Macy’s leadership changes focus on digital ops and supply chain

Discussion
Left to right: John Harper, Marc Mastronardi and Dennis Mullahy - Photos: Macy’s
Mar 02, 2021
George Anderson

Macy’s, Inc. announced yesterday that its chief operating officer, John Harper, will be leaving the retailer on Aug. 1 and that the position will not be refilled. The duties currently being performed by Mr. Harper will be split between Marc Mastronardi, Macy’s chief stores officer, and Dennis Mullahy, its chief supply officer. The two men will report directly to CEO Jeff Gennette.

The department store retailer also announced that its chief technology officer, Naveen Krishna, is leaving the company. Laura Miller, who most recently served as chief information officer at InterContinental Hotel Group, is joining Macy’s in the same title and role.

“As a digitally led omnichannel retailer, Macy’s, Inc. is in the midst of an exciting transformation,” said Mr. Gennette in a statement. “We are building a diverse leadership team that includes a blend of new talent with outside perspectives along with our tenured and best developed leaders who will accelerate the progress of our Polaris growth strategy. I am confident that these changes in reporting structure will enable us to be nimbler and more efficient as we move forward in our recovery and drive top and bottom-line growth.”

The strategy referenced by Mr. Gennette is Macy’s three-year plan introduced in Feb. 2020 to turn its struggling business around.

The senior leadership position changes in IT and supply chain at Macy’s are particularly significant in light of comments Mr. Gennette made last week on the retailer’s fourth quarter earnings call with analysts.

“We have shifted a large proportion of our current and future capital to digital, supply chain and technology platforms to better integrate our digital and physical assets and deliver the most relevant shopping experiences. In part enabled by these shifts, we expect that approximately $10 billion in sales will come from the digital channels by 2023,” he said.

Macy’s fourth quarter earnings were the first  positive quarterly report on that metric in more than a year. The company achieved its numbers due to inventory cutting and a reduction in promotional activity.

Macy’s same-store sales were down but showed an improvement over previous quarters. The retailer, like others deemed non-essential during the novel coronavirus pandemic, has seen its business take a hit as stores closed and consumers turned away from the merchandise it sells.

DISCUSSION QUESTIONS: What do you think Macy’s most recent senior leadership changes mean for the retailer’s future direction? Does the elimination of the COO role surprise you, and do you see this position or others in retail c-suites becoming redundant?

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Braintrust
"Macy’s will need more than a couple of leadership changes to get the wheels back on. "
"Eliminating the COO gives Macy’s a flatter organization. The technology leadership change adds fresh blood to Macy’s executive leadership."
"This is a company that lost a billions last year. Let’s hope that these changes are just the beginning."

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22 Comments on "Macy’s leadership changes focus on digital ops and supply chain"


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Mark Ryski
BrainTrust

At some point you have to ask, is it the crew or the leader? Macy’s challenges are legendary and protracted. While shaking up the executive ranks makes sense, what about the guy at the very top? I have nothing but respect for Mr. Gennette and the effort he’s put into moving Macy’s forward, but at some point you have to ask, is it the crew or the leader — and the buck stops at the top.

Gene Detroyer
BrainTrust

I suspect by all management measures, Mr. Gennette is pretty good. The latest personnel moves show thoughtfulness about some of Macy’s problems. And while he is titled CEO (the guy who looks out five years), he has essential made himself COO (today’s leader) because that is what Macy’s needs. There may never be a year five.

Craig Sundstrom
Guest

At some point you realize it’s neither the leader nor the crew, but the vessel: as we’ve said here on RW many, many, many times, the department store class of ships are dreadnoughts in an age of nuclear powered subs (expensive to operate, relatively slow and not easily maneuvered).

That’s not to say there aren’t many eternal question marks: the May merger — hundreds of low performing stores — and the move to scrap the Marshall Field’s name — perhaps the worst decision in retailing since Sewell Avery bunkered down Wards for a Depression that never came — come to mind; but those were a generation ago. It’s hard to say what recent management could have done, or more importantly, can do now to make much difference.

Jeff Weidauer
BrainTrust

Macy’s will need more than a couple of leadership changes to get the wheels back on. The elimination of the COO role is interesting, but likely won’t have much impact overall. The company’s overall trend is down and there is nothing in the stated plan that points to a change in that trajectory.

Neil Saunders
BrainTrust

To be absolutely blunt, I don’t think they mean much. Macy’s leadership is not really up to the job. They desperately need outside thinking that can drive transformational change. What they’ve currently got is a group of Macy’s lifers who talk a good game but consistently fail to deliver. I don’t doubt that they are all well-meaning and sincere people who are trying their best, but there is too much failure at Macy’s and nowhere near enough energy to bring the company into the modern era of retail.

Mark Ryski
BrainTrust

It’s the sad, harsh truth. Well put Neil.

Richard Hernandez
BrainTrust

That’s a lot of change. Its good to see that they realize the focus needs be in digital and supply chain and bringing in outside help is always good to help see the future from a different pair of eyes. I think one of their big hurdles that remains is how to differentiate from the others in the department store arena and stay relevant in the customer’s minds. Right now, there is nothing that would make me shop at Macy’s that I can’t get a Target or Kohl’s.

Jeff Sward
BrainTrust

Sounds like they are recognizing that the legacy definition of retail “operations” is outdated and overdue for updating. The COO job was not so much eliminated as it was split, appropriately so even if a little late. Supply chain and digital ops are very much their own silos so the trick in recognizing this will be to be sure that they integrate appropriately with each other as well as merchandising and buying. Nimble and efficient are truly the benchmarks.

Andrew Blatherwick
BrainTrust
These changes clearly focus on the core to any retail business – getting their supply chain and omnichannel strategy right and their stores operating effectively is key in today’s world. The stores and supply teams working closely together to deliver a seamless omnichannel offering is vital and shortening the communications channels from CEO to these two key operators will make it much easier to make the changes necessary to drive the business forward. The stores are a key part of any omnichannel strategy, which might sometimes be forgotten given all the hype about online retail these days with click and collect and curbside pick-up returns strategies. Single customer visibility at the stores is a critical part of that mix and working closely aligned to supply chain is the only way to make that effective and efficient. Macy’s has an uphill struggle to turn the corner and make this a thriving business again. Cutting lengthy management chains is a great place to start. Act fast decisively and with one focus and you are heading in the… Read more »
Gary Sankary
BrainTrust

I have to reserve judgement. “As a digitally led omnichannel retailer, Macy’s, Inc. is in the midst of an exciting transformation” is not encouraging. Macy’s has been stuck in “transformation” mode for years. I believe they need to take a close look at what true unified commerce is for their customers and make the changes needed. Hopefully the new leadership team can drive the needed changes.

Cathy Hotka
BrainTrust

This is a company that lost a billions last year. Let’s hope that these changes are just the beginning.

Kevin Graff
BrainTrust

The challenge for Macy’s isn’t the leadership, it’s that these middle of the road department stores are no longer competitive. They get outdone on pricing, merchandising, staff and experience by specialist retailers every day. Macy’s isn’t alone in the desert as you can see most department stores struggling. It is going to take some amazing, innovative thinking to bring these concepts from the past back to life.

Gene Detroyer
BrainTrust

This is nothing more than musical chairs, with a spark of logic. On paper the COO position is being eliminated, but in reality, Mr. Gennette is becoming COO. The COO manages today. The CEO manages about tomorrow. There may be no tomorrow for Macy’s.

Mohamed Amer
BrainTrust

Eliminating the COO gives Macy’s a flatter organization. The technology leadership change adds fresh blood to Macy’s executive leadership. These good moves are tempered by the realities of the company’s cost structure, store size, and a shift away from department stores. Mr. Gennette owns these new management decisions as he has with prior ones. The comps for the rest of 2021 should reflect strong double-digit growth; anything less will disappoint. The rate of change in retail accelerated in 2020 and continues this year. Macy’s leaders must change the company at an even faster pace for the company to remain relevant and ensure they are at the helm in early 2022.

Bob Phibbs
BrainTrust

The COO should be the lifeblood of the stores, setting the strategy and holding them accountable. This is so telling that they are going to simply eliminate and not replace. Neil Saunders has posted pics of Macy’s store visits on Twitter which look abysmal, I can only imagine what the holiday season will look like. Macy’s is like Gap, until and unless new leadership can invigorate the brand many announcements will do little to make the customer experience better. Macy’s – you’re better than this.

Gene Detroyer
BrainTrust

Macy’s could hire the very best retail leadership in the world and it won’t change the outcome for this company. The department store business model has been outdated for decades.

Bob Phibbs
BrainTrust

Target and Walmart prove the department store is not outmoded.

Ricardo Belmar
BrainTrust

This is mostly musical chairs, and while they are showing a spark of life in bringing in fresh talent to challenge the lifelong Macy’s way of executive thinking, you have to wonder if it’s too little, too late.

What I find curious is that in the face of these changes, we don’t see any direct words about store associates, workforce training, or specific store investment. The fact is, Macy’s suffers most from store-level execution. They continue to believe that if they introduce something new at Herald Square it will automatically translate into all Macy’s. Just look at what happened when they rolled out STORY – a general disaster of what should have been an excellent opportunity.

Macy’s needs to redefine what its brand means to customers. Give them a reason to shop with Macy’s – and then execute it flawlessly across all stores, not just Herald Square. Until that happens, shoppers will just pass them by – and that’s such a sad story for such a great, long-standing brand name in retail!

Yogesh Kulkarni
BrainTrust

The majority of retail is in overdrive to invest in digital and supply chain. Frankly speaking, most of the retailers don’t have the readiness in their distribution chains to capture and service online customers. Nine out of ten retailers I have worked with in the past year are investing heavily; they have to expand their DC network, work with new 3PLs and work on reducing shipping costs. It is such an important thing that CEOs cannot delegate it anymore. My sense is that the structural change reflects what the new focus for the CEO is. Jeff Gennette is no different!

Matt Jones
Guest

I grew up thinking Santa lived at Herald Square. Department stores are on their way out and replacing a great retail technology leader with another great technology leader isn’t going to fix that. How are they going to make INC etc. relevant again? How are they going to bring new designers and new apparel ideas to relevance? How are they going to avoid continuing down this path of slow liquidation?

Craig Sundstrom
Guest

Quick question: has the “Law” that the number of times the word “exciting” is uttered is in inverse relation to something actually BEING exciting been named yet? If not….

It seems like there are two kinds of companies that perpetually tinker with the org chart: those that do something with this, and those who hope to (but don’t). I’ll put Macy’s in the latter.

But enough negativity, let’s look forward: sales last year were bad … Great Depression level bad (no mystery why: Target et al’s gain was Macy’s et al ‘s loss); but that means this year will look pretty good (at least as long as we don’t think about it much or compare it to two years ago … or twenty). And maybe one or more of their “exciting” initiatives will pay off, in a big way. Put the two together, and they’ll have something called “momentum.”

Patricia Vekich Waldron
Staff

Macys has been “transforming” for years, but continues to underwhelm customers with their uninspiring stores, service and online operations. I’d like to think this new crew can develop strategies to remedy these issues and more importantly come up with a viable, differentiated value proposition for the chain.

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Braintrust
"Macy’s will need more than a couple of leadership changes to get the wheels back on. "
"Eliminating the COO gives Macy’s a flatter organization. The technology leadership change adds fresh blood to Macy’s executive leadership."
"This is a company that lost a billions last year. Let’s hope that these changes are just the beginning."

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