CASE STUDY 4

PLANNING FOR A MIRACLE ON 34TH

STREET

SUBMITTED TO, SUBMITTED BY,

PROF. ABHILASH G N NIVIN VINOI

P14199

PGDM-B

EXECUTIVE SUMMARY

The case deals with the restructuring of R.H Macy, a multi branded fashion retail store which was facing major crisis due to poor cost controls, customer service, computer systems, type and price of its merchandise and how they recovered this critical condition under two co-CEOs by strategically long term planning.

(Word Count: 50)

Macy was facing a lot of problems like outdated equipment’s, mounting depts, cost perception etc. To revamp company’s image the two CEO’s where appointed. One to fix the finance department and other to maintain company’s image and revamp its product line. They realized planning and strategy should go hand in hand. So rather than looking for a sudden hike they planned for a sustainable and long term plan. All there plan was realistic and flexible.

PLANNING MODE

They have a Conservative Planning. They want to carry Macy out of the red and back into the black. So they designed a five year plan hoping to get ten percent sales growth and margins improving two points. They planned first to get out from the debts and then concentrate on increasing sales.

STRATEGIC MODE

The CEOs implemented a new system referred to as Buyer-Planner-Store (BPS). Until that time various roles like merchandising, delivery, planning etc. are done by a single person. But Macy changed that concept. A single guy was put for handling each group.

For attracting cost conscious customers they replaced high priced, glitzy product line to more moderately priced line. When questions were asked about the downscaling they responded by saying “It is a price point and not fashion statement”. Thus well-made, stylish brand like Levi Strauss where introduced again.

For improving customer service and store layout they installed satellite network to connect suppliers with sales people. It helped them in coordinating products inside store and attracting customers by displaying it in proper places. If there is a high demand for a particular product, the dealer or supplier will inform the store and according to the current trend they will produce more and supply it to the dealers. Thus the new technology was utilized by them for building profit. It also helped the executives of the company to talk directly to their employees about issues and concerns.

The competition in textile field was very tough, so Macy has to think out of box to compete in the market. So for getting a step ahead of all other competitors they launched a 24 hours cable TV channel, naming TV Macy’s which became the most profitable and successful portion of the CEOs’ plan. Before introducing this plan the only scope was through newspapers or advertisements. So it was a limited exposure. Macy’s rivals also used one or two hours spot for promoting there brands. But it was first time that a 24 hour channel was launched. All these 24 hours they show about there own private-label apparel, housewares, and other items. Through this there

scope became exclusive. Thus they succeeded in this textile field and there by rapidly increasing profit.

(Word Count: 450)