Macy’s, one of the most iconic department store chains in the United States, has announced a major strategy shift that will see the closure of approximately 150 locations over the next three years. The move comes as the company aims to focus more on its luxury chains, Bloomingdale’s and Bluemercury. Macy’s new CEO, Tony Spring, referred to this shift as a “bold new chapter” for the company.
The closures will result in Macy’s reducing its store count to 350, while simultaneously adding around 45 new Bloomingdale’s and Bluemercury locations. The decision to close these under-performing stores was based on the fact that they account for only 10% of the company’s sales despite occupying 25% of its total square footage.
Spring emphasized that this strategic shift is aimed at reinvigorating customer relationships by improving shopping experiences, offering relevant assortments, and providing compelling value. He expressed confidence in Macy’s teams, stating that they are energized by the work ahead as they strive for market share gains, sustainable growth, and value creation for shareholders.
This announcement follows a previous plan in mid-January to close five Macy’s locations and eliminate approximately 2,350 positions, representing 3.5% of the company’s workforce. The additional closures will occur gradually over the next few years, with at least 50 locations expected to shutter this fiscal year and the remainder closing by the end of 2026.
Macy’s decision to streamline its supply chain through automation is also a contributing factor to the layoffs. By implementing more automated processes, the company aims to enhance efficiency and reduce costs.
In recent years, department stores have faced significant challenges, with the COVID-19 pandemic further exacerbating their struggles. Retail giants like J.C. Penney and Neiman Marcus have filed for bankruptcy protection, highlighting the need for adaptation and innovation within the industry.
To better compete with rivals such as Target, Nordstrom, and Kohl’s, Macy’s has been repositioning its portfolio and expanding its small-format store concept. In October, the company announced plans to open 30 smaller stores across the United States. These smaller stores, ranging from 30,000 to 50,000 square feet, are approximately one-fifth the size of traditional Macy’s locations. The company had previously opened four small-format stores in August, primarily in the Northeast and Western regions.
Macy’s bold strategy shift reflects the changing retail landscape and the need for department stores to adapt to evolving consumer preferences. By focusing on luxury chains and embracing smaller store formats, Macy’s aims to stay relevant and regain its competitive edge in the industry. As the company navigates this new chapter, it will be interesting to see how these changes unfold and whether they will lead to sustainable growth and success in the future.