Can Macy's Save the American Department Store?

Bloomberg

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00:00The holiday season, that time of year when the city that never sleeps takes a moment

00:08to reflect. Lights twinkle up and down the avenues of New York City, from the posh storefronts

00:13down in Soho, to the ornate window displays up along Fifth Avenue, to the epicenter in

00:19between, the miracle and magic of Macy's on 34th Street.

00:23Christmas isn't just a day, it's a frame of mind.

00:26American retailers seize on the season, hoping to capitalize on that frame of mind, creating

00:31something that lasts beyond just the holidays. A reflection of that effort can be found about

00:37an hour's drive away from Manhattan in the Long Island suburb of Garden City, New York,

00:42where Macy's is spearheading a broader corporate transformation.

00:45We're looking to be that neighborhood store, the place that you think of that is really

00:49convenient, but also has special things that you can buy for the people you love.

00:52Tony Spring took over as CEO of Macy's Inc. in 2024 after more than nine years of helping

00:58to refresh the company's luxury retail arm, Bloomingdale's. Now, the focus is on the Macy's

01:03brand itself, a middle market department store that has been plagued by slowing sales and waning

01:08cultural relevancy. In his first month on the job, Spring announced plans to close a third

01:13of U.S. Macy's locations, a move that would free up $750 million of assets, money to be reinvested

01:20in the best performing stores, including here at the Roosevelt Field Mall. When it opened

01:26in the 1950s, the I.M. Pay designed Roosevelt Field Mall was the largest in North America

01:32and today is situated in a county whose median income is significantly higher than the U.S.

01:37average. It's a storied retailer with incredible rich history that we're very proud of, but we

01:43never want our rich history to get in the way of our brighter future. The optionality that the

01:48customer has that they may want to shop on their phone, they want to shop in their car,

01:52they may want to shop in the store, and we have to be able to adjust the way we work to be able

01:58to provide that convenience for the customer. But that link between department stores and the

02:02customers they target, it's largely broken down. Department stores account for less than 1% of

02:06total U.S. retail sales, down from about 16% in the early 1990s. Retail historian Michael

02:13Lissicky suggests the decline stems from losing sight of the core consumer. These stores really

02:19excels when they were able to directly serve their immediate communities. They weren't just

02:24commercial destinations, they were social destinations, and that was so important in their

02:30general success. Department stores have long been a mirror of the American consumer, but their roots,

02:36they go back centuries. To the Tokyo fabric shops of the 1600s, to the more modern template established

02:42in the 1850s, when a French husband and wife duo transformed a small Parisian novelty shop into

02:48Le Bon Marche, offering at the time the widest variety of goods under one roof. They started out

02:54very modest, usually as dry goods stores, and then slowly graduated and became bigger. It really was the

03:01focal center of so many communities. What happened? America raced to the suburbs, and new families were

03:07not necessarily drawn to department stores. They wanted price, they wanted convenience, they wanted

03:13late hours, and though the department stores tried to chase their traditional shopper to the suburbs,

03:20the customer had changed. Who is the customer today? I think that's a question that these

03:25remaining department stores need to ask themselves. The middle is exactly where Macy's still sees

03:31promise. Let's think of the middle as the center, the center of it all, which the center gives you

03:37the opportunity to serve up and to serve down. And I think from backstage to luxury, we have the

03:44opportunity across this retail portfolio to satisfy what customers are looking for. Today, the customer has

03:50choices. They're not handcuffed to any mall or any downtown. They can shop literally anywhere, literally

03:59anywhere, and they love the freedom that they've been given. Mark Cohen is a retail veteran who worked

04:04as an executive for some of the most iconic and now defunct department stores of the golden era,

04:10Bradley's, Lord & Taylor, and Sears. A store has to be neat, clean, and friendly. That's sort of step one.

04:18That's old-style store management, and it got lost at Macy's 25, 30 years ago.

04:25It seems like it would be a lot easier to do that if you were a single brand store or a more curated,

04:30smaller footprint. It's easy if you're Apple and you only have a handful of products to sell,

04:34and your devotion is to those products, and your store presentation is deliberately,

04:39completely simple and straightforward. It's all about the merchandise.

04:43To make matters more complicated, the divide between the haves and have-nots

04:48is widening. Economic uncertainty forcing middle-income households to pull back.

04:53When you look at where we are in 2025, heading into 2026, is there a middle market retail business

05:01model? There's a market. It's not the market that there once was. It's a market that's under

05:08tremendous pressure and challenge, but it's viable if it represents things customers really want to buy,

05:18and it treats customers well enough for customers to remain loyal.

05:23One of the ways Macy's attempted to capture the shrinking middle was through deep discounts.

05:27Tony Spring is changing that precedent.

05:29I think closing a sale with value is compelling. People do it in many walks of life, whether it's

05:37the hotel I stay at or the restaurant that I visit, and we're in many different loyalty programs,

05:42but we shouldn't start with the value. The value should be what helps close the sale,

05:46not what helps open the sale. Let's talk about leather. Let's talk about cashmere. Let's talk about

05:51lab-grown diamonds. Let's talk about fragrance. Let's talk about the things that people actually are

05:56attracted to. And then if value is a way to close the sale, so be it. It's a testament to a power

06:02shift from the old days where department stores and their fashion buyers were the tastemakers

06:06to today where the customer is firmly in charge. So how does a department store meet shoppers on their

06:12terms? I mean, in America, it's not like we really need to purchase apparel or accessories.

06:17This is something you do if you have a kid and they outgrow it, but today's customer wants to be excited

06:23about buying something. And I think that's what's missing.

06:28Sean Grayne Carter is a branding expert and associate professor at the Fashion Institute of

06:32Technology and was once the e-commerce director for Macy's, helping launch its online strategy in the

06:38late 1990s. It's the magic of wanting to shop, not having it as drudgery. It's something you have to

06:45do because of the holidays coming up and therefore you have to give a gift. It's the excitement of

06:50finding something new, finding something that you think is sexy or interesting or just plain,

06:56you know, what you want. These days, that excitement comes just as easily through a few

07:00clicks as e-commerce offers customers an online version of the everything store that department

07:06stores once were. You could go to Macy's, you could go to Marshall Fields, Garfinkel's, you know,

07:12Wanamaker's, iMagnet, and feel that what you bought was special because these stores made you feel

07:17special and that experience made you feel special. Today, it's almost as if there's no excitement in

07:24shopping. And that's the magic that's missing. I mean, we know Macy's for their Thanksgiving Day

07:30parade and that's great, but customers don't want to feel that you don't want them. People love to be

07:37taken care of. And I think with our environment, you know, to have a beauty advisor tell you that

07:43that foundation doesn't really work on your skin, to be able to mix different brands in beauty,

07:49to create what is your makeup regimen. That only happens when you're working with people who will

07:54tell you the truth. That looks good on you. That doesn't look good on you. And I think we learned

07:58a long time ago in kind of retail sales 101 to tell somebody somebody looks good in something just

08:04to make a sale only means you lose a customer for life. So you're better to give them the honest

08:08opinion and find something that works for them. I kind of come back to multi-brand, multi-category,

08:14multi-priced. It is really an effective advantage in this environment where people really aren't sure

08:20what brand is right for them. Online shopping in the U.S. topped $1.3 trillion last year. But

08:26in-store shopping is still the preferred method for most Americans with almost $6 trillion in sales,

08:31according to a report from Capital One. Bloomingdale's CEO, Olivier Braun, interprets these trends

08:37as complementary. Of course, digital will keep growing. It's a fast-growing channel for us,

08:42and it's been the case for many years. I think we are seeing more and more transactions happening

08:47online. But for me, the best way to actually invest online is keep investing in the stores.

08:53The best branding investment we can make as a department store is investing in the store.

08:58Bloomingdale seems to have cracked the code. Under the Macy's Inc. umbrella,

09:02the department store has leaned into its high-income consumer base.

09:05Bloomingdale's emerged from the murk of a middle-ground, non-differentiated store on

09:133rd Avenue in the shadow of the 3rd Avenue L. I'm showing you my age. And became a real

09:20destination by virtue of the assortments that it presented, the ambiance it created,

09:26the mojo that it delivered. Tony Spring is widely credited with restoring Bloomingdale's' success.

09:34Serving as CEO from 2014 to 2023, he's now looking to bring that same feeling to Macy's.

09:40The wonder of Bloomingdale's is that you kind of come in and a lot of eye candy. You see great brands.

09:46There's the real careful precision and the curation and the editing of what you see and how it all comes

09:52to life. He did a great job as the CEO of Bloomingdale's. He's now got this enormous task

09:57of recreating, creating some form of magic that exists for real at Macy's.

10:04It's a different customer, though, at Macy's than at Bloomingdale's.

10:06It's a different customer, but it's the same challenge. It's the same challenge. You've got to be special.

10:13So when the holiday lights come down, the Thanksgiving Day Parade balloons go back into

10:18storage and the New York rush resumes, Macy's is still faced with the reality of a shrinking

10:23middle class. Who is the Macy's customer today? So working, woman, family, people who enjoy,

10:31I think, the nicer things in life, but also like value. And I think the balance of us as retailers,

10:37not determining this is on sale or this is not on sale or that everything you buy is on sale

10:43or that everything you buy is at regular price. We like to have a menu, and I think it allows

10:47you to indulge in the people that you love. We have the capacity to show retail, to show

10:52the consumer Macy's at its best as opposed to just trying to survive. And I think there's

10:57a fine line that you move from surviving to getting into the game, to playing to win, to

11:03making sure you're showing the customer the very best that you're capable of.

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