pruney to bloomie

good morrow to you,

studying up on retail has me romanticizing about retail relics of a bygone era.

especially those that still live on macy’s herald square in nyc.

the iconic wooden escalators, the magical holiday window displays, the bright red star logo, &, of course, the thanksgiving day parade that's a national treasure celebrating 100 years this november!

macy’s inc isn’t just a department store.

it’s actually several brands including bloomingdales & bluemercury.

but more than that it’s a cornerstone of american retail.

yet, like many retail giants, it’s wrestling with the reality of a changing landscape. once the crown jewel of shopping, american department stores are in the dark ages. the problem is that despite this, these department stores continue to occupy extremely large & extremely valuable real estate.

such key real estate that macy’s was almost bought for $9B in july mostly for their real estate portfolio. the macy’s property portfolio is estimated to be worth between $5 billion and $14 billion.

for reference, macy’s current market cap is $5 billion 🥴

bringing us to the topic of today’s newsletter
— the place’s leg of macy’s profiTABLE.

before we continue... please show your support for merry makery by clicking the link below to learn about our merry partner 1440 media!

grand beginnings

macy’s inc has long been synonymous with the grand, sprawling department stores that defined american retail. from the flagship macy’s to the high-end bloomingdale’s locations, these stores were the place to shop, the place to stroll, & the place to be seen.

these stores set many of the standards for retail excellence.

but as times changed, so did shopping habits.

the days when people would spend hours wandering through multiple floors of merchandise gave way to one-click shopping from couches.

less strolling, more scrolling.

as consumer behaviors evolved, the very thing that made these department stores legendary—their grand, oversized stores in A++++ locations—became a challenge.

shrinking to grow

recognizing these shifts, macy’s inc. embarked on a strategic evolution. over the past decade, they’ve both refined & reduce their square footage.

in 2015, macy’s acquired bluemercury with 60 stores (now @ 158 stores).

in 2018, macy’s acquired story, an experience-driven retail concept in chelsea in nyc that had “the point of view of a magazine, changed like a gallery and sold things like a store.”

i absolutely adored going to this shop when i lived in nyc. i took “the class” with tayrn toomey & saw a chat by sophia amoruso. such special retail!

in 2019, macy’s opened this story concept in 36 stores in 15 states.

in 2020, the founder of story, rachel shechtman, went on to lead their initiative to open a smaller 20,000 sq ft concept called market by macy’s (now with 13 locations)

for context that size is 1/5 the size of a full-line macy’s location.

in 2021, macy’s opened their new bloomie’s concept in fairfax, va. this is a smaller sharper version of bloomingdales.

in 2022, macy’s opened more 450 toys r us shop-in-shops, a move they did before back in 2012 pre toys r us backruptcy & liquidation.

meanwhile, macy’s is actively working to close 150 underperforming stores in the next 3 years. that were built for a “different era”—when bigger was always better. these locations representing 25% of their square footage. but account for less than 10% of the brand’s sales.

needed steps for the bleak profit stats below.

lil local luxuries

when i think about macy’s inc current lineup, it’s like a quirky family reunion. bloomingdale's is the glamorous grandma who still wears pearls to brunch, macy's is the suburban mom rocking her '90s denim, bluemercury is the bougie aunt who swears by clean beauty, & bloomie's is the cool younger cousin who always knows what's trending before anyone else

as is usually the case, the future is in the younger generation.

macy’s will only be opening small-format stores going forward. forbes did an excellent job in highlighting the strategy of this three prong approach:

1. replacement: open smaller stores in place of old flagships.

2. in-fill: expand in areas with a presence to be more convenient.

3. new markets: open stores in places that couldnt warrant a full-line.

all together this strategy allows them to get out of malls, get closer to more frequented shopping spots, & add services to drive customers in store. a strategy much better imo than j.c. penney that’s opening more low-volume stores.

i hope that going smaller allows macy’s to focus more on what they do best & less on the burden of these big pieces of real estate.

all of this has me thinking about how in retail, as in life, it’s not always about having the biggest footprint. sometimes, scaling down, getting sharper, & focusing on what really matters is the key to long-term success.

& maybe even happiness?

let’s raise a glass of macy’s private-label bourbon to the next chapter!

p.s. if you’ve got a favorite retail story or a burning question about the industry, hit reply & share it with me! i might just feature it in an upcoming newsletter 😊