Macy’s, one of the most iconic names in American retail, has faced considerable challenges in recent years. With shifting consumer habits, the rise of online shopping, and economic pressures, Macy’s has embarked on a major restructuring plan, including the closure of 150 stores over the coming years. This move reflects a broader strategy aimed at adapting to the evolving retail landscape and positioning Macy’s for long-term sustainability.
Legacy of Macy’s
Founded in 1858 by Rowland Hussey Macy in New York City, Macy’s began as a humble dry goods store. Over the next century, it transformed into a retail giant, pioneering fixed pricing and newspaper advertisements. Macy’s flagship Herald Square store, which opened in 1924, still stands as one of the largest department stores in the world and remains a cultural icon, thanks in part to the Macy’s Thanksgiving Day Parade.
In its peak years around 2014-2015, Macy’s boasted approximately 850 stores across the United States and generated over $28 billion in annual revenue. However, as competition from e-commerce giants like Amazon intensified and consumer preferences shifted, Macy’s dominance in the retail space began to wane.
Leadership Transition
Tony Spring, the current CEO of Macy’s, is leading the company through this transformative period. Spring, previously the CEO of Bloomingdale’s, was appointed as Macy’s CEO in March 2023. His leadership comes at a pivotal moment as the company faces not only store closures but also organizational restructuring. Even with the closures, Spring has emphasized that the underperforming stores are still valuable real estate assets, indicating that Macy’s may hold onto some properties for future strategic purposes.
Macy’s Closing Its Stores
The decision to close 150 stores is part of a larger strategy to respond to the ongoing changes in consumer behavior. Macy’s, like many other brick-and-mortar retailers, has been significantly impacted by the rise of e-commerce. Foot traffic in physical stores has decreased, with many shoppers opting for the convenience of online shopping. Additionally, off-price retailers and the growing trend of consumers prioritizing experiences over products have further diminished department store sales.
To combat these challenges, Macy’s has categorized its stores into “go-forward” and “non-go-forward” locations. The non-go-forward stores represent underperforming locations that Macy’s will shutter to improve overall company performance. The closures will allow Macy’s to cut costs and redirect investments toward its e-commerce operations and higher-performing stores.
Macy’s Real Estate
While Macy’s plans to close these underperforming stores, it still views its real estate holdings as valuable assets. Some of the stores slated for closure occupy prime locations, which could potentially be repurposed or sold for other uses. This strategy aligns with Macy’s ongoing efforts to invest in areas that are more profitable, including its luxury brands.
In addition to focusing on profitable Macy’s stores, the company is doubling down on its investment in Bloomingdale’s and Bluemercury, both of which have shown strong performance. Macy’s plans to open 15 new Bloomingdale’s stores, at least 30 new Bluemercury stores, and remodel approximately 30 existing Bluemercury locations over the next three years.
Planned Store Closures
Macy’s will close 55 stores by December 2024, with the remaining 95 closures expected by 2026. After these closures, Macy’s will continue to operate around 350 stores nationwide. While the company has not yet released an official list of the stores that will close, speculation suggests that certain high-profile locations, like the Macy’s store in San Francisco’s Union Square, are likely candidates for eventual closure.
Future of Macy’s
Despite the downsizing, Macy’s remains focused on adapting to the changing retail environment. With 519 Macy’s stores, over 150 Bluemercury locations, and 56 Bloomingdale’s stores, the company still has a significant retail presence. By pivoting its strategy to invest more heavily in e-commerce and luxury retail, Macy’s aims to remain competitive in a challenging market.
Macy’s decision to close 150 stores is a reflection of the evolving retail landscape, where online shopping and changing consumer habits have reshaped how people shop. As Macy’s navigates these challenges, its focus on strategic real estate decisions, investment in luxury brands, and a stronger e-commerce presence shows that the company is committed to adapting and thriving in this new retail era. While the closures mark the end of an era for many brick-and-mortar locations, they also signal the beginning of a new chapter for Macy’s as it seeks to modernize and remain relevant in the years to come.
FAQs
Why is Macy’s closing stores?
Macy’s is closing stores to adapt to changing consumer habits, reduce costs, and focus on e-commerce.
How many Macy’s stores will remain after the closures?
Approximately 350 Macy’s stores will remain open after the planned 150 closures.
Which Macy’s stores will close by 2024?
Macy’s will close 55 stores by December 2024, but specific locations have not been officially announced.
What is Macy’s strategy for its remaining real estate?
Macy’s may retain valuable real estate for future strategic purposes or repurpose the properties.
How is Macy’s focusing on luxury sales?
Macy’s is expanding its Bloomingdale’s and Bluemercury stores, both of which have shown strong performance.
