1.

Macy's undertook the dramatic overhaul of its marketing strategy for focusing on customer
retention. The company wants to give more attention to its existing customers and their buying
behaviour so that they can encourage their customer loyalty towards Macy's .

2. It is important for Macy's to use the knowledge it had gained about its target customers when
making decisions about its merchandise assortment for planning its merchandise collection as per
the preferences of its consumers. It used consumer data and insights to identify buying patterns
and consumer preferences. Implementation of the findings will increase its sales, customer
satisfaction and better stock turnover rates.

3. As a future campaign I would suggest that Macy's encourage and support its employees by
identifying and recognising their performance. It will encourage and motivate its staff and share
the stories of their employees contribution to the organisation in different ways. It will build
employee loyalty and improving morale of its employees in serving customers. It will benefit the
cause of community development, commitment towards organisation and customers, team
building, employee loyalty and satisfaction.

The off-price retail model relies on the purchase of over-produced, or excess, branded goods at a

lower price, thus being able to sell to consumers at a discount compared to other stores which
purchased an initial run. ... Among the largest retailers of this type are TJX Companies and Ross
Stores.

Threats of New Entrants

New entrants in Department Stores brings innovation, new ways of doing things and put pressure
on Macy's, Inc. through lower pricing strategy, reducing  costs, and providing new value
propositions to the customers. Macy's, Inc. has to manage all these challenges and build effective
barriers to safeguard its competitive edge.

How Macy's, Inc. can tackle the Threats of New Entrants

 By innovating new products and services. New products not only brings new customers
to the fold but also give old customer a reason to buy Macy's, Inc. ‘s products.
 By building economies of scale so that it can lower the fixed cost per unit. 
 Building capacities and spending money on research and development. New entrants are
less likely to enter a dynamic industry where the established players such as Macy's, Inc.
keep defining the standards regularly. It significantly reduces the window of
extraordinary profits for the new firms thus discourage new players in the industry.

Bargaining Power of Suppliers

All most all the companies in the Department Stores industry buy their raw material from
numerous suppliers. Suppliers in dominant position can decrease the margins Macy's, Inc. can
earn in the market. Powerful suppliers in Services sector use their negotiating power to extract
higher prices from the firms in Department Stores field. The overall impact of higher supplier
bargaining power is that it lowers the overall profitability of Department Stores.

How Macy's, Inc. can tackle Bargaining Power of the Suppliers

 By building efficient supply chain with multiple suppliers.

 By experimenting with product designs using different materials so that if the prices go
up of one raw material then company can shift to another.
 Developing dedicated suppliers whose business depends upon the firm. One of the
lessons Macy's, Inc. can learn from Wal-Mart and Nike is how these companies
developed third party manufacturers whose business solely depends on them thus
creating a scenario where these third party manufacturers have significantly less
bargaining power compare to Wal-Mart and Nike.

Bargaining Power of Buyers

Buyers are often a demanding lot. They want to buy the best offerings available by paying the
minimum price as possible. This put pressure on Macy's, Inc. profitability in the long run. The
smaller and more powerful the customer base is of Macy's, Inc. the higher the bargaining power
of the customers and higher their ability to seek increasing discounts and offers.

How Macy's, Inc. can tackle the Bargaining Power of Buyers

 By building a large base of customers. This will be helpful in two ways. It will reduce the
bargaining power of the buyers plus it will provide an opportunity to the firm to
streamline its sales and production process.
 By rapidly innovating new products. Customers often seek discounts and offerings on
established products so if Macy's, Inc. keep on coming up with new products then it can
limit the bargaining power of buyers.
 New products will also reduce the defection of existing customers of Macy's, Inc. to its
competitors.
Threats of Substitute Products or Services

When a new product or service meets a similar customer needs in different ways, industry
profitability suffers. For example services like Dropbox and Google Drive are substitute to
storage hardware drives. The threat of a substitute product or service is high if it offers a value
proposition that is uniquely different from present offerings of the industry.

How Macy's, Inc. can tackle the Treat of Substitute Products / Services

 By being service oriented rather than just product oriented.

 By understanding the core need of the customer rather than what the customer is buying.
 By increasing the switching cost for the customers.
Rivalry among the Existing Competitors

If the rivalry among the existing players in an industry is intense then it will drive down prices
and decrease the overall profitability of the industry. Macy's, Inc. operates in a very competitive
Department Stores industry. This competition does take toll on the overall long term profitability
of the organization.

How Macy's, Inc. can tackle Intense Rivalry among the Existing Competitors in
Department Stores industry

 By building a sustainable differentiation

 By building scale so that it can compete better
 Collaborating with competitors to increase the market size rather than just competing for
small market.
Implications of Porter Five Forces on Macy's, Inc.

By analyzing all the five competitive forces Macy's, Inc. strategists can gain a complete picture
of what impacts the profitability of the organization in Department Stores industry. They can
identify game changing trends early on and can swiftly respond to exploit the emerging
opportunity. By understanding the Porter Five Forces in great detail Macy's, Inc. 's managers can
shape those forces in their favour,

it is early innings, but I feel good about the progress that we’ve made, the focus and energy of
the team, and the positive response our customers have to our strategy,” Gennette said on a
recent earnings call with analysts.

The cornerstones of the strategy is investments in experience, mobility, and growing digital
sales. “Our recipe for success is healthy stores, a robust e-commerce business and a powerful
mobile app,”Gennette said.

The retailer’s investment in its mobile prowess, especially its mobile app is paying dividends
with sales up more than 50% on the app in the first half of the year. 

“We're going to pass $1 billion in mobile sales in 2018,” Gennette said. “But it’s much more
than that. The customer really uses [mobile] for understanding the brand, checking out customer
reviews, navigating the store, mobile checkout. The mobile app is a real gateway for us, and
we're going to continue to strengthen that.”

In addition to its mobility investments, Macy’s is focused on five key strategic initiatives as it
looks to rebound in the struggling department store segment:
1 Loyalty Program
Macy’s has redesigned its Star Rewards loyalty program and opened it up to all customers,
regardless of how they pay for their purchases; previously they needed to use their branded
Macy’s card to receive any loyalty benefits.

The benefits of the tiered program include:

 Bronze –  All customers can enjoy star money days, perks and offers, and a birthday
surprise.
 Silver – Customers who spend up to $499 annually at Macy’s with their Macy’s credit
card will receive 25% off any day they choose with Star Pass coupons.
 Gold – With $500 to $1,199 annual spend, customers receive 25% off any day they
choose with Star Pass coupons and free shipping on all Macy’s purchases when they use
a Macy’s card.
 Platinum – With $1,200 or more annual spend on a Macy’s credit card, customers receive
25% off any day they choose with Star Pass coupons, free shipping on all Macy’s
purchases, and 5% back in rewards on every Macy’s merchandise purchase in-store and
online.
“We’re very pleased with the loyalty program,” Gennette said. “There has been a meaningful
positive change in behavior at the platinum tier, which are our best customers. And at the bronze
tier level, we now have more than one million new members. These are new customers to
Macy's. Within the loyalty program, our best customers are spending more. And new customers
are coming into the program. We will continue to expand and refine the Star Rewards program.”

#2 Backstage Expansion
Macy’s is expanding its off-price brand Backstage. It opened 47 new Backstage stores in the
second quarter for a total of 65 openings in the first half of the year. The retailer is on pace to
open 120 discount locations this calendar year.

“Opening a Backstage store within a Macy's is a significant operation, since we need to relocate
departments to carve out space and then construct and merchandise Backstage,” Gennette said.
“This process creates a ripple effect in the store and to date the teams have been handling it very
well with minimal disruptions. Adding backstage makes existing stores more productive, gives
our customers an exciting new experience, and will bring new customers into the brand.” 

#3 Expanded Assortment
Macy’s is expanding its online assortment by partnering with vendors who will handle
fulfillment. The new system is similar to the marketplace model used my many retailers across
the industry. The ongoing merchandising expansion strategy is set to go live before the holiday
shopping season. The assortment increase will include Macy’s well-known brands as well as
some new brands and categories designed to connect with a greater customer segment.

“We’re almost doubling the amount of SKUs that we have in our inventory,”
Gennette said. “That’s a lot of sales that we’re banking on that’s going to be digital, that’s going
to be fulfilled by a vendor. We want to own the inventory until we consummate the sale.”
In addition to its third party merchandising strategy, Macy’s is relying on analytics to pinpoint
shopper needs and tailor its offerings to meet demand. Last year the department store chain
consolidated analytics into one center of excellence that serves the entire business. The analytics
center of excellence is focused on pricing, POS discounts, markdowns, and discovering and
acting on customer demand.

“We’re in the early innings of this, but we have appetites to continue to use science really
married with the art of a retail fashion business,” said Gennette. “[A mixture of] art and science
is what our success formula is going to be at both Bloomingdale's and Macy's.”

#4 Store Fulfillment
Macy’s is expanding its in-store pickup program, both its buy online ship to store initiative and
its buy online pickup in-store program. Buy online pickup in-store has been expanded to 50
stores and will be rolled out to most of the chain by the end of the third quarter.

In addition to scaling the program, Macy’s is refining the service with a focus on an improved
customer experience. The retailer will be introducing At Your Service stations in every store to
make pickup quick and seamless for shoppers.  

#5 Growth50
The retailer’s Growth50 initiative is the implementation of in-store enhancements at 50 stores
throughout the chain based on success from its Woodbridge Township, NJ test location.

“Our Growth50 stores are performing as we had expected and leave the improved trend in brick-
and-mortar in the first half of the year,” said Gennette. “We also see an outside improvement in
customer satisfaction scores in the Growth50, which tells us that our customers are noticing and
appreciating the changes that we're making.”

Macy’s Growth50 strategy focuses on the five Ps: product, presentation, process, promotion and
people. Year-to-date net promoter scores of the Growth50 stores are up almost 10 points