The luxury retail market has experienced significant challenges, with several prominent companies filing for bankruptcy. These include Barneys, Lord & Taylor, Neiman Marcus (twice), and most recently, Saks Global, which sought bankruptcy protection.
Amidst these industry struggles, Macy's and its higher-end subsidiary, Bloomingdale's, are implementing strategies to maintain their market position. Bloomingdale's is positioned to gain business as Saks navigates its bankruptcy process, particularly if Saks and Neiman Marcus stores close or face inventory shortages.
Macy's has also resisted buyout offers from private-equity firms, prioritizing shareholder interests over deals that could replicate the fates of other retailers like Sears and Toys 'R' Us. Instead, Macy's has focused on fundamental business improvements.
Under CEO Tony Spring, a Bloomingdale's veteran, Macy's has undertaken a turnaround plan focusing on store operations, including improving cleanliness, addressing dressing room maintenance, and ensuring adequate staffing for customer service.
As part of its strategy, Macy's has closed over 100 underperforming stores and plans to close an additional 14 this year.
These efforts are beginning to show results. In September, Macy's reported its first quarterly sales growth in years, albeit less than 1% year-over-year, which exceeded Wall Street's expectations. In December, the retailer again surpassed expectations, reporting its strongest same-store sales growth in over three years.
Despite this progress, Macy's faces ongoing challenges. Saks and its subsidiaries could potentially emerge from bankruptcy as renewed competitors. The continued expansion of online retail also presents a significant hurdle. Furthermore, changes in consumer behavior, including disillusionment with the luxury market due to perceived higher prices for lower quality, the growth of the secondhand luxury market, and direct-to-consumer brand strategies, require a fundamental rethinking of the department store model.
Retail analyst Neil Saunders suggests that Macy's focus on customer experience and retail fundamentals offers the best path forward for the industry, providing confidence for Macy's to continue its strategic plans.