What: Forbes reviews at Macy’s plans to close 150 stores and draws some conclusions.

Why it is important: Forbes’ advice to department stores: go DTC, differentiate through specific customer targers, and find new brands.

Macy's, a symbol of the traditional department store era, plans to close 150 stores, which constitutes nearly 30% of its current operations, reducing its store count to 350. This decision is a part of a broader trend of department store closures, including notable chains like JCPenney, T.J. Maxx, and Sears. Macy’s CEO Tony Spring attributes this decline to operating too many stores that are outdated, a sentiment reflected by department stores holding only 2.6% of total retail transactions in 2023, a steep drop from 14.1% in 1993.

The decline in department stores is primarily due to their failure to adapt to modern retail demands. Issues such as an overabundance of physical space, inadequate customer engagement, and outdated product offerings have contributed to their dwindling relevance. For instance, the pandemic has shifted consumer preferences towards online shopping, with online retail sales increasing from 26% in 2020 to 34% in 2023. Additionally, department stores have not effectively used customer data to enhance shopping experiences or modernize their product offerings to align with current lifestyles, such as the increased demand for comfortable home wear rather than formal office attire.

To regain relevance, department stores might look to successful strategies employed by competitors. This includes embracing direct-to-consumer models that cater to specific needs, exploring smaller, more targeted retail formats, and fostering purpose-driven brands that resonate with contemporary values like inclusivity and sustainability. By adopting these strategies, department stores could potentially revitalize their appeal, particularly among younger demographics, and sustain their presence in a rapidly evolving retail landscape.

Reviewing Macy’s plans to close 150 stores and what it means for department stores