Last week, Macy’s reported that same-store sales fell…again. This marks the fifth time in a row Macy’s has reported a negative number. The retailer cited declines in traffic, competitive pressures and a consumer base that is cautious (isn’t that just a restatement of the first thing they cited?).
There are major deep-seated problems in the retail sector. When Macy’s cites traffic declines and increased competition, it is simply stating the effects of a larger problem – what does Macy’s (or most other department stores, for that matter) mean to the consumer?
Apparently not as much as Macy’s would like.
Macy’s was once a meaningful brand.
There was a time when Macy’s actually meant something. It was wildly successful at the turn of the century when Macy’s moved to Herald Square in New York City. By 1924, it was known as the world’s largest store. Through its successes were in a single store, it began to purchase other department stores in large metropolitan areas. As Macy’s profits grew, its desire to expand grew. Today, it is the nation’s largest department retailer.
There is meaning in scarcity. Humans innately place value on it. Scarcity denotes exclusivity. For a long time that is what the perception of Macy’s was – exclusive and scarce. It was a destination. But as it grew, those values dissipated with each retail chain it acquired. It became less scarce and less exclusive. Today, Macy’s stores are everywhere (870 stores) and each is just another department store.
As customers move to other channels and specialty retailers, there are fewer customers shopping in department stores in general. Since there are very few department stores that mean anything, there are fewer shoppers to go around. So yeah, Macy’s, you hit the nail on the head. Declines in traffic and increased competition are the reasons for the disappointing sales.
The problem for Macy’s is that it can’t stem the tide of declining sales by trying to out retail other retailers. That simply would degrade the Macy’s brand further. Macy’s has to rethink something it is probably very uncomfortable examining. Its brand.