Macy's naming of an eBay executive as its president is one of the boldest signs yet that the department-store behemoth is seeking to rapidly gain ground in its battle to fend off Amazon and remain relevant at a time when more customers are shopping online.
Macy's announced Monday that Hal Lawton, senior vice president with eBay North America, will become the department store chain's president starting Sept. 8.
The retailer has been aiming to turn the tide on slipping sales through a variety of steps, including the incorporation of its lower-cost "Back Stage'' shops into more stores, and the planned launch of a new loyalty program in October. But in the fight it and other traditional store chains are waging against e-commerce giant Amazon, retail analysts say merchandising and robust online experience are key, and Lawton's background can bolster both.
"Time is not on their side,'' Sean Maharaj, a director in the retail practice of the global consultancy AArete said about Macy's. "The quickest path to seeing some light is bringing on heavy, proven and disruptively innovative talent like Lawton.''
Lawton's portfolio will include marketing, operations, and merchandising. But technology will be a critical area under his oversight, says Macy's CEO Jeff Gennette.
“He’s at the intersection between retail and technology,'' Gennette said in an interview Tuesday with CNBC. "What he learned in terms of his retail experience, how he applied that to a technology company, and now coming back to a retailer, we think he’s going to be able to scale change much faster.’’
At eBay North America, Lawton was in charge of operations, merchandising and marketing along with several other areas. He's also been an executive at Home Depot, where he created the home improvement retailer's e-commerce business, and turned it into an almost $2 billion business.
That background makes Lawton "arguably one of the most interesting outside additions to the entire department store space, let alone Macy's, over the past decade,'' said Chuck Grom, an analyst with Gordon Haskett Research Advisors in a note to investors. "While the move won't impact sales or profitability overnight, we think the addition could mark the beginning of a new chapter for Macy's.''
Macy's is definitely looking to turn the corner. The one-time standard-bearer for the traditional department store has seen sales drop and traffic dwindle as shoppers gravitate toward fast-fashion retailers like Zara, bargain-hunters' paradises like T.J. Maxx -- or decide to avoid stores altogether and shop online.
To regain its footing, Macy's has been cutting costs even as it boosts investment in improving its online experience. It announced this week that it would be streamlining its merchandising operations, resulting in the loss of about 100 jobs. The restructuring is projected to cost roughly $20 to $25 million, but to ultimately save Macy's about $30 million a year.
Those job cuts come on top of previously announced closings of 100 stores to help the retailer boost cash flow and focus attention on better-performing locations.
At the same time, Macy's has been ramping up the convenience of online shopping, even for customers browsing in an actual store. A customer, for instance, will be able to scan the bar code on a pair of shoes or an appliance with a Macy's app, find out its price and availability, then make the purchase through their mobile device and have the item delivered to their homes.
That kind of innovation will be necessary, says Neil Saunders, managing director of GlobalData Retail, since new management alone, will not be enough.
"Changing the structure will not, in itself, make shoppers want to buy from Macy’s,'' Saunders says. "For that to happen Macy’s needs to look at its stores, its products and the way in which it sells."