Macy’s Closing Stores – Is Department Store Chain Cutting Losses Or Improving Sales Approach?


Macy’s has announced it will be closing about 35-40 stores in the near future.

Macy’s is closing about 35-40 stores, which amounts to 5 percent of its total locations. Evidently, the soon-to-be-shuttered stores couldn’t even garner 1 percent of the department store operator’s sales. However, the reason behind the underperformance of the stores is rapidly changing buying patterns among its once-loyal customers. Incidentally, even if Macy’s has finalized exactly which stores it will close, it hasn’t disclosed the locations. But, the process will begin early next year.

Closing of stores isn’t something that Macy’s is doing for the first time. The department store chain has shuttered about 52 stores in the past five years. However, the process has been gradual and the company hasn’t closed this many stores in a single year, a step it is being forced to take after witnessing the change in how customers shop, reported CNN. A statement about the decision read:

“Annual sales volume at the stores, net of sales expected to be retained in nearby stores and online, is expected to be about $300 million. That would represent about 1 percent of total Macy’s sales.”

Though Macy’s largely operates in America, with about 770 stores in 45 states, globally the chain owns and manages a total of 885 stores, including Macy’s, Bloomingdale’s and others, reported MSN. Interestingly, the company isn’t on a closing spree. The company opened a dozen stores in other locations in an effort to optimize the supply-chain and stay in sync with its customers who have favored the multi-channel approach to shopping which includes brick-and-mortar stores as well as eCommerce, shared Macy’s CEO Terry Lundgren,

“As new shopping centers are opened, however, many customers change their shopping habits and often the sales volume of a store gets divided among the new and nearby, existing centers. Each year, we prune some stores that are our weakest performers so that we can concentrate our resources on the best locations and maintain a strong physical presence. At the same time the company opens a small number of new stores to fill gaps in our market coverage or where we have outstanding real estate opportunities.”

It’s no secret that companies in the physical world are increasingly focusing and gradually shifting to digital commerce and online shopping sites, as their customers are getting used to the convenience and ease of shopping with a mouse instead of trudging over to brick-and-mortar stores. In fact, Macy’s Chinese joint venture has already tied-up with Alibaba Group Holding Ltd. Macy’s now has a virtual store on Alibaba’s online marketplace, called Tmall, reported USA Today.

By closing some of its stores, Macy’s might improve its bottom line and could make money by liquidating its real estate.

[Image Credit | Andrew Burton / Getty Images]

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