Photo: Macy’s | iStock/AlexandreFagundes
What’s Next for Macy’s as Jeff Gennette Announces Plans to Retire?
Macy’s, Inc. CEO Jeff Gennette, 61, has said he will retire in February after nearly 40 years working for the department store giant.
Tony Spring, the chairman and CEO of Bloomingdale’s, has been named to succeed Mr. Gennette after the retailer engaged in “a rigorous succession planning process that included an internal and external search.” Mr. Spring, 58, is now president and CEO-elect for Macy’s, Inc. and has been named to the company’s board. He will be responsible for leading Macy’s, Inc.’s customer, merchandising and brand teams and overseeing the Bloomingdale’s and bluemercury businesses.
Mr. Gennette, in an internal memo, said, “Tony has achieved strong results in his nine years as CEO of Bloomingdale’s, where he began his career nearly 36 years ago as a trainee. He has driven stronger customer connections and high colleague engagement, and in the last fiscal year, he delivered record sales. He has also helped drive the execution of our Polaris transformation strategy as a key member of Macy’s, Inc.’s Corporate Strategy Group.”
Polaris is Macy’s, Inc.’s multi-year plan to turn the company around that has included closing unprofitable stores, opening new, smaller concepts in off-mall locations, its Backstage off-price store-within-a-store offering, merchandising enhancements, greater personalization and an upgrade to its loyalty program. The retailer has continuously touted the numbers of new shoppers it has attracted and loyalty members it has onboarded since the novel coronavirus pandemic began and it focused on picking up its digital game including delivery, in-store and curbside pickup.
Mr. Gennette called Mr. Spring “a proven and effective leader, known for his customer-focused innovation, successful brand building and merchandising, while living our values of Acceptance, Integrity, Respect and Giving Back. He is a trusted partner to me and others across the company and his deep experience makes him well-suited to lead Macy’s, Inc. on our transformation journey.”
Mr. Spring has led Bloomingdale’s introduction of its new Bloomie’s small store concept. The first 22,000 square-foot Bloomie’s opened in Fairfax, VA, in 2021.
That was followed by a 50,000 square-foot Bloomie’s in the Chicago area market that replaced a 206,000 square-foot Bloomingdale’s earlier this year. Another Bloomie’s is planned to open in Seattle this year.
Mr. Spring has led Bloomingdale’s merchandising function as its CEO. The retailer recently announced that Denise Magid would be its new chief merchant. Ms. Magid was Bloomingdale’s EVP and GMM for ready-to-wear, center core (shoes, handbags, accessories and fine jewelry), concessions and Bloomingdale’s outlets.
Adrian Mitchell has been named chief financial officer and chief operating officer at Macy’s, Inc.
Discussion Questions
DISCUSSION QUESTIONS: What is your take on the current state of Macy’s, Inc.’s business? What will Tony Spring need to accomplish to achieve the goals of the company’s Polaris strategy?
Poll
Loading …BrainTrust
Gary Sankary
Retail Industry Strategy, Esri
Neil Saunders
Managing Director, GlobalData
I give Macy’s credit for not being afraid to make changes to drive their business. The department store sector in general continues to be challenged by aging customers and changing consumer preferences for the brands they carry. As the country heads into a more challenging economic environment, these issues will become more acute for department stores. Mr. Spring has a strong background in building brands. His leading the development of smaller format stores is a good move that can undoubtedly help Macy’s to grow. That will be critical if he can help influence merchandising to help make the brand more relevant for younger shoppers. Continuing to support Macy’s digital transformation and continuous improvement in unified commerce capabilities will also be important as they move forward. Macy’s has their work cut out for them if they want to lead the department store sector into the future.
The final report card of Jeff Gennette is mixed. On the positive side he has done a great job of ensuring Macy’s is financially sound and has been prepared to swallow the tough medicine of closing underperforming stores. On the negative side he hasn’t really advanced the brand and many initiatives, such as the acquisition of Story, have been a complete flop.
As a company Macy’s has plenty of ideas and is good at talking them up. However it is extremely poor at executing and consistently fails to address the underwhelming customer proposition. To keep the business relevant, Tony Spring needs to come to grips with these things and inject some new energy and urgency. His background in merchandising may help; but he will need to avoid internal Macy’s-think which plagues the organization.
The branch stores we have both visited need immediate attention, that’s for sure.
Part of me admires Macy’s for developing and promoting homegrown talent (first Terry Lundgren, then Jeff Gennette, now Tony Spring) to its CEO role. There is an advantage in being steeped in your company’s culture before taking the reins, and your leadership team and associates know what they are getting.
On the downside, this kind of succession planning feels insular in the middle of so much retail disruption. Macy’s is still plagued by a lot of uninspiring locations — not just the unprofitable ones. To many brick-and-mortar shoppers, Macy’s has yet to recapture the cachet of local markets’ Federated nameplates and it begins with the merchandising.
If Mr. Spring is the right man for the job, why was there a rigorous succession planning process that included an internal and external search? An excellent succession plan has everyone in place before succession is needed.
I conclude that anyone with the necessary skills and experience was not interested in taking on the challenges that Macy’s is facing.
Macy’s business is–doing okay. Let’s call it stable. I have to confess I haven’t bought from the company for quite some time, as I just felt I had fallen out of its demographic and they remained ever over-inventoried–making it hard to shop.
The last time I shopped in Bloomie’s, it felt more like Macy’s than the iconic store I was used to. Going to the store on Lexington Avenue used to mean something and feel like something — not just markdowns. Last time I went, I was happy they were having a BOGO on winter coats (in January?) but it all felt sort of cheapened in a way.
One thing I noticed from the release and article: Mr. Gennette is retiring at 61, after 40 years with the company. Mr. Spring is 58 and has been with the company 36 years. That sounds like we’re about to have another three year tenure. On the one hand, I don’t love that. On the other hand, I do think corporate management should have vision into its core customer by sharing its values. That tells me younger would be better. So the real question is, “What is Mr. Spring’s succession plan?”
A dinosaur retail concept with a parade of PR leaders, mostly men. Macy’s screwed the pooch way back when they consolidated under one banner when indeed, the local brands had a lot of cachet. But e-commerce and the idea of modern retail is their true downfall. I’d look for another PR person to come in and tell us all is fine. As David Byrne once said, “same as it ever was”, which in retail, is the kiss of death. Hard to watch.
I give Mr. Gennette a lot of credit for putting into motion a number of initiatives to evolve the Macy’s business model. But Mr. Spring is inheriting one of the more complicated jobs in retail right now. Macy’s is still a mall-based department store with its own in-house discount store. They are moving off mall with smaller footprints. And they have a robust e-commerce business. But it’s a lot more complicated than operating fewer mall stores and opening smaller off-mall stores. So whether the adjective is omni or unified, can Macy’s successfully operate so many different models under one brand, all while being overly dependent on the dreaded One Day Sale? I’m a former Macy’s guy and I’m rooting for them big time, but it makes my head hurt to just think about all the different moving parts.
Macy’s has undergone a transformation with Jeff Gennette’s leadership to simplify, steady the foundational capabilities, and increase their digital elements. While this has led to streamlining their costs and improving the business’s overall health to ensure profitability, the final results are a mixed bag for Jeff Gennette as he departs in early 2024.
As Macy’s transitions to the Tony Spring era, it’s high time for the transformation strategies to result in tangible business operating model improvements, especially on the sales floor, where the merchandising execution leaves are falling well short of a good customer experience. Macy’s has had challenges resonating with Gen Z and Millennials, who find their products at other department stores, Amazon, Target, Nordstrom, Walmart, etc., who are far superior in their inventory management, supply chain capabilities, and in-store experiences.
Stagnation has become the death of brands and is a warning for a company, even with all the history and significance of Macy’s. It will be interesting to see how this plays out under Tony Spring’s leadership.
There’s one thing that old guard department stores, Macy’s in particular, struggle to understand: Your employees are the frontline of your brand’s local PR. Customers are increasingly aware of how you treat those employees, particularly long term retail employees of 10+ years. Gen Z values “fair labor practices” and “ethical employee treatment” above all else.
Macy’s leadership has yet to awaken to this reality and begin treating frontline employees like brand reps. Thus, the in-store experience AT Macy’s –– which is created by in-store employees on a day-to-day basis, continues to deteriorate.
It’s this old school, indifferent treatment of employees that we see reflected in Macy’s stores. A retailer can have all of the hard hitting merchandising teams in the world, but if their employees are indifferent, your stores are still going to look appallingly bad. I’d be more excited to hear about employee talent cultivation programs and initiatives to achieve communication between frontline employees and the C-suite than one fancy spearhead finally stepping down.
The Macy’s brand seems to still be a mid market brand in a mid market category. The middle is rarely a good place to be for a brand. It has also failed to recover the local market sensitivity and customer loyalty it lost after acquiring and absorbing a number of strong regional brands.
Given substantial changes in the market, the consumer, and competition, it seems department stores need a very different business model. Thus far, the attempted changes have been rather cautious.
My take?? “Doctor, we have a pulse, but…”
I would describe macy*s strategy as “playing it safe”: there are parallel universes where all kinds of exciting things happen (the Marshall Field brand is revived, Bllomingdales is spun off – why keep Fields and dump bloomies?hmm…) but we seem to live in the one where they don’t.
What I foresee for the near term future is the old slogan: “reduce (store count), re-use (the existing personnel and physical plant) and re-cycle (old ideas and pretend they’re new).” I won’t give them a letter grade (if they’re smart they took the pass/fail, option).
I don’t see how Macy’s will be able to innovate with speed and scale with (another) with long-time insider at the helm. It seems like an insular approach when what’s needed is radical transformation and exponentially improved operations.