Macy's is making a move that signals the death of department stores as we know them

Jonathan Weiss / Shutterstock.comMacy’s is shrinking some of its stores.
  • Macy’s is shrinking some of its less productive stores and cutting back on staff.
  • CEO Jeff Gennette told The Wall Street Journal that he planned to cut down on merchandise so that these smaller locations require fewer employees and that he hoped a more curated assortment would create a better shopping experience for the customer.
  • Kohl’s has used a similar strategy in the past to stave off store closings.

Macy’s has a drastic plan to boost sales in its less successful stores.

In an interview with The Wall Street Journal on Monday, CEO Jeff Gennette said the department-store chain would shrink its less productive stores and cut back on staff at these locations.

Gennette said he hoped that by having less merchandise to wade through, Macy’s could create a cleaner shopping environment and ultimately a more desirable experience for the customer.

So far, Macy’s is testing the new format at four locations, cutting as much as one-fifth of the total space.

A Macy’s representative did not confirm to Business Insider how many stores would be affected. Macy’s is due to report quarterly earnings on Wednesday.

These smaller locations will have more self-service options, fewer cashiers, and areas to pick up or return online purchases.

This helps to trim the number of employees required. At one of the test stores, at the Stamford Town Center in Stamford, Connecticut, Macy’s has pulled back on the number of employees – including cashiers – by 40%, The Journal reported.

Kohl’s has used a similar strategy to fight back against the so-called retail apocalypse. Rather than close stores, it has opened smaller locations of about 35,000 square feet, or about one-sixth the size of a typical Macy’s store, as well as shrunk several stores. Often, these spaces are not left empty but encompass other retailers like Aldi, a Kohl’s partner.

While Kohl’s has largely been praised for this strategy and is now considered an industry anomaly, reporting same-stores sales growth in recent months while its competitors have been forced to close stores, some experts say that shrinking stores is not a solution but evidence that a retailer is not resonating with customers.

“If you’ve got too much space, it means your brand isn’t resonating,” Steve Dennis, a former executive at Sears and Neiman Marcus, told The Journal. “It’s not a real-estate problem – it’s a brand problem.”

Macy’s is also investing in some of its more profitable locations, launching virtual-reality shopping technologies and rolling out concepts such as The Market @ Macy’s, a pop-up store-in-a-store that stocks lesser-known brands.


Read more:
Facebook is launching pop-up stores at Macy’s in a move that’s straight out of Amazon’s playbook

Gennette said he believes investment in stores now is crucial after the company took its eye off brick-and-mortar locations to ramp up its e-commerce strategy.

“We were spending the capital and gaining market share in digital,” Gennette told The Journal. “But we underinvested in brick-and-mortar. You can’t just do one without the other.”

That’s something the former Sears CEO Edward Lampert was accused of doing during his leadership and that critics say ultimately caused the downfall of the company.

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