Introduction
Macy’s is one of the largest American store chains focused on fashion retailing. The area of its activity is quite extensive, and it implies the existence of numerous competitors. To maintain its position on the market, the company needs to implement specific strategies to increase its attractiveness from the point of view of customers. In the present-day world, with the development of modern technologies, such actions should be orientated on online sales as one of the most promising areas of activity.
The improvements in Macy’s management of online sales are possible only with the consideration of the company’s strengths and weaknesses as well as other factors influencing the outcome of business expansion. The best tools for such an assessment are SWOT analysis and Porter’s five forces. Their implementation would allow demonstrating the existing malfunctions in Macy’s activities and distinguishing the factors, which would have a negative impact on its online sales. With the help of the analyses’ results, it would be possible to propose an action plan for the company that will cover the areas which should be improved.
SWOT Analysis
SWOT analysis is the principal tool, which is beneficial in terms of defining a company’s strengths, weaknesses, opportunities, and threats. Therefore, it would suit the situation of Macy’s and allow making a plan in accordance with the revealed specificities (Grant, 2020). The table containing the complete information on the analysis’ results can be seen below of the given report. According to it, the main strengths of Macy’s relate to the positive attitude of the customers towards the company’s goods and services (Simmons & Kang, 2018). Consequently, it results in higher customer satisfaction with the products and a better image of Macy’s.
SWOT Analysis
Moreover, the quality of its goods is higher than the quality of products of its main competitor, Amazon. According to the research, the brands that Amazon retails are less known to the customers than the ones of Macy’s (Simmons & Kang, 2018). Hence, it is another strength of Macy’s, and the company’s indicators reflect its more privileged position on the market in comparison with Amazon.
The presence of such strengths as the positive attitude of customers, brand awareness, and high quality contribute to the emergence of specific opportunities for further company development. Thus, such opportunities include the chance to improve the company’s online presence. This task is essential in the conditions of online competitiveness, with numerous retailers providing similar services. Macy’s also can use its strengths to enter the international retailing market and thereby improve its image or open more stores across the country.
It is important to note that there is always a possibility of the emergence of specific issues interrupting the plans of Macy’s. Its weaknesses, such as limited opportunities for business expansion, insufficient use of technologies, and the consequent reduction in market share, might worsen the situation. The problems connected to changing economic circumstances or customer behavior are entirely unforeseeable. The only way out of similar situations is the ability of the company’s managers to find a flexible solution for business operations. Hence, Macy’s efforts should be directed at taking measures to remain competitive in the presence of other large retailing companies.
Porter’s Five Forces
For a more thorough analysis of Macy’s situation, the Porter’s Five Forces model will be useful. It includes the consideration of such components as supplier power, the threat of new entrants, buyer power, the threat of substitutes, and the degree of rivalry (Chappelow, 2020). The high supplier power is evidenced by the latest 10K report published on the company’s website (Latest Quarterly or Annual Filing, 2020). However, the threat of new entrants for Macy’s can be critical as it already has problems with the increase in online competition among the largest retailers in the country.
Buyer power is strong due to the high quality of the delivered goods and brand awareness revealed in SWOT analysis. The principal threat relates to the possibility of increasing similar indicators of Macy’s competitors, such as Amazon. It would also increase the degree of the rivalry of retailing companies in the United States. This situation might lead to the necessity to take urgent measures in order to stay competitive and ensure the company’s profits in the future.
Recommendations for Improvements
The results of SWOT analysis and Porter’s Five Forces contribute to the understanding of possible reasons why Macy’s is experiencing difficulties related to the increase in online competition. As it is demonstrated in the latest 10K report of the company, the risks for physical stores are becoming higher due to the economic situation in the world resulting from the current Covid-19 crisis (Latest Quarterly or Annual Filing, 2020). This situation worsens the company’s already low indicators of online sales, and it implies the application of urgent measures for maintaining Macy’s stability and receiving a share of the market.
Hence, the main areas of improvement include the necessity to increase the presence of Macy’s in online sales and search for ways to expand the business. Due to the international economic situation, such expansion should primarily relate to online retailing as global expansion and physical stores will not provide much profit (Latest Quarterly or Annual Filing, 2020). Therefore, Macy’s should orientate online expansion and the adoption of new technologies facilitating the process.
Action Plan for Macy’s and Data Sources
The inability of Macy’s to keep up with the online competition is conditional on numerous factors contained in SWOT and Porter’s Five Forces analyses given above. They are complemented by the neglect of the company’s managers towards such methods as the use of social media and advertisements for target customers (Simmons & Kang, 2018). This fact explains the failure of the company to compete with successful online retailers, and the measures aimed at the improvements mentioned above should be the ground for the action plan.
The application of theories allowing to analyze the company’s situation is critical. However, it would be necessary to integrate the data of Macy’s and other retailers with better business indicators to develop the strategy. The primary sources suitable for the purpose of an action plan creation would be the official reports of Macy’s, Amazons, and The TJX Companies available on their websites. They would be complemented by their online management models that can serve as examples of successful online business operations.
Conclusion
The creation of an action plan for Macy’s is the only possible way of overcoming the current challenges related to its inability to keep up with the online competition. Further analysis of successful online retailers would allow it to develop a strategy of business re-orientation. This task is critical in the current economic situation, and the way out of the crisis for Macy’s implies the expansion of its online activities.
References
- Grant, M. (2020). Strength, weakness, opportunity, and threat (SWOT) analysis. Investopedia. Web.
- Chappelow, J. (2020). Porter’s 5 Forces. Investopedia. Web.
- Latest Quarterly or Annual Filing. (2020). Macy’s Inc.
- Simmons, A., & Kang, J. H. (2018). The strengths and weaknesses of Amazon.com and Macy’s as fashion retailers. International Textile and Apparel Association (ITAA) Annual Conference Proceedings. Iowa State University Digital Repository.