Macy’s Restructures, Cuts Management Jobs

Macy’s on Wednesday said it will undergo a dramatic restructuring of its organization that will affect approximately 2,500 management positions by consolidating its department store groupings into three regions with more localized control.

Called “My Macy’s,” the localization initiative was developed over the past year based on customer research, Macy’s said in a statement. Its goal is to accelerate sales growth in existing locations by ensuring that core customers surrounding each Macy’s store find merchandise assortments, size ranges, marketing programs and shopping experiences that are custom-tailored to their needs.

“Improving sales and earnings performance requires innovation in engaging our customer more effectively in every store, as well as reducing total costs,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer. “We believe the right answer is to reallocate our resources to place more emphasis and talent at the local market level to differentiate Macy’s stores, serve customers and drive business.

“In essence, we plan to drive sales growth by improving our knowledge at the local level and then acting quickly on that knowledge. These moves will benefit our customers as well as our shareholders,” Lundgren added. “In addition, we believe our new strategies will speed up decision making and simplify the process of working with our vendors.”

This new structure will be adopted for geographic markets that have been a part of Macy’s North, Macy’s Midwest and Macy’s Northwest as they are consolidated into Macy’s East, Macy’s South and Macy’s West, respectively, the company said.

Effective immediately, the company said it will begin consolidating its Minneapolis-based Macy’s North organization into New York-based Macy’s East, its St. Louis-based Macy’s Midwest organization into Atlanta-based Macy’s South and its Seattle-based Macy’s Northwest organization into San Francisco-based Macy’s West. The Atlanta-based division will be renamed Macy’s Central. All current store locations will remain in place.

The consolidation of divisional central office organizations, expected to be completed in the second quarter of 2008, will affect approximately 950 positions at the Macy’s North headquarters offices in Minneapolis, 850 positions at the Macy’s Midwest headquarters offices in St. Louis, and 750 positions at the Macy’s Northwest headquarters offices in Seattle.

Executives currently in the Macy’s North, Macy’s Midwest and Macy’s Northwest central organizations will be considered for positions in the new local market organization or for open positions elsewhere in the company. The company said it will hire approximately 250 new district and region positions based in those local markets adopting the new model. This will roughly double the number of management positions in the field in these markets.

Macy’s locations in these new markets will be grouped into 20 districts of about 10 stores (compared with an average of 16 to 18 currently overseen by each regional manger). Districts will be based in cities that include Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Kansas City, Minneapolis, Pittsburgh, Portland, Ore., St. Louis, Salt Lake City, and Seattle. Each new district will have a manager and a small staff of store merchandisers and planners. These districts will report into their divisions through new regional offices being established in Chicago, Cincinnati, St. Louis, and Seattle.

District-based executives will be empowered to make more local decisions about space allocation, service levels and visual merchandising, which the company said will enhance execution. In addition, district-based planners will provide market-specific intelligence to division planning offices. More resources also will be provided to local markets for special events and to enhance customer service.

Merchandise localization will be supported by a series of new systems and technology being rolled out in 2008 to all Macy’s divisions to facilitate more detailed store-level execution and assortment planning. In part, this will allow merchants to more accurately assort each Macy’s store with items, brands, garment sizes and colors preferred by customers who shop that specific location.

The company’s Miami-based Macy’s Florida and New-York based Bloomingdale’s divisions are not affected by moves.

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