Macy’s, Sears, Borders: Is IT Braggable?

Written by Evan Schuman
January 6th, 2011

There isn’t a CIO alive who doesn’t understand the extreme value of technology to his/her chain. But how their fellow C-level execs perceive IT—and how corporate thinks that others perceive it—that’s where things get interesting, as the different approaches of Macy’s, Sears and Borders this week demonstrate.

Publicly held companies have to wrestle with a delightfully subjective concept known as material information. Its essence is, “would this information be something that would likely impact how an investor makes decisions?” On Monday (Jan. 3), Borders filed an 8-K form to the U.S. Securities and Exchange Commission, notifying the investing public that the chain’s CIO—D. Scott Laverty—had left Borders after about 20 months. And it said that he had resigned that same day. But in early November 2010, when Sears parted ways with its CIO—Timothy Kasbe—it felt the need to say nothing. No SEC filing, no news release or statement whatsoever.

What does that say about how much the two chains value IT? Is Sears saying that the loss of its IT chief wouldn’t make a difference to any investor? Does Borders see its technology as more strategic?

In a broader sense, is there a changing sense of technology’s importance to retail? We’re seeing many companies announcing vague IT investments that seem to trumpet little other than that they are indeed investing in IT. On Tuesday (Jan. 4), for example, Macy’s issued a statement that it will be adding 725 new positions for E-Commerce over the next two years.

What’s interesting about the Macy’s move is the rationale behind the statement. It didn’t announce any new initiative (such as “we’re going to make mobile integration with POS seamless, so we now need to invest millions more into POS” or “In an effort to make our stores more friendly to customers who speak Spanish, Japanese and Russian, we’ll be spending $40 million for native-speaking associates and tri-lingual kiosks”), nor did it say how the funds would be applied.

The only point of the statement seemed to be that it was investing in E-Commerce. Given that no one was suggesting Macy’s was somehow ignoring E-Commerce, was the point to simply trumpet that investing in IT will attract investors? Is IT suddenly sexy? The fact that Macy’s seems to believe that is how it’s perceived says much about how the chain values IT. And by acting that way, its IT forces are likely to feel much more appreciated.

The Macy’s investment was interesting also in the few specifics it offered. It’s hard to interpret 725 new positions as a maintenance move, even in the anticipation of ever-increasing online traffic. That’s especially the case because about 150 of the positions will likely be software engineers, according to Jim Sluzewski, the Macy’s senior VP in charge of corporate communications. The move reflects the need for many additional online programs that will have to be created, he said.

Said Macy’s CEO Terry Lundgren: “These expansions to and represent investments in merchandising, marketing and site development, which complement ongoing improvements in systems infrastructure, fulfillment capacity and customer service.”

A company’s belief that spending money to boost IT is a good reason to buy that company’s stock? Now that’s nice and material.


4 Comments | Read Macy’s, Sears, Borders: Is IT Braggable?

  1. Mark Shuda Says:

    Interesting story , as always, and speculation is just that: sometimes. However, the next big thing promised from e-commerce is interactive TV shopping. Maybe Macy’s is strategizing how to get a jump on this. I like this point below: “The point to simply trumpet that investing in IT will attract investors? Is IT suddenly sexy?” I am in the process of writing a country song. It goes something like this: “She thinks my IT is sexy, it really turns her on. She keeps staring at my test scripts, as shes blogging along.”

  2. Chris Phillips Says:

    Though your hypothesis that IT means more to some of these companies than others may still be true, Borders filed an 8-K because they had to. CIO was one of their 5 highest paid officers, and his departure required an 8-K filing by SEC rules. The same was not true for Sears.

  3. Evan Schuman Says:

    But is highest-paid the only criteria? Let’s say that a corporation’s CEO is the sixth-highest-paid employee, which is certainly possible given various sales incentives and the fact that some CEOs choose to accept minimal salaries. But would a CEO’s departure ever be considered non-material? Isn’t the significance of that executive to the operations of that business a more meaningful determination of whether a separation is material? Isn’t that value to the investing public the true determiner?

  4. bill bittner Says:

    This story really combines two themes … the role of IT as perceived by its retail organization and the perception of IT to the business analysts who observe retailers.

    I can’t imagine that any senior executive of a retail organization does not understand the importance of technology. Whether the resignation of the senior IT executive is significant (aside from some technical reporting requirements) reminds me of the old saying: “If a vice president is fired it will take several weeks for everyone to notice, but If the janitor is fired everyone will know the next morning.” The concern at Borders must be who senior executive takes with them.

    Having said that, there is no denying that IT is much more important to a retailer selling products that can be delivered over the Internet. The whole idea of controlling a distribution channel that includes specialized software or hardware in the hands of the consumer (generic and hardware specific e-readers) is an evolving paradigm that requires strategic IT direction.

    As far as the Macy’s announcement, I agree it doesn’t seem to make much sense. Especially when it comes to developing an online shopping experience, there are a lot of existing solutions that can be purchased or even subscribed to (but don’t forget the Amazon and Toys-R-Us experience). The unique online experience will come from the “content developers” and the integration of the online experience with the store channel. To merely announce an IT project without any description of its business goals does not give me a warm fuzzy feeling that Macy’s knows where they’re going. We all know how quickly an IT project can devour resources.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.