Dive Brief:
-
Macy’s on Thursday revealed the first 66 locations that are closing as part of plans announced nearly a year ago to shutter about 150. Most in this round will close in Q1, with a few already closed and a couple closing mid-year.
-
The 66 locations slated to shutter span 22 states and many are mall anchors, according to a list released Thursday. Several are stand-alone furniture stores that in some cases will shift operations to nearby full-line stores.
-
The department store is closing four of its 24 small-format stores, a shift from the acceleration of small-format openings announced in 2023. Six out of nine of the retailer’s freestanding off-price Backstage locations will also close.
Dive Insight:
Many of the closures confirmed by Macy’s are mall anchors, but its shrinking of the small-format and off-price footprints indicates that two concepts previously touted as full of potential may be getting shelved or at least downplayed.
The small-format stores are about one-fifth the size of Macy’s full-line stores. In 2023, under previous CEO Jeff Gennette, the company said it could triple the number of these locations by the fall of 2025. In February last year, CEO Tony Spring said that, while 150 underperforming Macy’s stores would be closing, in some cases even if they are profitable, 30 small-format, off-mall Macy’s stores would open.
Macy’s launched Backstage about a decade ago and saw expanding the off-price operation as a way to grow and more effectively leverage its real estate. Though most locations have been carved within full-line stores, in recent years the company said it would return to its idea of opening more stand-alone Backstage stores, which like the small-format stores are mostly housed away from malls.
Macy’s didn’t immediately reply to questions about how much its small-format plans have changed, if at all. In a statement Thursday, Spring emphasized improvements in merchandising and customer service at stores slated to remain open; the company didn’t mention its forays into off-mall stores, smaller stores or off-price.
“Closing any store is never easy, but as part of our Bold New Chapter strategy, we are closing underproductive Macy’s stores to allow us to focus our resources and prioritize investments in our go-forward stores, where customers are already responding positively to better product offerings and elevated service,” Spring said.
Some analysts don’t view either the small-format or off-price strategy as productive.
“The small-format idea isn't a big winner,” Erik Gordon, professor at the University of Michigan’s Ross School of Business, said by email. “Backstage isn't great. Unless Macy's comes up with a new idea, its future is to shrink, not grow.”
In fact, the list released Thursday doesn’t go far enough, according to Nick Egelanian, founder and president of SiteWorks.
“I noticed closures at Southlake in Texas and some very good malls. Not many surprises, though,” he said by phone. “They continue to pare back only as stores become all but dead. I’ve been saying for many years, ‘Close more, get out of the Midwest and stop with the useless small-store program.’ What we need to see is what Macy’s is doing to save their best 200 stores — not their annual closing list.”
