Report: Impact of Government Action on Macy's Retail Store Operations

This report provides a comprehensive analysis of the impact of government actions and political challenges on Macy's retail store. It examines the business environment, including the effects of fiscal policies, interest rates, and consumer credit availability. The report explores how these factors influence Macy's financial situation, operational decisions, and sustainability. It delves into internal resources, communication strategies, and the company's public image, assessing the potential courses of action to respond to the situation, considering both short- and long-term impacts, including operational, financial, and ethical implications. Furthermore, the report addresses the role of external resources and third parties, such as government officials and lobbyists, in shaping the business's strategies and policies. The analysis highlights Macy's strategic shifts, including moving towards online sales and focusing on customer experience, as a response to the changing retail landscape and government regulations. The report concludes with an assessment of the overall impact of these actions on Macy's business and its future prospects.

IMPACT OF GOVERNMENT ACTION ON
THE MACY’S RETAIL STORE

Table of Contents
Introduction.................................................................................................................................................3
Business Environment:................................................................................................................................3
Macy’s Retail store..................................................................................................................................3
Sustainability...............................................................................................................................................4
Internal Resources.......................................................................................................................................4
Communication...........................................................................................................................................5
Company Image...........................................................................................................................................5
Response.....................................................................................................................................................6
Impact.........................................................................................................................................................7
External Resources......................................................................................................................................8
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9

Introduction
With the changes pertaining to government fiscal policies, interest rates, inflation and
deflation and the consumer credit availability and due to unstable government and political
factors, these affect the availability and subsequent merchandise cost. This report reflects the key
understanding on government actions and political challenges on the business of the Macy’s
retail stores.
Business Environment:
The impact of the governmental action or political challenge on the business’s financial situation
and operations?
Macy’s Retail store
The economic and political conditions are globally and in domestic front are unfavorable for
retail stores in the US especially affecting Macy’s. This negatively affected the business and the
other operational decisions and results. The changes pertaining to government fiscal policies,
interest rates, inflation and deflation and the consumer credit availability, customer debt, tax
rates and the unemployment rate and low tourism due to unstable government and political
factors affect the availability and subsequent merchandise cost. The retail business as compared
to others is seasonal. In the US the increase in revenue and operating cash flow can only be seen
at a tremendous hike during the second half of the year wherein there is a more holiday season
selling of items (Davis, Yue, & Davis, 2017). However, with the increase in sales during
November and December the company also faces back drops and increased expenses to be made
against the advertisements, employee bonuses and inventory accumulation which also affects the
company finances (Cody, 2017). Considerable alteration in the rate of interest and reduction in
assets values negatively impacts the company cash flow and thereby affecting the financial
condition. In 2016, the company had a loss of $1,451 million for pension plans and $261
million for the supplementary retirement plan (Chowdhury, & Sarkar, 2017). These plans are for
the employees who receive the lump sum amount of the benefits, which negatively affected the
company’s operations results, as it has been stated that if the annual lump sum amount which is
distributed to the employees exceeds a determined threshold, the company would need to
recognize a settlement expense of the unrecognized loss.

Sustainability
Based on your analysis of the governmental action or political challenge, how will the
governmental action or political challenge impact the sustainability of the business?
Despite the government regulations and political factors negatively impacting Macy’s and led to
a forced closure of the outlets, the company still takes it as an opportunity for them. Looking
from the merchandise side, the company can now move from pull strategy to push strategy which
will help improve their stock turn (Plazibat, & Dadić, 2017). The push strategy application will
also help them with faster reordering of the merchandising. Looking from the operational side
the management can now focus more towards their already existing legal right of selling their
products through a Kiosk in Pennsylvania Station, New York. The company still has plentiful of
opportunities to cater and grab (Walter, 2018).
Internal Resources
The internal resources of the company, including the business project teams that are available to
respond to the opportunity or threat.
According to Phibbs, after understanding the threat from the government and political factors,
Macy’s is now working towards the customer satisfaction and is now listening to and
understanding of what customers need. They no longer are dependent on the discounts and
promotions to communicate their business to their end consumers (Guillot, 2015). The major
competitors which are selling online such as Amazon and not affected by the government
policies as such the retail stores are being affected and therefore their prices remain low and
transactions are near frictionless. In order to survive in the market, there has to be a strategic
change in the company, from the discounts which lowers the brand value of positioning as a
cheap brand image the company needs to offer a distinguish service to the customers to attract
them towards the quality of the retail store and the brands the store offers (McConnell, 2018).
For that reason Macy, has now shifted its attention from the discount retail store and discounting
cycle that outbreak stores like Victoria's Secret. It has been seen from other similar retail store
experiences and literature review that in order to attract more customers, company need to
indulge in more advance activities. According to Macy's CEO Jeffrey Gennette, Macy’s is not a
commodity business; rather they deal with the experience business (Lisa, 2018)

According to Gennette, they assembled a new task force of a dedicated team involving 8
executives, employees, and managers which is called as what’s New, What’s Next. The team
works towards re-imagining the retail future (Susan & Lindsey 2017).
Communication
How has information about the situation been communicated to various stakeholders? For
example, have any public hearings being held?
Macy has always been in a great interaction with its stakeholders, one way in which the company
interacts is person to person, but the information regarding the store closure and strategic
changes is given to the customers through the big board’s being placed on the storefront as
shown in the figure (Pierce, 2015).
Source: https://patch.com/pennsylvania/newtown-pa/macys-kmart-sears-closing-15-
pennsylvania-stores.
Another method they use is broadcasting via articles on Macy’s; the CEO gave an interview to
the media to be able to spread the message to the stakeholders. The internal customers are being
told in a meeting and are being told about the new store openings elsewhere.
Company Image
How the situation has affected the company’s public image.

Jeff Gennette has been with the Macy’s for over thirty years. He has recently been promoted to
the Chief Executive Officer. According to him, he has only heard the complaints regarding the
stores with an assumption that they will stop with the complaints. He became cautious, even for
offering his opinions. The situation has affected the brand image and sales. Excepting a few
stores are in general hurting and closing. Sales have been declining in Macy’s stores,
tremendously every quarter; the company reported a 3.6% reduction in same store sales as
compared to the previous year for which the Florida and Texas Hurricanes have been blamed
though. However, the coming holiday season this year might help achieve the targets proving as
amicable the season as they are hoping it to be. The goal is to reduce the reduction in sales first
than to achieve profitability. The goal is to reduce the reduction in sakes to less than 3%. The
company has also lost its market value by two thirds and the profits have been reduced by almost
half.
Response
What are the potential courses of action to respond to the situation in the current macroeconomic
and business environment?
The Macy’s business is dependent upon the employees’ quality and their retention in the
company, especially in the scenario when the stores in large numbers are closing. A large
number of employees work at Macy’s as entry level workers and some are working in part time
positions having high turnover rates. However, the companies need to attract the employees and
train them enough to attract the right customers in the store is dependent upon the external
factors such as the level of unemployment in the market, the cross industry and competitive wage
rates, the laws pertaining to minimum wages and the employee demographics (Lee, & Lee,
2015). The company is also dependent on the managers while working in a highly competitive
and challenging environment. It is the duty of the managers and in the development and
execution of the business strategies and policies to curb the challenges and situations. If the
managers are incompetent and there are circumstances that affects the company negatively in
attracting, training and developing the employees also affects the business, finances and business
operations negatively (Sarofim, Chatterjee, & Rose, 2018). According to Jeff Gennette, who is
the current CEO and Macy’s President, Macy’s provides the customers great product choices and

assortments to select from. Macy has ready to wear women dresses, jewelry, perfumes and
fragrances, luggage, men and kid’s section, also, watches and shoes. At present, the focus of the
company is moving into the technology. As the world is moving towards selling and buying
online along with having retail stores such as, Clarks, JC Penny, and Shoppers Stop, the Macy’s
also planning to go online and sell products to the customers at home, while looking for products
as they experience in retail stores of Macy’s the company is also planning to keep the brick and
mortar store alive, though closing a few more stores as a strong strategic move. Thereby stating
the governments impact to the stores and opportunity for the brand to develop technologically,
calling this strategy as a North Star Strategy (Tokosh, 2018).
Impact
How will these courses of action impact the business? Make sure to consider both short- and
long-term impacts, including operational, financial, and ethical implications.
The course of action will positively impact the business, because as the customers are growing
technologically, and considering the work pressure and work life balancing them no longer wish
to visit the brick and mortar stores for small purchases. In case the company moves online yet
keeping a few stores off line, the customers will be in a position to stay loyal to the company.
This will also allow the company to earn more profit and help reduce the cost of hiring and
retaining employees. The overall cost will be reduced and finances will be improved
significantly. Ethically, it is imperative for the business to move online and care for the customer
need, however, the employees will have to part ways with the stores, who are working since
long. Although, there are certain strategic changes being taking place, wherein some new stores
are opening up, with the new stores coming up the company can rehire the existing employees.
The employees can join the company as delivery boys and also through training and
development the employees can manage the online business. The company needs to have the
right stores at the right places where the customer footfall is high. The company has a short term
plan to close over 100 stores, by closing the unproductive locations (Macy’s, 2017).

External Resources
The role and functions of the third parties and external sources will depend upon the
work undertaken in organization. All the government officials and legislators will be indulged in
making the business policies and government traits which will be imposed on the organization.
in addition to this, the rule of independence in the board of the directors will also be set
accordingly by the government in the best interest of the people at large. These external factors
will restrict the business policies and strategies framed by the board of directors. For instance,
marketing activities and promotional of company in market will be based on the external
resources. In addition to this, strategic alliance with other parties will also strengthen the
business values of organization. The main role of third parties is to promote the organization to
strengthen its business in market. Lobbyists would also be used to influence the decision made
by government against the company by creating lobby groups.it will be attempts to influence the
legislators and other official groups. There will be public legislators and government officials
who will argue on the behalf of the government or the business.
Conclusion
It is analyzed that the course of action taken by the company will positively impact the
business, because as all the business challenges and government policies are in the favour of the
strategies formulated by the Macy’s Retail store. Now in the end, it could be inferred all the
strategic plan of the Macy’s Retail store should be adapted with the changes in the business
policies and strategic plans.

References
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