In an unprecedented move illustrating the shifting landscape of the traditional retail industry, Macy’s Inc. has announced the closure of approximately 150 of its stores nationwide. The American department store is embarking on a repositioning strategy focusing on luxury with the assertion to start a ‘bold new chapter’ in its illustrious history.
Derived from a detailed report on Godzilla Newz, the closures represent nearly 20% of Macy’s current 800 store portfolio. As part of the retailer’s three-year Polaris strategy, named after the North Star, the company plans not only to close stores but also revamp the customer journey at its remaining outlets. The strategy is expected to generate annual gross savings of $1.5 billion for the company by the end of 2022.
Macy’s store portfolio is broken down into three models, namely flagship; magnet and neighborhood stores. The closure focus will primarily be on the neighborhood stores which are the lowest sales performers of the three despite representing 50% of Macy’s entire inventory. Macys has reported that of their 775 current stores, 125 are classified as neighborhood stores.
As part of the Polaris strategy, Macy’s will be aiming to enhance the quality of its product offer by focusing on high-margin categories. It aims to embrace a more luxury-oriented approach, shifting focus from being a department store to a lifestyle store. Changes will see a greater emphasis placed on luxury fashion, beauty, and home products to increase profitability and offer a compelling shopping experience to its customers.
To further its commitment towards repositioning, Macy’s will also test a new store format, dubbed Market by Macy’s. These concept stores will have a smaller footprint than typical Macy’s stores and will be located at vibrant lifestyle centers to draw a wealthy demographic. Reimagining its legacy to fit the current consumer expectations, Market by Macy’s will prominently feature local goods, boutique businesses and invite guest experts to conduct workshops and classes. Such efforts are in line with the brand’s newfound aspiration to be more than a shopping destination, becoming a place where customers can gather, connect and learn.
Spearheading Macy’s digital growth, the company is also investing in building a robust and high-quality digital business. Recognizing the increasing role of e-commerce in consumer shopping, Macy’s is making a significant push towards enhancing its online presence, improving its site and app experiences, and expanding its omnichannel capabilities. The rise of digital sales is reflected in Macy’s reports that online sales accounted for $6 billion in 2020, a 27% increase in volume compared to the previous year.
The ongoing pandemic has further acted as a catalyst for Macy’s strategic shift. As result of sudden lockdowns and changing consumer behaviors, the demand for luxury goods and an upscale shopping experience online has seen a notable surge. Macy’s move to digitalize its brand, along with closing underperforming stores and focusing on premium offerings, seems an informed decision to weather the retail storm and maintain its relevance in the current market scenario.
An important part of the broader changes, the closure of several Macy’s stores marks quite a transformation in the company’s 162-year long history. The aim is to strategically navigate through the changing dynamics of the retail industry by consolidating its store portfolio, focusing on premium offerings and engaging customers through unique retail experiences. This, coupled with a keen focus on its digital growth, points to Macy’s visionary path towards reinvention.