Macy's Announces Store Closures, Job Cuts as Part of 3-Year Growth Plan
Macy's announced Tuesday a new three-year growth strategy that includes plans to close 125 of its least productive stores and cut 2,000 corporate positions among other changes, reports CNBC. The retailer is closing its San Francisco, downtown Cincinnati and Lorain, OH offices, consolidating headquarters to its New York City location. The turnaround plan, dubbed the Polaris strategy, hopes to see savings from these cost cuts funnel into the company's bottom line. In a press release, Macy's announced its focus would be on five main pillars: strengthen customer relationships, curate quality fashion, accelerate digital growth, optimize store portfolio, and reset cost base.
The company press release also stated plans to upgrade up to 100 stores with new technology and merchandising strategies after stores already treated with this model continue to outperform dated locations. Macy's will also double down on investments in its digital presence, including its websites and apps, and on growing its off-price Backstage business.
Total Retail's Take: Like other traditional retailers, Macy's is realizing its massive brick-and-mortar footprint needs to shift, scale down, and become more digitally integrated to continue to draw customers. The brand is currently testing a new store format, Market by Macy’s, that places smaller stores outside of the mall with features like curated merchandise, local goods, food and beverage options, and community events. If executed well, this pilot program could pave the way for Macy's to regain its footing in local communities and revamp its appearance as a dated department store.
Jeff Gennette, chairman and CEO of Macy’s, Inc., said, "We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work … I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment." However, from another angle, the plan's peppering of store closures, job cuts and consolidation efforts leaves a lot of room for skepticism. The Polaris strategy seems to hold some promise for the struggling company in terms of cost savings, but it will need to prove itself in other areas, namely accelerating digital growth.
Kristina Stidham is the digital content director at Total Retail and sister brands Women in Retail Leadership Circle and Women Leading Travel & Hospitality at NAPCO Media. She is passionate about digital media and handles video, podcast and virtual event production for all brands. You can often find her at WIRLC, TR, WLT&H or industry events with her camera and podcasting equipment—or at home on Zoom—recording interviews with thought leaders and business executives.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her family and two pet guinea pigs, and travel to new places.