Macy's to outsource IT unit
Macy's is shuttering a New York State-based tech support plant, with 57 employees slated for lay-offs in June, according to a WARN filing earlier this month. The employees (unlike many of the retailer's store associates) aren't represented by a union, according to the filing.
"We're always looking at the best way to provide technology support to our company," Macy's told Retail Dive in an emailed statement. "Macy's has made changes to outsource many Field Services organization functions. We are working closely with our external vendor to encourage impacted Macy's colleagues to apply for the many new roles being created ... as a result of this transition."
Earlier this month, a management shakeup at the department store eliminated 100 executive jobs that the company said will save some $100 million beginning this year.
With the bulk of its massive downsizing behind it — Macy's is in the process of shuttering the last of the 100 or so stores nationwide that two years ago were slated for closure — the department store is still on the hunt for savings even as it takes steps to revamp its operations for a new department store era.
The company told Retail Dive that it's finished with those closures and has embarked on a new strategy for its fleet that entails running three types of stores — flagships, magnet stores and neighborhood stores — each with its own customer base and potential.
While shifting its IT support to a vendor is a run-of-the-mill way to save dollars, it simply may not be enough, according to retail analyst Nick Egelanian, president at SiteWorks.
"The move on tech sounds to me like a fairly routine cost-cutting measure as the company looks to all four corners of its business to [rationalize] costs in a shrinking top-line environment," he told Retail Dive in an email. "My belief is that management is simply unaware of the full extent of the overwhelming forces that have created the headwinds they (and other former full-line department stores) are facing and the near impossibility of neutralizing or reversing the impact of these forces."
Those forces are "external and unstoppable" and could decimate three-quarters of America's department stores and even more of the enclosed malls that they anchor, Egelanian said.
"If they were truly aware of the threat, they would be taking bolder steps to right-size the store fleet to prepare for a future as a much smaller concern," he said. "That would mean closing all but a few stores between the coasts and developing a completely new merchandising strategy for surviving stores."
He isn't alone. GlobalData Retail Managing Director Neil Saunders noted in comments emailed to Retail Dive that, while Macy's has made progress, with store upgrades delivering improved conversion and loyalty, it has failed to address fundamental merchandising issues at most locations.
That could get worse as the robust economy shrinks, he also warned.
"That is reflected in the guidance for comparable sales which are forecast to be flat to up 1%," he said of the company's latest earnings report. "This underlines the fact that Macy's has still not successfully created a true destination status and has still not got to grips with many of the issues plaguing its stores."
- Retail Dive Macy's on the brink
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