Terry Lundren, Jeff Gennette - Photos: Macy's
Terry Lundren, Jeff Gennette – Photos: Macy’s

What will happen to Macy’s after Terry Lundgren steps down as CEO?

Macy’s, Inc. chief executive officer Terry Lundgren has seen his reputation as a retail visionary scrutinized in recent years as the retailer has struggled to connect with younger consumers and drive the type of sales and earnings numbers that were once a foregone conclusion. With the news that Mr. Lundgren will step down as CEO of Macy’s next year, the question on everyone’s mind is what will happen to Macy’s without him?

Macy’s has provided some answers. Firstly, the company has an internal replacement ready to move into the CEO role. Jeff Gennette, president of Macy’s, Inc. since 2014, will succeed Mr. Lundgren as CEO in the first quarter of 2017. In the interim, he will assume additional responsibilities currently handled by Mr. Lundgren. Mr. Gennette will also join Macy’s board bringing the total number to 14. Mr. Lundgren, who became CEO of Macy’s in 2003, will remain on as executive chairman. He was first named chairman in 2004.

“Now is the time to reset our business model to thrive in a future that is being driven by rapid evolution in consumer preferences and shopping habits,” said Mr. Lundgren in a statement. “Our company must and will change in response to the profound secular forces that are driving consumer spending.”

Mr. Gennette said Macy’s would need to be “laser-focused” on the needs of its customers and reaffirmed the company’s goal of becoming “the premier omnichannel retailer” in the business.

“There is no doubt that Macy’s, Inc. will need to be a significantly different retailer in the future in the way we operate and approach the marketplace,” said Mr. Gennette. “But we also must continue to tackle our immediate priorities with vigor and discipline.”

As to how Macy’s will change under Mr. Gennette’s leadership, an article on the Fortune site posits that the retailer may include more store-within-a-store concepts such as the ones currently in place with Best Buy, Finish Line, Lids and Sunglass Hut. Mr. Gennette pointed to the association with Finish Line as a success, a category of products in which Macy’s hadn’t previously had a “credible” presence.

BrainTrust

"Terry Lundgren’s legacy will be that he carved several years of success out of a chain that, by all rights, was too big to be successful."

Paula Rosenblum

Co-founder, RSR Research


"If the new Easton (Ohio) test is Gennette’s mission, then there’s hope."

Lee Peterson

EVP Thought Leadership, Marketing, WD Partners


"Terry Lundgren is one of the last members of retail’s old guard still at the helm of a major retailer."

Carol Spieckerman

President, Spieckerman Retail


Discussion Questions

DISCUSSION QUESTIONS: Do you have any advice for Jeff Gennette as he prepares to become the next CEO of Macy’s, Inc.? What do you think will be Terry Lundgren’s legacy once all is said and done?

Poll

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Paula Rosenblum
Noble Member
7 years ago

Terry Lundgren’s legacy will be that he carved several years of success out of a chain that, by all rights, was too big to be successful. He was an early embracer of omnichannel and the emerging Millennial customer.

The department store format itself is in trouble. I don’t know how anyone can fix that, because it’s a structural problem that involves contracts with brand managers, store layouts and more than a hundred years of history.

Dick Seesel
Trusted Member
7 years ago

Terry Lundgren has led Macy’s through a period of unprecedented change, in particular integrating the May Company brands into a truly national department store company and leading the industry in “omnichannel” initiatives. But Macy’s has lost its edge over the past couple of years — whether or not Mr. Lundgren is responsible — in essential areas of focus like merchandising, marketing and customer service.

Jeff Gennette has the challenge of stepping into the CEO chair at a difficult time for the company, and this is not the timing that Terry Lundgren might have had in mind for his succession plan. The question for Mr. Gennette is whether a Macy’s “lifer” (33 years) can also be a transformative leader at the point where the company is facing unprecedented risks to its business model.

Tom Redd
Tom Redd
7 years ago

Knowing Terry for years he is a CEO that adopted the shift to the Millennials very early. His team — Jeff a big part of it — is also breaking the department store mold with new test stores going live in July, the first one in Ohio. They are not sitting still and are not like old department stores. They drive exclusive brands. They have new formats inside the store — like women’s shoes in the NYC store. A block-long floor of shoes with full inventory on that floor and wireless, mobile integration with stock team and sales people on the floor. The sales person never leaves the customer to get inventory for the customer to try on. Strong merchandise officer (Jeff), CEO and CIO will focus to make this happen.

Macy’s will continue to be a leader and Terry will continue to help inspire college kids to get involved in retail via the Terry Lundgren Center for Retail at the University of Arizona.

Ken Cassar
Member
7 years ago

If I were Jeff Gennette, the first thing I’d do is take Ron Johnson, former CEO of J.C. Penney, out for a very nice meal and ask him to reflect on what he learned during his stormy tenure there. Both J.C. Penney and Macy’s face similar problems: They are both venerated retail brands that once revolutionized different segments of the department store category, but find themselves struggling to keep up with new competitors and younger shoppers. Most specifically Mr. Gennette should ask Mr. Johnson, if he had to do it again, how he would manage significant change without alienating the older customers that account for today’s sales and profits. As importantly, he will need to learn how to maintain the support of the Board during this transition. Mr. Gennette also ought to start working with Mr. Lundgren to recruit people with digital commerce experience to the Board immediately. Macy’s Board currently has just one member with any significant digital experience.

Ori Marom
Ori Marom
7 years ago

My advice to Mr. Gennette would be to take a cue from Amazon Marketplace’s success. Selling products in physical stores is not a good business today and never will be. Driving sales for leaner retailers in return for referral fees and brand-sponsored kickbacks may well be a wonderful business!

In the retail industry, true visionaries are rare indeed. Will Mr. Gennette lead a true change at Macy’s or simply ride the storm? Time will tell.

Zel Bianco
Zel Bianco
Active Member
7 years ago

Macy’s new CEO Jeff Gennette will have to make sweeping changes to get Macy’s back on track. He should focus on curating better merchandise, connecting with younger shoppers and figuring out how to get Macy’s edge back. Overall, Macy’s needs to be more on top of shopper trends.

I think Terry Lundgren’s legacy will remain strong. While the last few years have not been kind to Macy’s, he’s had an impressive career and he managed the 2005 merger of May Department Stores and Federated Department Stores which has generated huge amounts of income.

Ed Rosenbaum
Ed Rosenbaum
Member
7 years ago

Possibly one of the first hurdles Mr. Gennette will have to face is the cumbersome number of stores and their proximity to each other. Over the years Macy’s has been quick to take over some vacated spaces in malls where they already had a presence. Too much is not necessarily the best avenue to follow. The next task is to read the history of the company before his time to see what made them so successful. Going back to the past might be the best route to take to get to the future.

Carol Spieckerman
Active Member
7 years ago

Terry Lundgren is one of the last members of retail’s old guard still at the helm of a major retailer. After acknowledging that he was tardy to retail’s digital party, Lundgren coached an admirable game of catch-up but more will be needed in order to secure Macy’s future. It’s interesting that Ron Johnson’s name came up in this discussion. Perhaps Johnson-phobia is fueling a preference for home-grown leadership but I can’t help but think that bringing in an outsider would make more sense at this critical juncture. At least have a look at some fresh faces?

Lee Kent
Lee Kent
Member
7 years ago

Terry Lundgren is one of the greatest retailers I have known. His legacy will be that he took hard steps, but the right steps to move the department store forward. He has created an enterprise that is ready for change and, frankly, I can’t say that about many.

Kudos to Terry Lundgren and his legacy. It’s time to shake things up a bit in the department store space and fresh face can make a difference. Thanks to Terry, Macy’s is ready for it.

Lee Peterson
Member
7 years ago

If the new Easton (Ohio) test is Gennette’s mission, then there’s hope. Easton will have more/better trained associates, a lower SKU count, coffee/yoga shops, interactive displays, on and on … you know, a better customer experience.

We shall see though; this feels like a transitional move to me. I’m not expecting anything revolutionary until a true digital native takes the helm.

Craig Sundstrom
Craig Sundstrom
Noble Member
7 years ago

In one word, “downsize.” Close the glut of underperforming stores, set Bloomingdales free (i.e. sell it to a luxury retailer). I think the legacy ultimately will be framed in terms of the May Company merger. It’s true it brought Macy’s (even greater) economies of scale, but it also brought into the fold scores — hundred’s? — of mid/low tier stores that were fundamentally at odds with the mid/upper stores that had been both Federated and the original Macy’s core; and this was done just a few years before the country slid into recession (though the near collapse of JCP greatly benefitted Macy’s and masked many of the problems the merger could have created). And of course the decision to discontinue the Marshall Field name became a source of acrimony in the Midwest.

Mr. Lundgren, best wishes in your retirement.

Karen McNeely
Karen McNeely
Reply to  Craig Sundstrom
7 years ago

Thank you Craig. In my opinion discontinuing the Marshall Fields nameplate goes down as one of the top retail errors of all time. They already had the hindsight of the public relations nightmare of when Daytons became Marshall Fields and certainly should have known better.