Macy’s Closing 125 Stores as It Reorganizes for Digital Shopping

A Macy’s department store stands at the corner of Race and Fifth Streets in downtown Cincinnati, Ohio, U.S., on Tuesday, Aug. 19, 2014. The U.S. economy will expand 3 percent in the third quarter, according to the latest results of a Bloomberg News survey of 76 economists. Photographer: Ty Wright/Bloomberg via Getty Images

Macy’s plans to close 125 of its least productive department stores — almost a quarter of the total — over the next three years and cut about 2,000 jobs as part of a large restructuring.

The stores, including 30 that are already in the process of being closed, account for about $1.4 billion in annual sales, the company said in a statement. Across the rest of the locations, the company is adjusting its staff — reducing in some locations and increasing it in better-performing stores. The shares climbed as much as 3.5% in late trading.

Analysts have said Macy’s is weighed down by too many stores in under performing malls. It currently has more than 600 Macy’s across 43 states. Last month, it reported encouraging sales numbers for the crucial holiday season, but said it would close more than two dozens stores as it adjusts to changes in the way consumers shop.

“We’ve been saying they need to close stores forever,” said Poonam Goyal, senior retail analyst at Bloomberg Intelligence. “This is a good enough number to show that they’re doing enough to solve the overstored problem in the U.S.”

Consumers have grown more comfortable shopping online and ditching the in-store experience. Department stores, in particular, have suffered and last year, they sized up as the worst sector in the S&P 500. Many have invested in pop-up shops and brand partnerships to entice shoppers back into stores. The loss of foot traffic in department stores has had a ripple effect in malls across the country, which depend on the “anchors” to draw people to the centers.

Macy’s will also consolidate its corporate headquarters in New York, where it already makes a big part of its business. Its massive flagship store in Herald Square has been situated there since 1902. It is closing its corporate offices in Cincinnati.

‘Deep Cuts’

In a note to employees sent Tuesday and described to Bloomberg News, Chief Executive Officer Jeff Gennette said it would be a “difficult week” for everyone at Macy’s as he outlined the path the retailer will take in coming years. He said that the structural changes were a necessity in order to return to profitable growth.

“We are making deep cuts in almost every area of the business,” he said in the note. “Every function was required to take a hard look at their organization and reset their cost base. This means the departure of many valued colleagues.”

The plan was developed over six months, Gennette said. Managers will begin sharing details with their workers this week.

Macy’s didn’t immediately respond to requests for comment about the letter.

The company expects the restructuring to generate annual gross savings of about $1.5 billion, which will be fully realized by 2022, with savings this year of about $600 million.

Polaris Strategy

As part of the reorganization, which it dubbed its Polaris Strategy, the company also made a number of leadership changes. Marc Mastronardi, for one, was promoted to chief stores officer, according to a separate letter to employees seen by Bloomberg News.

Macy’s is also introducing a new small format store, and will open a 20,000 square-foot location in Dallas on Wednesday called Market by Macy’s. The store is an immersive shopping experience and multi-purpose event space, according to the letter.

Earlier Tuesday, Macy’s said it would close its San Francisco offices, which include its technology operations. The company said it would offer severance to eligible staff at the offices while some other employees will be able to transfer.

Retailers have been closing stores by the thousands as bankrupt chains liquidate and survivors shrink their footprints, having accumulated too much selling space as shoppers went online. More than 9,000 stores closed in 2019, according to data from Coresight Research.

It’s not the beginning and its not going to be the end,” said Simeon Siegel, a retail analyst at BMO Capital Markets. But store closures alone aren’t enough. “At the heart of it you have to look at what you value proposition is that’s driving customers to stores. In what way does it get better by getting smaller?”

By Jordyn Holman and Kim Bhasin / Bloomberg

Source: Macy’s Closing 125 Stores as It Reorganizes for Digital Shopping

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Macy’s announced that it will close 125 of its department stores over the next 3 years. CNBC’s Courtney Reagan reports.

Five Reasons Why Legacy Retail Won’t Survive This Decade

Does legacy retail have a future in the age of digital?

It’s that time of year. No, I’m not thinking of Veganuary (I can’t even pronounce the word), no, I’m thinking of that time of year when most retailers declare their Christmas trading figures…..kind of. Because as we know, reporting periods are massaged and margin and returns are never disclosed.

However, although we may have to reach for a rather large pinch of salt, the annual list of Christmas winners and losers still gives a good indication of the relative state of the market.

A quick look at the Retail Week Golden Quarter league table for Christmas 2019 trading is at once both revealing, and depressingly predictable.

The Liverpool of the retail industry? Boohoo, who else? Closely followed by ASOS. Meanwhile, a scan further down the table shows the Norwich City’s of the retail world have one thing in common: a) they are older more established businesses who b) have their heritage grounded firmly in bricks and mortar retailing.

As with everything, there are some notable exceptions such as Fortnum & Mason, Primark and Pets at Home, however these are businesses who have a very clear sense of their purpose and brand identity and largely succeed because of that.

The remainder sit firmly within a retail category which is increasingly being polarized, differentiating itself by being average, uninspiring and mediocre. To what am I referring? Legacy retail.

Earlier this month, I was in New York for the annual retail festival otherwise known as NRF. And NRF 2020 will go down as something of a watershed conference for retail. Why? Because, the world is changing, consumer attitudes are changing and the conference reflected this shift towards a more human-centric, planet first, sustainable agenda.

Perhaps for the first time, the nature of the purpose of retail and of retail businesses is being openly questioned and challenged. To earn a profit for their shareholders or to do good for the planet. Or both? How retail businesses will be measured in the future as we move through this decade will be very different from today.


And in the twenties, this will have profound implications for legacy retail which will continue its, inexorable and predictable slide into oblivion. Here are five reasons why.

1.Ways Of Working

Silo’ed, vertical, hierarchical, top-down, command and control – sounds familiar? Virtually every retail business would say that they are customer focused, however the way they are organised is totally the opposite.

Instead of putting an emphasis on working as one business, powerful fiefdoms emerge, competing for resources in ways which ultimately may benefit them but not the holistic enterprise.

It’s typical of legacy retail, it’s damaging and it’s ultimately destructive. Never mind inappropriate touching or egotistical leaders and owners, this behavior is endemic. Legacy retail will always be legacy retail while this structure exists.

2.Metrics

While many traditional metrics, which have served retail for decades, are still entirely appropriate, there are others which have no place in new retail. They no longer reflect the changing landscape of retail and the new ways in which success and the path to growth should be measured.

Legacy retail still clings to a sales first business model where everything revolves around the Monday morning sales meeting. Let’s be honest, many still have difficulty in sales attribution in an online world. Listen to a newer start-up retailer and they simply refer to sales, they don’t differentiate between online and physical because it’s all one entity.

For those still measuring sales per square foot, see you later.

3.Digital Skills

It’s all very well having clever, digital natives in your marketing, merchandising, IT and commercial departments but if the very top of the business isn’t on the same wavelength, you’re wasting your time.

Sadly, the board of most legacy retailers is anything but digitally savvy. This is important for two very good reasons. Investment decisions abound and there will always be a list longer than the budget allows.

But sometimes, instinct rather than hurdle rate, needs to take precedence. This is where a digitally enabled board can make the difference between success and failure.

4.Social

Spoiler alert: we’re still only scraping the surface of the potential for social engagement and social selling in retail. Legacy retail doesn’t really do social. It should, it really should. According to Maybe* the average social user spends two hours twenty two minutes each day scrolling through their social media feed.

Which is where they would see all that wonderful engagement from legacy retail. Except they don’t. Because for legacy retail, the priority is on measuring footfall, sales per employee and other meaningless metrics.

Ever asked yourself, how is my customer feeling? Give it a try, it just might surprise you.

5.Perfect Storm

Perhaps I’m being a little harsh on legacy retail? After all, aren’t they caught in a perfect storm, the like of which has never before been experienced? What were those reasons for poor performance again? Let’s see if I can remember them, in no particular order:

  1. Rising costs
  2. The weather
  3. Online
  4. Brexit
  5. Low consumer confidence

But you don’t hear new retail bleating about external factors. That’s because they have a clear sense of purpose, a laser focus on their brand and what it stands for and above all they know and engage with their customers.


Thankfully, there will always be those who come along to take the place of legacy retailers – on the high street and on our smartphones. And there will always be glorious exceptions to the rule where a sense of brand, authenticity, artisan, inspiration and excitement abound within their DNA.

But sadly, for many, the new rules of retail coupled with the new consumer, and an inability to reinvent, will mean only one thing. But as has always been the case, retail is an abundantly resilient industry and what we will witness this decade will be the rejuvenation of retail.

And for that reason alone, we have cause for optimism.

Follow me on Twitter. Check out my website.

For this, my 100th post for Forbes, I asked my Twitter audience what subject they most wanted me to write about. Legacy retail emerged an overwhelming favorite

I am a retail analyst, writer, and keynote speaker on retail challenges and trends with a focus on consumer behavior, customer experience, and technology disruption. Prior to founding Retail Reflections, during my 20-year retail career, I held senior positions at Kingfisher and Superdrug and have worked with many of the UK’s leading retailers. I’ve been named a top retail influencer by several publications and my observations on the High Street and many aspects of retail regularly appear in the press.

Source: Five Reasons Why Legacy Retail Won’t Survive This Decade

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Store Wars: The Rise Of Floorwalkers

Christmas gift returns and exchanges

A long time ago in a galaxy that seems very far away retailers used to provide something that has gotten lost over the century-long history of modern retailing.

Call it service, call it customer care, call it knowledgeable sales help, even call it guest services if you must, but whatever you call it, it all falls under one heading: people on the selling floor to help customers buy things.

From the days of the first general stores and the local merchant who stocked pretty much whatever you needed, the most basic part of retailing has always been about someone behind the counter who could help.

In the rush to dumb down modern retailing, that concept got lost in the spreadsheets, replaced by ever decreasing numbers of salespeople, self-checkout lines and minimum-wage workers whose main function was to stock shelves, not help customers.

With the online onslaught and the need to compete, that process is being reversed—not that it’s by any means a universal turnaround for retailing in general. Far too many physical stores are void of any human life forms there to assist. But some retailers are starting to get it.

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• Say what you want about the Story concept at Macy’s—and I still have my doubts they are ever going to make this work—but one of the pleasant surprises one finds when shopping these ever-changing pop-up shops is that there are living, breathing salespeople there to help you. They are for the most part cheerful, enthusiastic and knowledgeable about the products for sale in the area. It’s a stark contrast with the rest of the store.

• Showfields, the experiential retailer in downtown Manhattan that features small shops leased to mostly online brands, has a person in each of these areas ready to tell you all about what’s for sale. They’ve even tested a reality shopping experience where salespeople play-act roles revolving around the products being sold. It could go horribly wrong if the salespeople-cum-actors lay it on too thick but it works nicely in the best traditions of a Disney-Broadway mash-up.

• Whenever anybody pines for the good old days of department stores, they usually end up referencing Nordstrom as the only present-day player in the space that still adheres to the concept of professional salesperson. Even with some of its recent struggles, Nordstrom remains probably the most successful department store in the country and it’s largely due to the quality of their people. They are the poster child for customer service in today’s legacy retailing world.

There are many other examples but let’s not forget the reverse: the poster child for getting customer service wrong was the late, little-lamented Circuit City. During one of its iterations, the consumer electronics big-box chain systematically got rid of all of its best, most knowledgeable salespeople in the pursuit of lower costs. The move was a disaster as evidenced by the fact that the company went out of business a few short years later.

Contrast that with Best Buy, which has gone the opposite route, emphasizing customer service through its Geek Squad and other initiatives that thrive on salespeople helping customers through the often-frightening world of buying a big expensive electronics purchase. This strategy has made Best Buy the envy of most comparable physical retailers that are trying to come up with anti-Amazon strategies.

This Rise of the Floorwalker movement is catching on across many parts of retailing, though some stores remain oblivious. Those that get it right are likely to have long runs. Those that don’t probably won’t have any sequels in the Store Wars.

The business of retailing is my specialty…and boy is it special. Plenty of good, bad and ugly to go around and my job, as it has been for most of my career as a business journalist, is to try to sort it all out. I do so as a regular contributor to Forbes.com, as well as The Robin Report, Progressive Business Media and other media, plus my own blog, stupidbusiness.com. My regular commentaries have elicited both praise and scorn and I welcome them both equally. I expect to be doing this for the duration.

Source: Store Wars: The Rise Of Floorwalkers

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