Macy's Inc. (NYSE: M) has entered into its third phase of growth in 2015. The company’s focus on its growth and expansion strategy made it a hit; proving it to be a greater competitive threat for its rivals Kohl’s (NYSE:KSS) and JC Penney (NYSE:JCP) sooner or later. The company has realized that it requires going beyond department stores to achieve a completely new level of success. What is so appealing about Macy’s strategies being undertaken to secure its near future? Let’s visit the facts shared in the article.
Growth strategies in focus
Macy’s growth strategies focus on acquisition, private label expansion, customer base expansion, organic growth and going international.
“We expect some of these new activities to enter startup phases later in 2015, and we remain committed to succeeding in a test-and-learn environment where the best and most promising ideas can be ramped up quickly,” quoted CEO Terry Lundren.
The company has recently acquired Bluemercury Inc. to strengthen its beauty segment. Bluemercury, a leading retailer of luxury beauty products, including private label products and spa services, is well known among the American population. Macy’s Inc needs to work for improving Bluemercury’s online presence.
The company has also announced plans to open Bloomingdale’s 14th new store in a major urban center at Broadway, heart of Manhattan, as it would definitely help the company to boost customer traffic. Bloomingdale is operated by Macy’s Inc. Additionally, it is planning to opt for off-price outlets concept targeting the low income group in order to increase the brand recognition of Bloomingdale.
The same-day delivery offer and buy-online-pick-up-in stores offer has boosted the company’s sales which not only drove up the digital sales growth but also increased the in-store sales. The company has decided to invest $1.1 billion in technological development, which would help the company face and survive the competition from the online retailers. This shows its focus on organic growth.
The key categories in which the company focuses are activewear, handbags, cosmetics and jewelry items. Now it is turning its focus towards the men’s shoes category after finding a significant success in the pilot tests conducted in 2014. Such categories tend to be sold frequently as one can see rapid changes in the fashion trends in these categories. In order to reduce its dependence on sourced brands, the company is following the private label expansion mode.
Expansion program in place
Macy’s and Bloomingdale brands are ready for their pick up as an international brand in Dubai, a tourism hub. The company opened its first international store at Abu Dhabi in Dubai, UAE in 2010 which is operated by the Al Tayer Group. It is gradually moving towards opening its second store in UAE by 2018. In order to increase its international recognition, it is also planning to boost its digital sales here including online and omni-channel opportunities.
Positive GDP of U.S. also offers an affirmative sign towards positive sales growth in the home market. Lower fuel price and improved economic rates would let U.S. consumers invest more in improving their personal lifestyle.
Parting thoughts
These prospective growth opportunities are reasons for recommending a strong "buy" on Macy’s stock.
“Coming into 2015, we entered our third phase,” said Chief Financial Officer Karen Hoguet. “Having now reached one of the industry’s highest profitability rates, we are focusing ourselves on accelerating top-line sales growth. … This new phase we have entered has the opportunity to take our company to a whole new level of success.”
Macy’s acquisition-and-expansion strategy, strengthening in the beauty segment, expanding its customer base by acquiring Bluemercury, focusing on key categories and private label expansion, improving its global presence by opening new stores in UAE and other areas of U.S. –Â all of these will make it the world’s most renowned and powerful brand in the coming days.
