Don’t Cry for Macy’s Just Yet

It's actually avoiding many of the mistakes made by rivals

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Holiday shoppers browse Macy's department store in New York City

If you need any further evidence that the media overemphasizes bad news, look no further than this morning’s announcement that Macy’s will be shutting down five stores and changing up the mix of its employees.

The New York Times for instance went with the headline “Macy’s Plans to Lay Off 2,500, Though Its Holiday Sales Were Up.” Buried way down in the story, however, was that Macy’s wasn’t actually reducing it’s workforce overall, because of hiring taking place to beef up Macy’s online operations.

News of layoffs if terrible for those workers who are losing their jobs, and it might be better if Macy’s had decided to retrain its existing workforce to meet the challenges of a modern retail environment, but headlines that say that this move is further evidence of Macy’s retrenchment are just plain wrong.

With e-commerce continuing to capture more and more of the total retail pie, Macy’s would be foolish to not shift resources from its bricks-and-mortar operation to online. They’re simply giving the customer what he wants. And while traditional retailers around the country are struggling to adapt to the new realities of their business, Macy’s isn’t doing so bad. As Morningstar analyst Paul Swinland writes in a recent research note, “Macy’s is stronger than it was before the financial crisis and well positioned to take advantage of a middle-class recovery as many competitors still struggle.”

Swinland praises Macy’s efforts to create an “omnichannel” shopping experience whereby the company’s online and in-store operations become more streamlined so that its stores can operate as distribution centers for its online efforts.

1 comments
Jodun
Jodun

According to the original press release on Macy's website, Macy's is closing 5 underperforming stores and reorganizing. The number of Operational Regions are being reduced from 8 to 7 and sales districts are being merged, bringing the total from 69 down to 60. Most of the 2,500 people are corporate staffers, not store employees.

Balanced against the closings and changes Macy's will open 8 new stores this year (5 macy's and 3 Bloomingdales) and they are hiring in their Online and Direct to Consumer divisions. The net effect of the hiring should balance out against the layoffs and the company expects to end the year with around 175,000 employees, roughly the same as Dec. 31 2013.

As for retraining, it sounds like many of the people being laid off would be moving into a lower level (or at least paying) job if they did so. Most of them are executives and executive staffers who can get similar jobs elsewhere. I doubt many of them would want to take one of the new jobs that are going to be added.