Macy’s to Close 100 Stores — Could Philly Locations Be Shuttered?
Wanamaker is a name with a lot of history in Philadelphia. John Wanamaker first got into the retail business in 1861, and he opened the grand Wanamaker Building in 1911. There has been a department store there ever since — and one with a lot of beloved Philadelphia traditions in it. The pipe organ in the Grand Court is the largest playing pipe organ in the world, and its holiday light show has delighted citizens of Philadelphia for generations. It also hosts Dickens Village, a more recent holiday affair that was once at Wanamaker’s.
Also, the Wanamaker Building played Prince & Co. in Mannequin, which for various reasons is the greatest film ever made about Philadelphia. Now a Macy’s, the department store is just three levels — reduced from an original nine floors of retail space.
Today, Macy’s announced it had “outlined a series of initiatives to drive profitable growth, enhance shareholder value and strengthen Macy’s as America’s preferred omnichannel shopping destination.” Translation: Macy’s is closing 100 stores. (Its stock jumped at the news.)
Macy’s did not disclose which stores would be closed and said it is still having internal discussions about which 100 stores would be closing. There are 675 “full-line” Macy’s locations. Fourteen percent of Macy’s store portfolio will be slashed.
“In the short term, our company’s topline sales will be somewhat smaller, but the changes being made will position us to grow comparable sales more quickly and generate a level of profitability that stands out among retailers,” said Jeff Gennette, the Macy’s president, who is slated to become CEO early next year. “We will continue to carefully analyze consumer shopping patterns and trends, and use data and customer insights as the basis for innovations to drive the business. You can look forward to a company that expedites decision-making, moves faster, and is bolder in its approach to the customer.”
Macy’s is facing tough competition from online retailers like Amazon, as well as discounters. Because the recovery from the recession has been concentrated in the upper class, most Americans are still bargain-hunting. Off-price retailers are trouncing regular department stores. In Center City, there are locations of Marshall’s, Bloomingdale’s Outlet, Nordstrom Rack, Ross Dress for Less and Century 21 within walking distance of the Macy’s. Bloomingdale’s is owned by Macy’s.
“Nearly all of the stores to be closed are cash-flow positive today, but their volume and profitability in most cases have been declining steadily in recent years,” Gennette said. “We recognize that these locations do not yield an adequate return on investment and often do not represent a customer shopping experience that reflects our aspirations for the Macy’s brand. We decided to close a larger number of stores proactively so we can invest in a winning customer experience in our most productive and highest-potential locations, as well as invest in growth sooner and more aggressively in digital and mobile.”
The Center City Macy’s location could survive: The foot traffic in Market East, plus the location’s historic character, is likely enough to save it — unless Macy’s feels the “outlet” nature of Market East. But there are also lots of Macy’s in the area: There are four (plus a Macy’s Furniture Gallery) in South Jersey not far from Philadelphia, and there are six in the Philly suburbs in Pennsylvania. Macy’s also has a location at the Roosevelt Mall in Northeast Philly. Macy’s said it would close stores where the real estate value exceeds the store value.
Macy’s announced a sixth-straight quarter of decline, but said it was not as low as Wall Street had predicted. Macy’s said it would focus more on developing online offerings and beefing up offerings at stores that will remain open. The new closings are in addition to the 40 closures Macy’s previously announced this year.
But if Macy’s really wants to turn things around, all the company really needs to do is watch Mannequin. A mannequin that comes to life and helps craft eye-popping window displays should do the trick to turn the store around.
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