ur shareholders in the years ahead”. It follows reports in January that Macy’s was curbing 2,350 jobs, approximately 3.5 per cent of its workforce.  With the closure of the underperforming stores, Macy’s explained it would be concentrating on luxury shopping offerings moving forward which includes opening 15 Bloomingdale’s stores and 30 Bluemercury cosmetics locations in the next three years. In a public announcement, Tony Spring, Macy’s chief executive officer, declared, “A bold new chapter serves as a strong call to action. It challenges the status quo to create a more modern Macy’s, Inc.… We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value.” In addition to the closures, Macy’s has also pledged to invest in approximately 350 locations and expand smaller storefronts.  Where did Macy’s go wrong? Since its beginnings as a small dry goods store in Herald Square in 1858, Macy’s slowly but surely became one of the most well-known department stores in the US, if not the world. However, the legacy retailer’s reputation has been on shaky ground of late. Thanks to a decline in consumer interest in shopping in traditional department stores amidst the rise of online shopping and indie retailers, big-box retailers like Macy’s and Neiman Marcus and JCPenney, the latter two of which have both filed for Chapter 11 bankruptcy protection, have been fighting to stay afloat.   In the last quarter of 2023, Macy’s posted a net loss of $71 million, down from profits of $508 million in the same period of 2022, with sales dropping 1.7 per cent from $8.12 billion.  In December, Macy’s received a $5.8 billion acquisition offer from an investor group, a proposition that the retailer ultimately rejected due to a lack of a viable financing plan.  Can Macy’s compete in luxury? Neil Saunders, managing director and retail analyst at GlobalData, believes the store closures are “a necessary step to strip the dead wood from Macy’s”.  “There are too many underperforming stores in the portfolio that will not generate a strong return on investment, even if they are improved. By freeing itself from this burden, Macy’s will be able to divert more resources to the stores it thinks have a future. It [the retailer] will also be able to expand Bloomingdales and Bluemercury, which have better growth potential,” he told Inside Retail. However, Saunders warned that this expansion strategy alone won’t be enough to restore Macy’s to its prior status. “Aside from Bluemercury and Bloomingdale’s, Macy’s needs to revive its core nameplate and this is the most challenging part of the job,” he said. “For the core nameplates, Macy’s says it will ‘modernize’ the shopping experience which hopefully means that stores will be given a full refurbishment and proper staffing levels to provide a level of service and visual appearance that is appropriate for mid-tier department store…a correction that has long been needed.” Steve Dennis, president and founder of SageBerry Consulting, a firm that provides strategic advisory services to the retail, fashion, and luxury industries, echoed Saunders’ doubt about Macy’s plans for a luxury revival. “There are two things we know for sure. The trends have been adverse for department stores for more than two decades and nothing Macy’s has done in response has amounted to much,” Dennis explained. “Second, closing stores does precisely nothing to improve customer relevance. To restore market share growth Macy’s will have to dramatically improve the draw and differentiation of its remaining locations in a part of the retail market that continue to contract. That is a very tall order. “The impulse to double down on its more upscale formats makes sense at face value, but both Bloomingdales and Bluemercury face formidable, better resourced competition. There are no easy victories here,” Dennis warned.  As he explained in a previous article, Dennis felt that while legacy department stores are trying to play catch up, it may just be too little, too late.  “Off-price brands like TJ Maxx and specialty beauty players like Ulta and Sephora offer superior value propositions. It’s unclear how a shrunken-down Macy’s format delivers enough differentiation that it’s likely to claw back substantial market share rather than merely transfer sales from existing mall-based locations. Sadly, this is what we see time and time again from legacy brands that mostly watched the last twenty years happen to them,” Dennis concluded.