Unit VIII pt3 BPS

Enablers

Challenges

Internal

STRENGTHS:

i. Polaris strategy is designed to enhance growth in the company (Macy's, Inc., 2020).

ii. Flexibility- pivoted quickly when stores closed, focusing on digital properties hence absorbing additional demand online and driving sales (Macy's, Inc., 2020).

iii. Strengthened relationship between online and off-line through Omnichannel experience.

iv. Improved product assortment, product mix and deployment of data and data analytics.

v. Healthy liquidity was demonstrated by the organization end year with $1.7billion cash and $3billion untapped capacity in revolving asset-based facilities (Macy’s, Inc., 2020).

vi. Addition of 1000 brands to meet emerging demand.

vii. Deepened customer engagement through hyper-personalized loyalty system, communication and personalized experiences which has improved customer value.

viii. Provided a modern and frictionless digital shopping experience.

ix. Convenient delivery and return experience that is fully connected to the stores.

x. Supports professional growth and development of the employees resulting in the improvement of employees ‘morale.

xi. Many suppliers, and good relationships with suppliers eliminating supplier bargaining power.

xii. The Company’s stores are located in premier locations.

xiii. The company promotes diversity and inclusion, committing to full realization through the MOSAIC program.

xiv. Strong security systems and safeguards to enhance data protection.

WEAKNESSES:

i. Poor risk management structures were exhibited by the close of stores during the Covid-19 outbreak.

ii. Net sales have declined over the last three years, $24, 971, $24,560 and $17,346, that is 2018 to 2020 respectively (Macy's, Inc., 2020).

iii. Investment in the facilities and fixtures upgrade, merchandise assortment and customer service whose benefits may not occur.

iv. Adopted real estate strategy is inherently volatile and could impact the financial position of the company adversely.

v. High part-time employees with historical high turnover rates.

vi. A decline in the profitability, with a net loss, was reported in 2020, and gross margin declined by 900 basis points.

vii. Decline in the shareholder equity from 6,337 to 2,553 from 2019 to 2020, which might have necessitated a decline in the market value.

viii. The current ratio declined from 1.18 to 1.15 from 2019 to 2020, which denotes a decrease in the liquidity position.

ix. Overdependence on the U.S market.

x. Emotional disconnect, attributed to pressured adoption of technology replacing social interaction between customers and employees.

External

OPPORTUNITIES:

i. Access to new customers via tested and innovative digital platforms.

ii. Backstage locations exhibit potential for excellent performance prompting Macy’s plan to open 35 new backstage stores in 2021 (Macy’s, Inc., 2020).

iii. Transforming assortment architecture, fashion curation, inventory productivity and vendor relationships.

iv. More demand was identified for under-40 which the company shoulders on to respond to.

v. Pricing and promotions that the organization would take to improve markdown and localize pricing to create better value clarity to the shoppers, and also improve merchandise margins.

vi. Enhancement of the omnichannel experience by scaling store fulfillment, buy online pick-up in-store, curbside pick-up and same-day delivery services (Macy’s, Inc., 2020).

vii. Modernization of the supply chain infrastructure aimed to improve customer fulfillment, and delivery convenience.

viii. Strengthen global presence.

ix. Diversification of the products.

x. Focus on the emerging products.

THREATS:

i. Changing consumer needs.

ii. Pandemic best exhibited by Covid-19 which had an adverse effect on the business.

iii. Seasonality of the retail sales, with high sales and income realized in November and December.

iv. High competition at the local and national levels.

v. Technology changes are exhibited by the migration of consumers online.

vi. Legislations in the States that have increased minimum wage and benefits make it hard to attract talented employees and meet high labor costs (Macy’s, Inc., 2020).

vii. Significant changes in the interest rates decreasing the fair value for the planned assets and benefit payments.

viii. Fluctuation in the foreign exchange rate exposing the company to the transaction, economic and translation exposure.

ix. Exposure of information technology systems to damage and interruptions from power outages, cyber-attack, telecommunication failures and natural calamities.

x. Political and financial instability, trade restrictions, for procured goods and services outside the United States (Macy’s, Inc., 2020).

How the above information will be used:

SWOT analysis is a situational analysis which screens internal and external environments and identifies which improvements can be made. According to David, David and David (2019), SWOT analysis is used to inform strategy formulation, implementation, evaluation and adjustments. From SWOT analysis, strategies are extracted which are represented by the TOWS matrix –Strengths-Opportunities(SO) strategy, strengths-Threats(ST) strategy, weaknesses –opportunities(WO) strategy and weaknesses-threats(WT) strategy (Ravanavar & Charantimath, 2012). In other words, SWOT analysis informs the formulation of strategies that can be adopted to minimize threats, weaknesses and exploits opportunities while strengthening core competencies to improve sustainable competitive advantage.

SWOT analysis is one of the tools in strategic management, which is used to identify areas that cause the organization to lag in the attainment of formulated strategy, and facilitates the refinement of the strategy adopted by the organization in the response to the business dynamics (David, David and David, 2019). Every organization that takes strategic management seriously, needs to conduct a SWOT analysis to enable understand areas that need to take certain measures to improve performance, and also to enhance diagnosis of issues that possibly could have hindered the organization from attaining desired competitive edge.

Based on the SWOT analysis for Macy’s, Inc., the following decision may be reached: the organization needs to venture into the international market to reduce overdependence in the U.S market, company needs to improve invest in risk management and preparedness, the company should consider diversification of the product and services to reach to more customers and increase its sales, the organization should restructuring its capital to reduce financial leverage, the company needs to consider integrating technology with customer experiences to improve customer value and emotional connection, the company should review hiring and recruiting policies to reduce high turnover and labor costs, high investment in the research and development is necessary to enhance the development of products and services responsive to customer needs. Additionally, the company needs to reconfigure its strategies to exploit fully identified opportunities and continue leverage on its core competencies. Therefore, SWOT analysis identified areas that Macy’s, Inc. needs to improve, threats that need to address, opportunities to explore and competencies to maintain in an endeavor to improve financial condition.