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Macy's restructure plans bring news of possible off-price chain

Written by RetailWire Staff

Macy's sophisticated omnichannel strategies and ongoing rollout of innovative and useful shopping tools has won the chain points with tech-savvy consumers. But with recent news of the company's restructuring, it appears Macy's may be trying to attract a completely different audience. Macy's announced that it is looking into creating a chain to compete with such outlets as T.J. Maxx and Nordstrom's off-price alternative, Nordstrom Rack.

The off-price world seems to offer a huge opportunity for growth for higher-end clothing retailers. According to Fortune magazine, Nordstrom has tripled the number of Rack outlets in the last five years, and Saks Fifth Avenue has been closing outlets of its main brand while aggressively increasing the number of its Off Fifth stores.

At least in the case of Nordstrom Rack, off-price has offered the retailer an almost entirely new influx of customers. According to a recent Business Insider article, "There is only a 10%-20% overlap between Nordstrom Rack customers and the high-end department store." Thus moving into off-price could also mean brand new shoppers for Macy's.

The announced Macy's restructuring, which also consists of 14 impending store closures affecting 2,200 employees and the merging of the company's in-store and online merchandising and marketing groups, has not been hugely popular with investors. The stock saw a three percent drop on the Thursday the restructuring was announced.

A Zacks article states that, "The company plans to divert the savings from these restructuring activities to further develop its omni-channel capacities, build superior security infrastructure and enhance direct-to-consumer fulfillment capacity in all full-line Macy's and Bloomingdale's stores …"

According to Fortune, Macy's has addressed concerns over the store closures and layoffs, stating that it will try to move those affected by layoffs to other positions within the company, and that it expects its total workforce size to remain the same.

Restructuring aside, Macy's has been experiencing continued growth. The company reported a 2.1 percent increase in same-store sales during November and December 2014, and expects its fourth quarter same-store sales to grow 2.5 percent to three percent.

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