Can an old dog learn new tricks? Macy’s has been stepping up to the plate with a series of new moves, from the expansion of its smaller-footprint stores, to a new digital fashion platform targeting younger shoppers. In October, the department store retailer announced plans to open 30 more “mini stores” in strip centers across the US over the next two years, as it veers outside of the shopping mall. The stores are approximately one-fifth of the size of a traditional Macy’s, an
and offer a selective mix of merchandise, host local events, and showcase an updated look. The retailer has been testing out this smaller store format, initially dubbed Market by Macy’s, though it is slowly being phased back to Macy’s, for around for four years to a fairly positive outcome. The small-format stores that have been open for more than one fiscal year have posted comparable sales growth on an owned-plus-licenses basis from the beginning of the latest fiscal year, which began in late January, through the fiscal second quarter, which ended on July 29. Chief store officer Marc Mastronardi believes that part of the success of these stores is their proximity to big-box stores, grocers, and popular discount retailers like T.J. Maxx. Mastronardi noted, “The high level of convenience in places that have a lot of traffic — that’s been the secret sauce.” Macy’s also recently teamed up with metaverse technology platform Journee to launch a new digital fashion platform, Mstylelab, an interactive experience for users to explore a virtual world to explore the retailer’s newest brand, On 34th. Dave Torres, vice president of interactive marketing at Macy’s, commented: “As we grow and evolve the Mstylelab digital platform and community, new activations and experiences will be brought to life creating immersive storytelling focused on fashion and style, in a fun and shoppable environment.” But while these initiatives sound promising, the question remains: can the department store chain truly adapt to the needs of the modern-day consumer? What’s going on with Macy’s? The first Macy’s opened in October 1858. But while the brand enjoys strong recognition with both Americans and international consumers alike — thanks to its iconic flagship store located in the heart of New York City’s Herald Square and the Thanksgiving parade it hosts every year — that hasn’t necessarily been helping the retailer survive the tough retail market. In August, Macy’s announced that its second quarter net sales fell by 8.4 per cent year-over-year to $5.1 billion, with bricks-and-mortar sales down 8 per cent and online sales down 10 per cent. It’s not just Macy’s. The classic department store chains that Baby Boomers and Gen X shoppers grew up with are either shutting down, like Lord & Taylor, or trying to reinvent themselves for the millennial and Gen Z consumer demographic, like Saks Fifth Avenue or Macy’s. Attempts to revitalise the department store chain model Showfields is a prime example of a well-intended, but somewhat ill-executed attempt at defining the modern-day version of a department store. The self-described “most interesting store in the world” was the talk of the town when it opened its first bricks-and-mortar location in 2019 in NoHo, a trendy residential neighborhood in Manhattan, before opening stores in Brooklyn, Miami, Washington DC, and Los Angeles. Showfields attempted to set itself apart as the “upgraded” version of the department store chain in a few key ways. Instead of providing a wide variety of brands that customers could reliably find and purchase in-store, it offered a constantly revolving selection of brands, many of which were indie and new to the market, that consumers could check out, and then purchase online from the brands directly. Positioning itself as a “lifestyle discovery store”, it used a software-as-a-service platform to anonymously track consumers’ shopping journeys through the store, gathering data such as sales figures, traffic figures, customers’ gender, and more. While the idea sounds great in theory, between factors like a lack of foot traffic in Showfields’ bricks-and-mortar locations during the height of the pandemic and high rent costs, the retailer has struggled to make the concept work financially, and it recently filed for bankruptcy. Will Macy’s efforts help revive the classic department store chain? Steve Dennis, president and founder of SageBerry Consulting, a firm that provides strategic advisory services to the retail, fashion, and luxury industries, believes that Macy’s attempt to reinvent itself may be coming a bit late to provide much help. “Given the dramatic loss of market share to ‘off-the mall’ competition that Macy’s has experienced for many, many years, at one level pursuing a strategy of moving to where the customers are makes sense. The issue is that it’s almost certainly too little, too late to be meaningful,” Dennis told Inside Retail. “Off-price brands like T.J. Maxx and specialty beauty players like Ulta and Sephora offer superior value propositions. It’s unclear how a shrunken-down Macy’s format delivers enough differentiation that it’s likely to claw back substantial market share rather than merely transfer sales from existing mall-based locations. Sadly, this is what we see time and time again from legacy brands that mostly watched the last twenty years happen to them.” At this point, only time will tell if Macy’s recent efforts will be enough to restore the brand to its peak profitability.