Can Macy’s be truly modernized for a greater future?

As industry pundits and experienced retailers see it, Tony Spring, the brand new Macy’s Inc. president who is about to succeed Jeff Gennette in February 2024 as chief executive officer, has a formidable task ahead — getting it together on the Macy’s brand.

RELATED: Macy’s Discloses Tony Spring and Adrian Mitchell Compensation Packages

Under Gennette, Macy’s has already undergone major change. It’s develop into more agile post-pandemic; data-driven; less glutted by inventory; prepared to chase fashion trends, and has streamlined management and shed about 80 weak stores, restoring its relevancy. All good.

However the standards at many stores have to be raised. The Market by Macy’s specialty stores and online marketplace formats, in addition to the Backstage off-price offshoot, have to grow and evolve to develop into larger contributors to the enterprise. And up to date negative sales and profit trends have to be reversed.

“Macy’s is in sort of growth desert straight away. That’s the large challenge,” said Craig Johnson, president of Customer Growth Partners. “The business has been slowly losing its top-line momentum.”

“Backstage helps somewhat, nevertheless it’s a bloop double, not a house run. Macy’s straight away needs a recent growth engine. The issue for essentially the most part is Macy’s has a fleet of stores built for yesterday’s retail wars, for enclosed malls with multi-departments. The one-stop shopping, everything-under-one-roof tactic has been overcome by digital. The Macy’s fleet is sized, structured and designed for the ’70s and ’80s. The opposite newer channels they’ve launched into seem more relevant. I feel the Market by Macy’s concept is where the long run is and that should be boosted. The concept is nice. Macy’s is basically fine-tuning it to get the formula right,” he added.

“Changing the guard in any business provides a possibility for brand new pondering and for injecting more enthusiasm into management. This stuff are vital for fulfillment and, in fact, Macy’s needs them greater than most,” Neil Saunders, managing director of GlobalData, wrote in a report Wednesday on the Macy’s transition.

“While Macy’s has no shortage of strategies and is great at talking an excellent game, it consistently fails to execute well. As a consequence, it has not arrested the decline in relevance and market share,” Saunders commented.

Not everybody would agree.

“We’ve been very impressed at how they’ve tried to be nimble, how they’ve tried to even be local so far as being attentive to the nuances of the communities they’re in and the way they buy for a specific area. They’ve been doing that for a very long time,” observed Steven Plenge, CEO of Pacific Retail Capital Partners, which owns or manages a complete of 25 enclosed malls and open-air shopping centers across the U.S., housing about 20 Macy’s malls.

“We expect they’ve done an excellent job of staying up with the apparel trends, they usually have been great at managing their expenses,” Plenge added.

“Department shops would make it extremely difficult to get anything done so far as redevelopment. But Macy’s has been an excellent partner, and really practical and cooperative on our redevelopments. They’re critical components of our projects.”

“Tony Spring will resolve what his priorities are, but I give Jeff a number of credit for having Tony getting involved at Macy’s corporate level and at Bluemercury and giving him opportunities while he was running Bloomingdale’s. It’s the sort of opportunities that other retail CEOs may not have prolonged,” said a former top retail executive.

“My understanding is that Tony has been attending board meetings and involved tangentially. Tony comes into Macy’s with an excellent feel for it, but until he’s there for awhile, we don’t know of course what the agenda, the priorities, can be. He’ll bring a distinct dimension to the business. But take into accout that Macy’s online business was down last quarter and the shop business is off. Tony does have his work cut out for him. He’s got to vary the culture. It’s how the people operate. It’s how Macy’s treats the market. It’s the shortage of service in lots of the stores. The presentation is inconsistent. I mean the standards for Macy’s are below a few of its competitors, particularly Dillard’s,” the manager added.

The $24.4 billion Macy’s Inc. projects further sales and profit declines this yr, which implies that in 2024, after Spring takes the helm, the image should start appearing brighter. Comparisons between 2023 and 2024 get easier and the topline could swing into the plus column.

Bloomingdale’s, unlike Macy’s, has been on an excellent trajectory. Throughout the department store sector, Bloomingdale’s has been getting the best reviews from consumers, primarily for quality luxury and contemporary offerings, crisp displays and an energized shopping experience abetted by associations with popular culture. The business seems destined for increased support from corporate for expansion, particularly since Spring spent his entire profession at Bloomingdale’s, the last nine years as CEO and chairman. He knows the opportunities.

With only 34 stores and 20 outlets there’s room for extra Bloomingdale’s in Texas, Arizona and the Northwest, where there are not any Bloomingdale’s, and markets that have already got Bloomingdale’s could possibly be filled in with Bloomies units. Currently, two Bloomies are open and a 3rd is opening soon. There may be also opportunities overseas. “Bloomingdale’s may have a distinct voice. It has big opportunities to grow, to expand,” said the retail source.

The trail for Bluemercury also looks vivid, considering Spring has been involved in its turnaround while concurrently CEO at Bloomingdale’s. The fragrance sector has generally been strong.

On Wednesday morning, Macy’s Inc. surprised the industry by revealing that Gennette, the 61-year-old chairman and CEO and a 40-year veteran of the corporate, will retire in February, and that Spring, the 58-year-old chairman and CEO of Bloomingdale’s, became Macy’s Inc.’s president and can develop into the group’s CEO upon Gennette’s retirement next yr. Spring also joined the Macy’s Inc. board.

A search is underway for the subsequent CEO of Bloomingdale’s.

As Macy’s president, Spring can be accountable for the corporation’s digital, customer, merchandising and brand teams, while overseeing the Bloomingdale’s and Bluemercury divisions. The role of president has been vacant since Hal Lawton left in December 2019 to develop into president and CEO of Tractor Supply. 

In one other key change, Macy’s chief financial officer Adrian Mitchell is taking up the extra role of chief operating officer. As CFO and chief operating officer, Mitchell will lead the shop operations, technology and provide chain teams while continuing together with his finance and real estate responsibilities.

At Bloomingdale’s last week, Denise Magid was promoted to chief merchant. There was speculation that she is being groomed for a much bigger role inside Macy’s Inc. She could possibly be a future Bloomingdale’s CEO though that will be years off, as Gennette told WWD that she is just not within the running to be the very next Bloomingdale’s CEO.

A seasoned merchant, Magid was most recently executive vice chairman and general merchandise manager for ready-to-wear, center core, concessions and Bloomingdale’s outlets. Magid made retail history last week by becoming the primary to carry the title of chief merchant on the 150-year-old Bloomingdale’s. Previous CEOs, including Michael Gould and the late Marvin Traub, were de facto chief merchants, even in the event that they didn’t have that title, because the overall merchandise managers reported on to them.

Regarding Bloomingdale’s next CEO, sources said the search would likely concentrate on a powerful operations-type executive, who would have responsibility for such areas as stores, finance, marketing and human relations, while Magid reports to the CEO, and the overall merchandisers report back to her.

The Macy’s Inc. change in command is surprising considering Gennette is a number of years younger than when most CEOs go for retirement. While Macy’s most up-to-date financial results haven’t been stellar, Gennette, widely respected for his leadership qualities and showmanship, is credited with successfully navigating Macy’s through a profusion of challenges including the pandemic, inflation, recession worries, the rise of Amazon and fast-moving shifts in consumer shopping behaviors, in addition to pressure at times from activist investors. 

Significantly, Gennette and his team deserve credit for something that’s hard to measure — changing industry perceptions of Macy’s Inc. for the higher, that it’s still relevant. That could be a big accomplishment considering all the corporate has been through, and the cacophony from pundits preaching the death of the department store.

“It seems early for Jeff to be leaving, since he’s only 62, and Terry Lundgren [former Macy’s Inc. CEO] resigned at 65,” said Johnson, of Customer Growth Partners.

“I never wish to see an actual long difference between when someone is called and the actual start date. That is an 11-month transition so in some unspecified time in the future there could possibly be some ambiguity about who is basically in charge. I wish to see shorter transitions. The one good thing is that there’s a clear date for the handoff. That’s a distinction from Levi Strauss, where Michelle Gass can be rising to CEO but there isn’t any specific date for that.”

Still, the overall assumption is that the transition ought to be high quality. Gennette and Spring are said to have an excellent working relationship. On Wednesday, Gennette characterised Spring as “an incredible innovator, brand builder, an incredible developer of talent and with storytelling skills and deep partnerships in the seller community.” 

Spring’s ascension is hardly surprising. Except for leading Bloomingdale’s and getting good results there, he’s been lively across the Macy’s portfolio as a member of the Macy’s executive leadership team, and been involved with the repositioning of the Bluemercury division and reworking Macy’s.

Johnson and others suggested that food and beverage hasn’t played a large enough role in Macy’s historically. “Should you go to London and visit Harrods and Selfridges, there’s an enormous food component typically on the primary floor for eat in or take out. It’s an incredible traffic builder, an excuse to enter the shop and stay longer,” said Johnson. “People do have to eat day by day. They don’t have to buy a showering suit day by day.”

Johnson did credit Gennette with closing about 80 stores, though he and other retail analysts and observers feel more closings will come.

Johnson also said, “Macy’s has a number of positive brand equity, and has a good job attracting younger families and recent Americans, but clearly you could have to grasp we’re in a recent era of retail. Make the fleet smaller. It’s just about the identical fleet of a generation ago.”

Saunders, while critical of Macy’s, wrote that under Gennette’s leadership there have been positives. “The nimble response to the pandemic, the enhancement of the net proposition, the willingness to take tough decisions on store closures, and the partnership with Toys ‘R’ Us are all to his credit. So too is the indisputable fact that Macy’s is financially stable while another malls are struggling. Our balanced view is that this adds as much as a legacy of stabilizing the ship but falls quite a way wanting advancing it.

“The hope is that the subsequent CEO, Tony Spring — together with a few of his recent C-suite colleagues — can be more of an agent of change and can fix a few of the long-standing issues, especially across the in-store experience,” added Saunders. “Mr. Spring’s background in merchandising and the very fact he has run Bloomingdale’s, where brand image is incredibly essential, bodes well. Nonetheless, our slight concern is that, as when Mr. Gennette became CEO, that is an internal appointment which implies that the standard Macy’s way of doing things may prevail.

“Due to Mr. Gennette, Macy’s isn’t dead and even circling the drain. Nonetheless, it remains to be on a deadly glide path with weak long-term prospects. It’s the job of the brand new CEO to vary this trajectory and never to easily keep on with the present course.”

Veteran retail analyst and blogger Walter Loeb said, “Certainly one of the challenges Tony may have can be attending to know the Macy’s people. Obviously, he knows everybody at Bloomingdale’s, and he does know a few of the Macy’s people, but he might want to get to know more of the team. Macy’s actually needs a number of work. Tony must be living in a store for a while, after which settle on what sorts of changes he sees obligatory.

“Nothing straight away will occur, but I’m expecting major changes, a revamp starting with the look of the stores, possibly a recent spirit getting injected,” Loeb said. “Do you could have to hold the whole lot or would you would like it to have more of a recent slant appealing to many more younger people? Is that shoe department on the Herald Square flagship really working? Tony revamped the shoe department at Bloomingdale’s, he might as well take a have a look at the shoe department, and make it more of a serious attraction.

“Macy’s, back in its history, did have an enormous food department on the principal floor. Perhaps something like that could possibly be back. There may be so much to achieve by having more food and beverage. There are a number of things that must be done, that need to be modernized,” said Loeb.

Spring joined the shop in 1987 as an executive trainee within the White Plains, Latest York store, and rose through the ranks until becoming chairman and CEO in 2014.

“It is a unbelievable promotion for Tony,” observed Michael Gould, the previous CEO of Bloomingdale’s. In 1991, very soon after Gould began the role, “Tony was the very first person I promoted at Bloomingdale’s. It was in October 1991. I promoted him to merchandise manager. Over the subsequent 23-plus years, I used to be with him all the way in which,” said Gould, who was succeeded by Spring in 2013. “Tony could be very thoughtful and strategic. He comes across at times as very understated, but underneath the hood is a burning passion and a number of intellect.”

Gennette’s passion for retailing was born during highschool when he sold mopeds on commission at Moped Motors in El Cajon, a suburb of San Diego. “I actually enjoyed it and was quite good at it. I made a number of money selling on commission. I enjoyed determining what the purchasers needed, the products I had and making that connection.”

In college, he majored in Victorian literature and inventive writing, but he still had the retail bug so he joined Macy’s right out of school. “I believed I might stay a few years and go to business school.”

He briefly left Macy’s to try specialty retailing with FAO Schwarz, where he opened the flagship in Union Square in San Francisco. “After eight months I spotted specialty retail was not right for me, so I got here back to Macy’s because the store manager in Santa Rosa [California].”

In numerous parts of the country he worked as a sales manager, a floor manager, a store manager, assistant buyer, associate buyer, buyer, divisional, general merchandise manager and director of stores. He became chairman of the previous Bon Marché and Macy’s West divisions before they were converted to Macy’s, later ascending to Macy’s chief merchant, then president. He became CEO in 2017, and chairman and CEO a yr later.

“I’m definitely retiring, but I would do something else,” he told WWD. “I don’t know what that’s yet. Macy’s has been my life’s work. I even have had Macy’s jobs in lots of parts of the country. I’ve been in many various functions. I couldn’t be prouder…I may have one other chapter but I don’t know quite what it’s going to be. I’m enthusiastic about with the ability to spend more time with my family,” including his husband, who’s retired, and his daughter, who will soon graduate from Parsons School of Design. 

Asked why he stayed so long at Macy’s, Gennette gave a fast and straightforward response. “Amazing mentors — Sue Kronick, Terry Lundgren, Janet Grove, Bob Mettler, Mike Steinberg. These were players that believed in me. They were hugely influential. They all the time put recent opportunities in front of me, and in lots of cases it was before I believed I used to be ready for them. It’s been very enriching. This will be a cliché, however the piece that has brought essentially the most satisfaction has been all of the talent and dealing with the teams.”