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Analysis of Macy’s Business Environment

Macy’s is one of the oldest and biggest fashion retailers in the USA. Like any fashion
retailer its main goal is to increase its market share, revenues and profits. The achievement of
this goal almost entirely depends on factors in its external and internal environment.

Analysis of Macy’s External Environment

Macy’s external environment include international factors, economy, political/legal
environment, sociocultural, and technological development. Recent robust US economic
performance is likely to have a positive effect on the store’s sales. Another positive aspect of the
store’s external environment is increasing use of online shopping by customers. Even though
Macy’s has for long depended on its brick and mortar offline stores, its increasing online forays
are likely to significantly boost its sales (Halzach, 2014). Internationally, increasing economic
strength of regions where its presence is relatively strong such as Gulf countries in the Middle
East and East Asia are also bound to have a positive effect on its bottom line. On the flipside, the
global trade war involving some of the world’s major economic powers may depress the retailers
sales.
In its task environment, Macy’s ability to achieve its business goals is going to be
affected by factors such as suppliers, competitors, and customers. As fashion retailer for high end
fashion products, Macy’s is lucky to have contracts with some of the best known brands in the
fashion industry such as Ralph Lauren, Michael Kors, and Calvin Klein (Macy’s, 2018). The
suppliers, both local and international, are on the whole reliable. They have partly been
responsible for its market leadership in high end fashion market. It can, however, not rest on its
laurels as it faces stiff competition from players such as J.C Penney. Whether it succeeds or not

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against such new players will depend a lot on its ability to hold on and expand on its customer
base of mostly medium and high net worth individuals.
An analysis of these factors in Macy’s external environment reveal that the best strategy
for Macy’s continued growth in heavy investment in online retail. Such investment will allow to
conveniently serve its local and international customers. It will also allow it to compete with
online retail giants such as Amazon. More importantly it will allow it to increase its share of
international market. Such a strategy is important because it allows it to maintain robust sales
even when there is a downturn in US’s economy.

Analysis of Macy’s Internal Environment

Macy’s internal environment includes employees, management, and culture. The
company has over 130,000 employees in its more than 800 stores (Macy’s, 2018). As an equal
opportunity employer, Macy’s attracts committed individuals regardless of their race, religion, or
sexual orientation (Fairchild, 2017). It then takes them through an intensive training program
which enables it to have a highly effective workforce. Its management, often made up of
individuals who have gone through its ranks, is also effective as it has continuously been able to
anticipate future market changes and prepared the stores for these changes.
Effective management is part of strength in Macy’s SWOT analysis but it not the only
one. Others include large number of stores in prime locations across the US and a strong brand.
Its main weakness is lack of diversification. Its only lines of business are Macy’s and
Bloomingdale (Howard, 2015). As for opportunities, strong economic growth in emerging
markets such as Gulf countries and popularity of online retail where it has recently made an entry
in are potentially going to help drive its future sales (Halzach, 2014). Its biggest threats include
intense competition from rivals such as J.C Penney and discount stores such as Wal-Mart

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(particularly in moments of economic downturn when people spend more on cheaper fashion
products).
A review of this SWOT analysis shows that perhaps the main area that Macy’s
management should focus on is how to strengthen its online presence. It’s only through such
strategy that Macy’s will be able to profit from the current trend of consumers doing most of their
shopping online. Succeeding in future will also require the store to strengthen its core
competencies. These include effective management and having extensively trained workers.

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References

Fairchild, C. (2017). How Macy’s quietly created one of America’s most diverse boards. Fortune.
Halzach, S. (2014). Is the new technology at Macy’s our first glimpse of the future of retail?. The
Washington Post.
Howard, V. (2015). From Main Street to Mall: the rise and fall of the American department store.
University of Pennsylvania Press.
Macy’s (2018). About Us. Retrieved on 2nd December, 2018 on
https://googleweblight.com/i?u=https://www.macysinc.com/about-us/&hl=en-KE