Department stores have been a staple of the economy ever since the first one was created in England in the eighteenth century. Thought the years and the decades, they have evolved, and their purpose has changed, but the one thing that they have maintained is the variety of choices that customers can take advantage of when they step inside the premises. The advent of the internet changed all this as it made it easier for customers to shop from the comfort of their own home every individual brand and section and brought on a retail crisis that even giant department stores like Macy’s are having a hard time weathering.
But they are not letting the changes in the industry stop them, and Macy’s has now decided to change the way they do business to adapt and try to maintain their position in the market. The process will be tough and will involve some restructuring, but they have a clear vision and strategy that they have called “A Bold New Chapter,” to help them achieve it.
Macy’s new plan for the future, a way to reinvent in person shopping
First the bad news, there will be some stores that will close down. The company operates a total of 680 stores worldwide, across all brands, 450 of which are Macy’s branded stores. It stands to reason that not all of them are as profitable as they should be, and the company has decided that this is a good time to take care of that problem before it brings down the entire company.
By 2027 they are planning to have closed approximately 150 underperforming stores, which is nearly a third of its total store footprint. While this is not excellent news for some of its workers, there will be time for the adjustment and Tony Spring, the company’s CEO has states that this will help the company liberate approximately $700 million in assets that will be able to be reinvested into the business to help improve it.
Some of the ways that money will be spent will shore up the company for the future, but there are three main avenues that will be covered:
- Modernization of 350 key stores that are now profitable but that could be better with this investment.
- Strengthening the digital channel. After all, online shopping is popular and customers still like to see a repository of brands that they can choose from.
- Expansion of the luxury brands Bloomingdale’s and Bluemercury. With the immediate access to everything, personalization and luxury have become not just a commodity but a sought after experience, and Macy’s is in a position to offer it through their brands.
Because of this restructuring strategy, Macy’s is shifting away from the traditional large-scale department store model in favor of a more tailored and upscale retail strategy. This new direction emphasizes a refined shopping experience through modern, strategically located stores designed to better serve local demand and as a part of this transition, the company plans to introduce 30 compact, streamlined locations with curated product selections.
Additionally, Macy’s is expanding its specialty brands, with 15 new Bloomingdale’s stores and 30 more Bluemercury locations, capitalizing on steady growth in luxury fashion and premium beauty products. But the company does not exisist in a vacuum and the new tariff war with China might derail these plans or make them less effective, after all, the company has already expressed that the new import taxes will have a direct impact on its prices and profit margins.
In a recent call with investors, Macy’s CEO outlined plans to introduce targeted price hikes on specific brands and product categories as a response to tariff-related pressures. CFO Adrian Mitchell added that the company is taking a highly focused approach, working to renegotiate supplier agreements, shift sourcing away from China, and phase out underperforming merchandise