fact that Macy’s has still not successfully created a true destination status and has still not got to grips with many of the issues plaguing its stores,” stated Neil Saunders, the managing director of GlobalData Retail, in a report, according to the Associated Press.