As Macy’s Inc. managed through the COVID-19 crisis, three priorities emerged.
The first was cash preservation. “We moved quickly and pulled every lever available to us, many of which were really painful decisions,” Jeff Gennette, chairman and chief executive officer of Macy’s Inc., said during his talk.
“We froze our capital expenditures and significantly reduced our operating expenses. We suspended our quarterly dividend. We furloughed the majority of our colleagues, and reduced pay for all of senior management. We dramatically reduced our marketing spend and we canceled inventory orders, delayed receipts and extended our payment terms. These quick actions allowed us to keep the business stable while we completed our refinancing that provided us with much-needed financial flexibility for today and into the future.”
Macy’s second priority was responding to “an extreme channel shift. The growth of digital was terrific,” Gennette said. “We could take care of customers who could not come to our stores. At the same time, we had a large amount of trapped inventory in our stores (all Macy’s, Bloomingdale’s and Bluemercury stores were temporarily closed starting March 18) and a highly disrupted supply chain. So we pivoted. Our stores became fulfillment centers to support our dot.com customers, and running on skeleton crews at the height of the crisis were fulfilling over half of our digital demand.”
Gennette said the third priority as “a shift to innovative solutions to new challenges. We are a very planful company. As the crisis unfolded, we learned to become more scrappy. In March, we did not have curbside [pickup] in any form. In April, we had curbside up and running, and in May, it was rolled out to every store.”
Being in crisis mode means “moving quickly and tackling the the most immediate tasks,” Gennette said. “That is a survival skill and it really helps when adrenaline kicks in. But the real trick is keeping the organization agile and moving quickly when the adrenaline rush and the immediate crisis subsides. It’s really important to build plans that can be quickly iterated and adjusted.…Agility is not a new concept for business, especially for retail which has never been for the faint of heart. I don’t think any of us knew what agility truly meant until COVID-19 hit.”