Macy’s store closures are a sign that retail industry changes and an inability to adapt have taken their toll on the beleaguered department store sector.
When Macy’s announced in early September that it planned to close between 35 and 40 under performing stores, the move certainly made headlines. Unfortunately for Macy’s, it also made sense. Because, as most analysts and industry observers can attest, it only reaffirmed a story line that has been developing for many years now: department stores are in trouble.
Sales numbers continue to drop. Macy’s announced in August that second-quarter revenue was down 2.6% and profit dipped 26% — the latest disheartening news in a longer-term trend of shrinking market share. While closing under performing locations and exploring new options in new markets is a healthy part of any national retail brand’s portfolio, the latest store closure announcement is clearly not business as usual. While Macy’s is understandably framing this move as part of natural turnover, the reality is very different. The pressures that have brought Macy’s to this point have been building for almost 25 years, and are the result of both tectonic shifts in the retail industry and strategic missteps by the department store giant.