The past few years have not been kind to major department stores. Macy’s, Sears, JC Penney’s, and Dillard’s have been staples and anchor stores at suburban American malls for decades. But culture is shifting. Fewer people – by the millions – are going to malls. Kids are not hanging out there nearly as much, and people of all ages are shopping elsewhere, mostly online.
Throughout 2016 few department stores were in the headlines as much as Macy’s. The company struggled with plummeting sales all year, and even a massive line outside the flagship location in NYC could do little to stop the writing on the wall. So, Macy’s picked up 2017 right where they left off in 2016, announcing layoffs.
According to the report, Macy’s plans to close 68 stores and cut 10,000 jobs. Nearly 4,000 workers are expected to be let go immediately, and more than 6,000 more jobs will be “streamlined” as the company works to readjust its management team. The stock dropped 10 percent at the news.
The closings are expected to continue through the first half of the year, with all 68 shuttered by mid-summer.
According to some market watchers, Macy’s is expected to re-invest what it saves from the failing stores into its digital business. This, some say, is just the tip of the iceberg. They expect more similar announcements in the near future as the company works to completely revamp its business model in the hopes of avoiding the fate of slower movers like Sears, who was recently forced to sell is hugely popular Craftsman brand after several years of steady decline.
Sears initially tried to pull out of its fall by purchasing Kmart, an attempt to diversify its holdings that only created more drag on company growth, eventually pulling both brands into a freefall which has yet to stop.
Another department store competitor, JC Penney’s, tried a radically different marketing campaign, which failed spectacularly. The company scrapped the new plan and went back to the bait and switch game of up-marking and offering sales that their customers seemed to prefer.
That leaves Macy’s trying desperately to come up with a winning strategy while trying to stay ahead of market trends and hoping to avoid the fates of its predecessors and struggling competitors. Most believe it will get harder and news will be worse long before it gets better. But, maybe, Macy’s can borrow a little bit of that holiday magic they’ve been charming people with all these years.
Elie Hirschfeld is a NY real estate developer.