Commentary

Macy's Shuttering 125 Stores As Part Of 3-Year Revitalization Plan

Macy’s will close 125 stores across the country over the next three years and will eliminate about 2,000 corporate jobs in what it says is “an updated strategy … designed to stabilize profitability and position the company for growth.” It also says it plans to focus on its higher-margin private brands business and expects “to build four $1 billion brands.”

“The stores that will be closing collectively account for $1.4 billion in sales but individually are poor performers and are based in what the company deems to be ‘lower-tier’ malls. Among the stores that remain open, there will be job cuts  ‘in some stores and increases in others,’ Macy’s said,” Charisse Jones writes for USA Today.

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“Additionally, it is shutting its San Francisco offices that handled tech functions, shifting those tasks to New York City and Atlanta,” Jones adds.

“More than 800 employees and about 200 contractors work in the San Francisco building at 680 Folsom, and eligible staff will be offered severance and given the opportunity to reapply for jobs that are being relocated in New York and Atlanta, according to Business Insider,” Amy Graff writes  for SF Gate. “Departments that are moving include Macy's Product and Digital Revenue,  Macys.com and Macy’s Technology.”

Further, “the Cincinnati corporate headquarters will close, along with the company’s San Francisco and Lorain, Ohio, offices. The company will also close its Tempe, Arizona, customer contact center and consolidate customer service work into its Mason, Ohio, and Clearwater, Florida, facilities. New York City will become the company’s sole corporate headquarters, the company said,” according to  WLWT5 Cincinnati.

“Macy’s, which will keep running about 400 of its namesake stores, is ramping up its restructuring efforts after a yearslong slump. Cobbled together from various regional chains, the company has struggled even as it left the weakest malls and boosted spending on ecommerce,” writes  Suzanne Kapner for The Wall Street Journal.

“Once the backbone of America’s shopping malls, department-store chains like Macy’s, J.C. Penney and Sears have been losing customers to the convenience of Amazon.com  Inc. and the discounts found at off-price chains like T.J. Maxx,” she adds.

“Our goal is to reclaim and revitalize what a department store should be,” Macy’s chief executive Jeff Gennette tells Kapner. “Department stores are still vital if they are done right. There is viability to having many categories and brands under one roof.”

For example, Macy’s is opening a 20,000-square-foot, “flexible retail store format” location called Market by Macy’s at Southlake Town Square mall in Southlake, Texas, tomorrow. The customer base in the area has an average household income of $172,291, and 60% of residents have a bachelor’s degree, according to The Dallas Morning News.

Market by Macy’s will host “community-driven programming from cooking tutorials and book signings to crafting and fitness classes,” the company says in a release. 

“Macy’s new Texas concept favors interior design elements, like bright lighting and open space, that retailers like Target and Nordstrom are also bringing into new and remodeled stores. The new format also appears to have much in common with its existing curated shop-in-shop effort “Market @ Macy’s” found in some stores,” Daphne Howland writes  for Retail Dive.

“The ‘brand experience team’ leading the effort is spearheaded by Story founder and now Macy's brand experience officer Rachel Shechtman. The Texas store will feature ‘specialty designers and local Texas brands for men, women, kids and the home,’ lending a localized flair to the assortment,” Howland adds.

“Shechtman said she’s obsessed with the concept of ‘store as community,’ and that was the driving force behind the new concept,” Maria Halkias writes for The Dallas Morning News.

“We’re using the past to impact the present and returning to a modern main street,” Shechtman tells Halkias. 

“Branding the beauty section as Getchell’s Apothecary is an example. Margaret Getchell was Macy’s first female executive in 1860,” Halkias writes.

The cost-cutting moves announced yesterday “are expected to generate annual gross savings of about $1.5 billion, which will be fully realized by year-end 2022. For 2020, Macy's anticipates gross savings of about $600 million,” reports  the AP’s Anne D’Innocenzio for The Chicago Tribune.

“The announcement of the steps comes ahead of Macy's annual investor meeting Wednesday in New York where Gennette is expected to unveil a three-year reinvention plan.”

“The more convenient, brand-right touchpoints we have, the greater loyalty and engagement we engender. This will enable us to grow with the next generation of American shoppers,” Gennette says in a statement.

Whatever it takes to float the floats.

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