Businessmodel of Macy’s

Customer Segments

Macy’s has a mass market business model, with no significant differentiation between customer segments. The company targets all consumers who desire general merchandise.

Value Proposition

Macy’s offers three primary value propositions: accessibility, convenience, and brand/status.

The company creates accessibility by providing a wide variety of options. Its selection includes a broad range of merchandise, including home furnishings, cosmetics, apparel and accessories (men’s, women’s, and children’s), and other consumer goods.

The company offers convenience by making life simpler for customers. Most of its stores are located at suburban or urban sites, typically in densely populated locations, where more people can access them. Also, it enables customers to buy items online and pick them up in store the same day.

The company has established a powerful brand due to its success. It is the largest department store in the United States in terms of retail sales. It generated annual revenues of $27.1 billion in 2015 and has 157,900 employees. As of April 2016 it had 880 stores in 45 states, the District of Columbia, Guam, and Puerto Rico under the brand names of Macy’s, Macy’s Backstage, Bloomingdale’s, Bloomingdale’s Outlet, and Bluemercury.

Channels

Macy’s main channel is its network of retail stores located across the U.S.; it also sells products through its website. The company promotes its offering through its social media pages, advertising, and participation in trade shows and conferences.

Customer Relationships

Macy’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees.

Key Activities

Macy’s business model entails distributing products and delivering associated services to customers.

Key Partners

Macy’s key partners are the suppliers that provide it with the merchandise it sells in its stores. No suppliers accounted for more than 5% of its net purchases in 2015. It also maintains important partnerships with the manufacturers that produce items for its private label collection.

Key Resources

Macy’s main resources are its physical resources, namely its collection of 880 stores in 45 U.S. states and other locations. Among these, 426 are owned and 318 are leased. It also maintains important human resources in the form of full-time and part-time store associates that offer customer support.

Cost Structure

Macy’s has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

Macy’s has one revenue stream: revenues it generates from sales of its products to customers.