Amid the slump in sales, Macy’s has announced that it will close around 125 department stores over the next three years. The move is likely to impact about 2,000 workers or 10 per cent of its corporate staff. Macy’s has already shut its Cincinnati headquarters and offices in San Francisco. The cost-cutting is expected to help Macy’s save USD 1.5 billion by the end of next year. The stores which are being closed are in the malls that are witnessing low foot traffic. The decision is expected to impact the one-fifth of the company’s total stores. The development comes even as Macy’s has closed more than 100 departmental stores since 2015. “We are looking for significant structural change and will divert our resources towards healthy parts of the business,” CEO Jeff Gennette said in a statement.
“Structural change will bring our team closer and minimize duplication of work. These changes are deep and will impact every quarter of the business, but it was necessary to address the unhealthy parts of the business. We will come out stronger, better fit and more agile to compete in the present retail environment,” the statement reads. The announcement has been made after years of struggles, especially because of the growth of low-price clothing chains and the rise of online services likes Amazon. Macy’s rivals like Forever 21 and Sears have faced similar challenges and have been forced into bankruptcy.
To avoid the fate of Sears, Macy’s has outlined a new plan to become sustainable and profitable. It is likely to reveal its multilayer plan during a meeting with investors in New York. The departmental store brand is planning to expand its loyalty program and build up to four private-label brands. It will also test the ‘Market by Macy’s’ store concept. These stores will be smaller than its typical stores and located away from malls. Apart from having curated merchandise selection, the store will also serve local food and drink. The first one is expected to open in Dallas.
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