Macy's Cost Structure Essay

Words: 838
Pages: 4

Macy’s Cost Structure
Macy Inc. (M) has a cost structure that can best be viewed using SWOT analysis, which is a way of evaluating the strengths, weaknesses, opportunities, and threats to the corporation. Macy’s strengths include customer loyalty, a recognizable store name, use of technology, a substantial supply chain, its comprehensive size, and the locations of its stores. In total, these strengths enable Macy Inc. to provide a unique service that offers a characteristic their competitors do not have: merchandise tailored to the customer by store and climate zone. Macy’s main weakness is its cost structure: costs are high compared to their competitors due to a complete operational transformation that includes localizing merchandise by
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Price changes will have a large effect on the quantity demanded by consumers. Price elasticity for supply would be positive because price and quantity move in the same direction on the supply curve and is measured as the ratio of proportionate change in the quantity supplied to the proportionate change in price. Macy’s would have a low elasticity because they purchase in bulk and have little sensitivity to price changes.
Macy’s has fixed costs that must be paid regardless of whether they sell merchandise or not. If Macy’s can sell merchandise to cover its variable costs and still have revenue to pay part of its fixed costs Macy’s can operate at a loss in the short run. Estimating elastic effects of price and income changes over time provide insight to the dynamics of Short run vs. long run changes for Macy Inc.
Macy’s Inc. has proven very effective in adjusting to changing market conditions by laying groundwork for a data-driven and integrated website and initiating My Macy’s, designed to increase customer satisfaction in every aspect of the company’s operation. My Macy’s reflects the continued effort to build personal relationships with customers and develop customer loyalty with each interaction.

Macy’s (M) (2014). Income statement, February 1, 2014. Yahoo!Finance. Retrieved from