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Department stores are not doing well. This we know because sales have declined 30 percent from $87.46 billion in 2005 to $60.65 billion in 2015, and also because: When was the last time you shopped in a department store? And this afternoon, Macy’s announced that it would be closing 68 of its current 730 stores and cutting 10,100 jobs.
Via press release, Macy’s announced a series of cost-cutting measures, including store closures and layoffs that are estimated to save the company $550 million annually. As a way to streamline management, the company will lay off 6,200 employees, while an additional 3,900 will be displaced due to store closings, some of whom may be offered positions in nearby stores. This brings the job count cut to 10,100.
The news does not come as a surprise to experts, including Neil Saunders, CEO of retail analyst firm Conlumino. “The blunt truth is that many of these locations are simply not going to deliver solid returns, so there is little point trying to revitalize and invest in them,” he writes in a statement.
As for what Macy’s can do to succeed? “In our view, it needs to completely overhaul the experience to make stores easier to shop, more interesting to browse, and more relevant to today’s shopper,” he explains. “It also needs to develop a much more fulsome exclusive or own label offer to differentiate it from rivals.”
Those rivals include Nordstrom, whose recent efforts to ramp up its department store presence separates it from its competitors. Meanwhile, JCPenney has closed 80 locations since 2014, while Sears has closed nearly 300. Sounds like Macy’s has some work to do.