Macy's CEO Jeff Gennette to retire. Here's how the legacy brand plans on doing business differently.

• Macy's CEO Jeff Gennette will retire in February, the company announced on Wednesday.
• Tony Spring will take his place and continue shifting Macy's strategy based on consumer changes.

Macy's announced on Wednesday that CEO Jeff Gennette, who worked at the brand for 40 years, will retire in February. He will be succeeded by Tony Spring, the current CEO of Bloomingdale's.

This comes amid a time of change for Macy's, one of the oldest and largest department stores in the country. Since the start of 2020, the retailer has reconstructed its strategy to stay attuned to consumer habits and the future of retail, said Gennette at the National Retail Federation's "Retail's Big Show" in January.

For example, last year's Q4 brick-and-mortar sales increased by 3% from 2021, while net sales have continually dropped since 2019, according to the company's end-of-year report.

To combat the dropping numbers, the brand launched its "Polaris Strategy" in 2020 intended to stabilize profitability, which includes a focus on accelerating digital growth and consolidating its footprint to save cash by closing additional stores this month.

Gennette said the progress was still in its "early innings," and that Spring will now be in charge of executing the plan, The New York Times reported. Additionally, Gennette said that he's "worked alongside Macy's senior leaders as they began its turnaround strategy."

Here's what the future of Macy's might look like, including finding new opportunities, shifting the digital and supply chain strategies, and the importance of DEI, according to Gennette's panel at "Retail's Big Show."

Consumer spending trends indicate when to "pounce"

Retail has transformed over the last few years as ecommerce boomed, social media became a major marketplace, and consumers looked for immersive experiences when entering stores post-pandemic lockdowns.

With recent news of a potential recession, consumer spending has fluctuated once again as many become more hesitant to open their wallets.

"We certainly saw how customers were shopping for gifts," Gennette said of the holiday season, but that volume dropped during non-peak shopping periods, he added.

The constant shifts in consumer behavior have Gennette on his toes: "It's a point to say, be cautious," he said on the NRF panel. "But be ready to pounce when opportunities and signals present themselves."

One way the store is predicting consumer trends is with digital strategy, allocation science, and pricing science. Credit card data and other macro-influences of the current economic environment can also support that business research, according to NRF.

A shift in supply chain procedures

The supply chain has been a pain point for many businesses over the last three years. Prices of goods and materials skyrocketed, and shipping costs raised prices even higher.

In recent years, Macy's has "totally redone" its supply chain, said Gennette, adding that it's reducing its dependence on China and shifting to more duty-free countries.

What's more, Macy's also joined forces with UPS and created 35 regional warehouses in unusable store space to combat those extra costs.

"We've put a lot of technology and a lot of capital to get this as efficient as possible, while dealing with this kind of international crisis," he said on the panel.

DEI remains a crucial component of company success

Diversity, equity, and inclusion measures are important across company structures, including hiring and team building, development opportunities, and generating customers.

For instance, Macy's has extended its opening wage to $15 in all stores, with an average well over $20, according to NRF.

And Macy's is continuing to tap into voids in DEI like mentorship opportunities, sponsorship, and training, Gennette said.

What's more, with the younger and more diverse customer base Macy's has accumulated since the pandemic, a focus on DEI initiatives becomes that much more important: young shoppers are more likely to support brands with diversity and inclusion measures.

The department store started working with diverse entrepreneurs and suppliers, like creating a dress collection for the "Divine Nine" Black sorority organizations, which has become a $10 million division of the business, Gennette said.

"We're always looking at opportunities to improve," he added.