Macy's Put to the Test: A Transformation with an Unexpected Strategy

Once, the large department stores in the USA were not only an indispensable part of retail but also firmly established in every family. With a wide range of offerings from household goods to clothing and electronics, they provided the convenience of "one-stop" shopping. These retail giants held the title of the most lucrative companies in the nation for decades. However, time took its toll on these giants as well. Increasing competition, changing consumer behavior, and the unstoppable rise of online shopping led to a slow decline. Macy's is no exception, having struggled with declining sales for years. Back in February, Macy's announced plans to close around 150 less profitable stores in the USA by 2026. The focus is to be placed on more profitable brands, while 30 smaller concept stores are to be established. Interestingly, Macy's is pursuing a strategy opposite to many of its competitors: While others focus on value offerings, Macy's continues to invest in high-priced luxury brands. Despite challenges in the luxury market, Macy's is betting on higher prices and fewer discounts, which have so far resulted in positive outcomes in the form of higher full-price sales and an expansion of its private labels. As part of the restructuring, 3.5% of the workforce was also reduced last year. For 2025, Macy's plans to close another 66 unprofitable stores. However, this measure is not without controversy: Shareholder activists doubt whether everything is being done to maximize real estate value, particularly concerning the flagship store at Herald Square in New York City. Yet, despite the skepticism, Macy's reported positive developments: a triple quarterly increase in customer satisfaction and sales, despite a recent decline in net sales by 2.4% to $4.7 billion.