Macy’s Department Store Repositioning

COMPLETE THE SITUATIONAL ANALYSIS OF THE TRADITIONAL DEPARTMENT STORE INDUSTRY OF MACY’S AS OF 2005

Sector analysis Strength of the threat

Potential competitors Category Specialist Stores (fashion: ZARA, H&M, The GAP, etc; household goods/housewares: Pier Import, Bath and Beyond)

Discounters (Wal-Mart, Target, etc)

Online stores

Very high:

• From 1992 to 2006 the weight of dept store on total market decreased from ~45% to ~20% (as per Exhibit 1).

• Low entrance barriers.

Rivalry among established company High-end General: Nordstrom, Lord and Taylor, etc

Same category: Dillard’s

Lower Middle: JCPenny, Sears, etc High:

• High rivalry

• Very fragmented and mature sector

Bargaining power of buyers Several customers with demographic segmentation High:

• Low customer loyalty

• Customers looks for new shopping experience

Bargaining power of suppliers N/A Low - N/A

Threats of potential substitutes Category Specialist Stores (ZARA, H&M, The GAP, etc)

Discounters (Wal-Mart, Target, etc)

Online stores Very high:

• Entrance of different competitors with different business models.

WHICH FACTORS IN THE EXTERNAL ENVIRONMENT COULD AFFECT THE SUCCESS OF MACY’S NEW STRATEGY – WHICH INTERNAL FACTORS COULD AFFECT THE SUCCESS AND REPOSITIONING STRATEGY: WHAT ARE ITS STRENGHTS AND WEAKNESSES

Strength Weakness

• Reduction of SG&A costs (consolidation of brand, advertising cost reduction, unification of management structure)

• Reduction of CoGS (optimization of purchasing)

• Positive Brand Image (and brands already known and well established)

• Prime Location

• Strong management (already experienced in consolidation activities) • Past Federated Department Store brands history (e.g. Chicago Marshall Fields)

• Macy’s customers used to have differentiated products

Opportunities Threat

• The department stores try to become more and more specialized for differencing the target

• New loyalty possibilities (Everyday values)

• Customers are in...