Executive Summary and Introduction

The retail industry is undergoing fundamental change as it relates to business operations. Advances in technology, product offerings, logistics, and data have all creating significant headwinds for incumbent retail players. From a technology perspective, the internet has provided consumers with much more pricing power then in prior business cycles. Consumers have many more options to cater to their demands. As such retailers have lost significant pricing power as it relates to product offerings. The advancement of technology has all be eliminated information asymmetry which allowed retailers to prosper for so long. In addition, as more competitors enter the market, they are no longer restricted by geographic and logistic boundaries (Agrawal, 2009).

Changing consumer shopping habits have also created large shifts in how products and services are delivered to consumers. Customers are now willing and much accepting of online orders. Advances in logistics have allowed companies such as amazon to deliver products within a single day in certain instances. The added convenience of not leaving the home creates a compelling value proposition of emerging online retailer. These trends were exacerbated during the recent COVID-19 pandemic as consumers quickly adopting online shopping trends to mitigate the impact of the virus on their health and wellbeing. During the pandemic online retail sales surged as consumer looked for efficient and low-cost solutions to their needs.

Due to these pressures, many incompetent and once powerful retailer operations have gone bankrupt. JC Penny, Sears, Neiman Marcus, Payless, GNC, and Brooks Brothers are but a few of the many casualties caused by traditional retailers inability to properly adapt in a changing retail environment. Likewise, many of these companies did not possess a sustainable competitive advantage that could allow them to compete. Retailers who have strong competitive advantages not only can better compete with online retailers, but in many instances flourish. For example, low cost producers such as Costco and Walmart have actually gained market share and are expanding to other markets overseas. Other retailers such as TJ Max, Ross, and Burlington Coat Factory occupy as unique niche that is difficult online retailers to dislodge. Still others have actually acquired emerging online retailers to better compete and gain product know how. Each of these strategies have been viable as they each leverage the retailers strength in a respective operations category. To survive, retailers are going to need to adopt many of these trends that are currently underway in the market and apply them to their current business operations.

As it relates to Macys the company has strong business element that will allow to better compete while also continuing to remain profitable. First, it has one of the most recognizable retail brands in the industry. Consumers often view the brand favorably relative to peers in the industry. Events such as the Macys Thanksgiving Day parade or the Macys Fourth of July Fireworks Show are both hallmarks of American tradition. The companies flag ship store in Herald Square, New York has become a tourist attraction and represents many of the best elements of American retail shopping. Likewise, the company benefits from extensive and highly competitive real estate portfolio that can be leverages in various ways to add value to shareholders. Currently the real estate portfolio is valued higher than the actual company itself as it relates to market capitalization. As such, the market is heavily discounting the store operations of Macys. All of these assets can be used to derive a strategy that can be beneficial for all stakeholders. In this instance, it will allow Macys to remain a small, nimbler and more competitive retailer. It also keeps retail employees...

…operations of the business. This will include both online and brick and mortal operations. This department will be heavily reduced as the company sales non-performing assets, downsizes its workforce and focuses on performing assets. The real estate department will be an entirely new department that is the focus of this strategic plan. Here, the real estate operations will focus on redevelopment opportunities designed to increase revenue and drive shareholder wealth. This department will look to partner through joint ventures to reduce risk and operate with minimal debt. The third division is the technology division. This division is designed to innovate, disrupt and alter the manner in which retail services are delivered. This division is designed to keep the overall company on the precipice of technology and the overall digital revenue. A portion of the cash flows form the retail and real estate divisions will be used to fund the technology and innovation department. The department will be responsible for creating an engaging online presence for Macys. It will also be responsible for looking for potential acquisition targets who are pioneers in a new and emerging field. The technology department will also look to develop technology, applications and other products in house that can be profitable for the business going forward. Here each department serves a purpose. First, the real estate department creates a stable cash flow mechanism by which future growth can be funded. The retail operations will be much smaller, but continue to service clients in the traditional manner that they have with help form the technology department. The technology department will look towards the future and help to identify areas that Macy can pioneer well before its competitors do. Through this method Macys, minimizes its changes of falling behind competitors in the future. Each department will have a separate…