Macy’s, a cornerstone of American retail history, has encountered significant challenges in recent years, driven by evolving consumer behaviors, the rise of online shopping, and mounting economic pressures. In a strategic move to navigate these turbulent waters, Macy’s has announced plans to shutter 150 of its stores over the coming years.
Established in 1858 by Rowland Hussey Macy in the heart of New York City, Macy’s began as a modest dry goods store, rapidly transforming into a retail powerhouse. Pioneering innovations such as fixed pricing and the bold move to advertise actual prices in newspapers, Macy’s carved out a niche as a household staple by the early 20th century. Its iconic flagship store in Herald Square, New York City, which opened its doors in 1924, still stands as one of the largest department stores globally and is renowned for hosting the celebrated Macy’s Thanksgiving Day Parade.
Leadership Transition at Macy’s
During its peak in the mid-2010s, Macy’s boasted an impressive network of approximately 850 stores spanning the United States. The company’s financial zenith was around 2014-2015, when it achieved an astounding $28 billion in annual revenue. However, this success was soon challenged by fierce competition from online giants like Amazon, which began to erode its market share.
Tony Spring, the current CEO of Macy’s, remarked that even though some stores are underperforming, they remain “valuable real estate assets.” He highlighted that there has been strong demand for these properties. While Spring hasn’t disclosed specific plans for these locations’ future, it’s likely that Macy’s may choose to retain these real estate holdings.
Having a long history with Macy’s, Tony Spring previously led as CEO of Bloomingdale’s before his appointment as CEO-elect in March 2023. His leadership arrives at a pivotal moment for Macy’s, as the company undergoes significant changes, including store closures and organizational restructuring.
Why is Macy’s Closing its Stores?
The decision by Macy’s to shutter 150 stores is driven by a broader strategy to adapt to the ever-changing retail environment. Several key factors fuel these closures, with the primary driver being the increasing shift toward online shopping.
The rise of e-commerce has significantly diminished foot traffic in physical stores. In this new landscape, Macy’s has faced challenges in competing with online retail giants like Amazon. Today’s consumers are spending less time in department stores and are increasingly drawn to off-price retailers. Additionally, there has been a noticeable shift in consumer behavior, with a growing preference for experiences over products.
Macy’s Strategic Store Categories
Macy’s has categorized its stores into “go-forward” and “non-go-forward” categories. The “non-go-forward” stores represent underperforming locations that are being closed to enhance overall company performance. Macy’s board has emphasized that while these stores occupy valuable real estate, their performance has not matched that of other locations.
Cost-Cutting and Investment Realignment
The closure of these stores is part of a larger cost-cutting strategy aimed at redirecting the company’s investments towards more profitable locations and its expanding e-commerce operations. This strategic move seeks to position Macy’s for better performance in the evolving retail environment.
Has Macy’s Announced Which Stores Are Closing?
As of now, Macy’s hasn’t unveiled an official list of the specific stores slated for closure. The company has, however, confirmed that 55 out of the planned 150 closures will happen by December 2024. The rest of the closures are expected in the years following. While employees and retail analysts have speculated on possible locations, the official list is still under wraps and hasn’t been shared with the press.
Planned Store Closures by December 2024
Macy’s is gearing up to close 55 stores by the end of 2024. This is part of a larger plan to shutter a total of 150 locations by 2026. Despite this downscaling, Macy’s will continue to operate 519 stores across the U.S., concentrating on its more profitable sites. In addition to these, Macy’s owns over 150 Bluemercury stores and 56 Bloomingdale’s locations, which will remain open as the company shifts its focus toward a more sustainable and profitable future.
Are there specific regions or states where Macy’s store closures are more concentrated?
- Macy’s plans to close approximately 150 stores nationwide as part of a major reorganization to focus more on luxury sales.
- The closures will happen in phases, with about 50 stores closing by the end of Macy’s current fiscal year.
- The company declined to specify which exact stores will be closing. However, the mayor of San Francisco said the flagship Macy’s store in Union Square will eventually close, though not in the initial round of 50 closures.
- After the closures, there will be approximately 350 Macy’s locations remaining, along with Bloomingdale’s and Bluemercury stores.
- Macy’s sees Bloomingdale’s and Bluemercury as strong performers and key to its future. It plans to open 15 new Bloomingdale’s stores, at least 30 new Bluemercury stores, and remodel around 30 Bluemercury locations over the next 3 years.