Department stores like Macy’s rely on an old shopping model. Can they change?
Department stores like Macy’s rely on an old shopping model. Can they change?
Macy’s is entering A Bold New Chapter — at least that’s what it calls the strategy it announced on an earnings call Tuesday that was designed to reposition the company. To make that happen, the retail chain said it needs to close 150 stores over the next three years. It currently has about 480 locations.
Of course, Macy’s isn’t alone. Department stores have been trying to fight a dusty and dated image for decades now.
When department stores followed urban sprawl into the suburbs after World War II, they became centers of shopping and socializing.
“You get people in the door and you don’t get them to leave. You could spend the entire day there,” said Michael Lisicky, a historian who’s written several books about department stores.
They sold clothing, furniture and appliances, and they had restaurants, salons and photography studios, he said.
“And these massive emporiums, as they grew, were able to stock things that you could not buy anywhere. They had a monopoly, in a sense, on retail,” Lisicky said.
But between globalization and online shopping, the monopoly didn’t last. And the department store’s strength as a place for everything became its weakness. Christina Boni, senior vice president at financial analytics firm Moody’s, said browsing now happens through your browser.
“You don’t go to the store to do inquiry in the same way you used to do. Today you have a good idea of what you’re looking for,” she said.
And if you don’t, you likely want a curated selection to help you cut through the infinite choices online. To many shoppers, Macy’s old model as a place for everything can be overwhelming.
“If you had a magic wand, people would not have department stores the size they are today,” Boni said.
Macy’s doesn’t have a magic wand. But it does have a few tricks up its sleeve, like the other stores under its corporate umbrella, including Bloomingdale’s — which caters to higher-end customers — and Bluemercury — which sells skin care products and cosmetics. David Swartz, senior equity analyst at investment research firm Morningstar, thinks it will take more than that to renew the brand.
“There’s really no place for the traditional department store anymore,” he said.
He said closing 150 locations will give the company some capital to refocus on its discount store, Macy’s Backstage, and smaller concept stores.
“I think there’s a future for Macy’s, it’s just not going to be the old Macy’s,” Swartz said.
The bigger and more iconic the brand, he said, the harder it is to change.
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