STORE CLOSURES
Why are so many department stores like Macy’s closing in recent years in the US?
The once dominant department stores of old have been swept up in the online shopping revolution as store closures confirm.
Macy’s revently announced the closure of 150 branches in the country, the result of a new ‘strategy’ to prioritize service in the remaining 350 locations, .
According to the company, the closures will occur gradually, starting with 50 closures before fiscal year 2024. The rest will take place between 2025 and 2026, so that, after a period of three years, the company has completed a total of 150 closures.
Although Macy’s Inc. argued that the main objective of the strategy is to optimise the company in the future, analysts and experts on the subject assure that the decline of Macy’s, and other department stores, is the result of a problems that have been going on for years.
Why are department stores closing?
According to Neil Sauders, a retail analyst at GlobalData, the reason why Macy’s and others large stores are closing branches is simple: lack of evolution due to not listening to their customers. In addition to this, other of the main factors in the closure of branches are the rise of online shopping and competition from large retailers. For example, stores like Walmart and Target now offer the same items at lower prices, in addition to including food and other extra items in their catalog.
“Quite frankly, a lot of them stopped caring. They stopped listening to customers,” he said. “Sure online has taken its share, sure big box has taken its share. But most of all, it’s a failure to evolve... In 10 years time we’ll still be talking about this trend, because there will be fewer [department stores] than there are now, Sauders explained to CNN.
Furthermore, the covid-19 pandemic delivered a major blow to all brick-and-mortar stores, forcing temporary closures and accelerating the shift to online shopping. In addition to online shopping, lack of evolution and competition from other companies, another obstacle was the pandemic. Additionally, rising inflation is putting a strain on household budgets, leading consumers to prioritize spending on essential items, further impacting department store sales.
In the specific case of Macy’s, the the office clothing market had a great decline due to the implementation and rise of the home office. In addition, while many department stores had to close, retail stores remained open, allowing them to expand their offering and gain more customers.