Walter Holbrook’s Post

The gradual demise of America’s department stores is not just history. It’s a lesson. Macy’s announcement that it’ll close 150 stores—nearly 30% of its total—is the result of a once-great industry in decades of decline. It comes as no big surprise. Their downturn can be blamed on many factors: competition from big box retailers, a shift to online shopping, activist shareholders fighting for control of the company’s board. But the key problem for Macy’s and others is more fundamental: they failed to evolve. While you can make money off a declining business model for years, data shows that once a company runs up against a major stall in its growth, it has less than a 10% chance of ever fully recovering. (See comment for link to research.) Department stores were once the giants of American retail. They reshaped how and where we bought everything, from clothing to appliances to toys to electronics. No longer. This is a wake-up call to those making money off a declining business model. It should push you to deeply rethink how you operate. And to reimagine how you create, distribute and capture value—not only to thrive but to address the transformational challenges of the coming decades. How are you anticipating what’s next and having the flexibility to evolve? #futuresthinking #foresight #innovation #strategy #growth

Stepping into the role as Macy's Chief Executive, Tony Spring faces dual challenges: rejuvenating stores and fending off a potential takeover bid from investors. With Bloomingdale's as his background, Spring aims to infuse innovation into Macy's amid shifting consumer trends and digital retail dynamics. The proposed $5.8 billion buyout bid by Arkhouse Management and Brigade Capital Management only intensifies the scrutiny on Spring's leadership. Macy's, with its diverse customer base, must differentiate itself by attracting younger shoppers, especially Gen Z. The threat of activist investors eyeing Macy's real estate assets complicates Spring's agenda, necessitating a holistic strategy beyond traditional cost-cutting measures. As Spring navigates Macy's transformation, stakeholders eagerly await its outcome, underscoring the importance of innovative solutions in today's retail landscape. #RetailLeadership #BusinessTransformation #MacysCEO #RetailInnovation #amsterdamassociates

There’s an interesting article in the Wall Street Journal in which the new CEO of Macy's, Tony Spring, recognizes that shopping at Macy’s stores isn’t fun. It’s one of the first admissions we have had, in a very long time, from the executive suite that the way stores look and feel goes to the heart of Macy’s issues. Basically, the experience just isn’t what it should be. There are lots of little details that give glimmers of hope, including the fact Tony Spring wants to review how clothes are displayed, that he intends to add more staff, and that he believes that first impressions can make or break a store. Among other things, this is what good retailing is all about. Tony Spring’s views are now in direct contrast to those of activist investors Arkhouse which, in the same article, bang on about how Macy’s lacks the necessary experience to properly unlock the value of its real-estate. Real estate is important, but monetizing it is not a retail strategy. It is a financial strategy – and usually an extremely short term one at that. Arkhouse’s approach seems to be some kind of smash and grab raid to generate a quick buck with little concern for the consequences. In my view, retailers should be run as retailers. Macy’s may not always have done a good job of running its business in the past, but Tony Spring’s heart and mind seem to be in the right place. He needs to be given a chance to succeed. However, words need to turn quickly into actions. Otherwise the "Bold New Chapter" plan will turn into the same old story. Link to article in the comments. #retail #departmentstores #retailnews #Macys

The Curious Case of Struggling Department Stores: NORSTROM GROUP LIMITED & Macy's Wall Street has written off stores like Macy's and Nordstrom. Sales are slumping, their future looks uncertain, and stock prices reflect that pessimism.📉 Savvy investors are starting to circle. Why? These stores might be hiding some serious value: a) Location, Location, Location: Prime real estate holdings in major cities. 🏙️ b) Brand Recognition: Household names with potential for a fresh take. ✨ c) Customer Base: They still have loyal shoppers, despite the overall struggles. >>What's Going On? Macy's: Real estate investors are doing their homework, considering a buyout offer. They believe the company is undervalued. 🤔 Nordstrom: The founding family is exploring going private. This could mean major changes behind the scenes. 🤫 >>The Big Question: Can They Be Saved? It's a gamble. These stores desperately need reinvention to win back customers. But, could an outsider with a bold vision succeed where others have failed? Or, is the best move to sell off assets and gracefully exit? 🤷 >>The Dillard's Inc.'s Case One department store chain stands apart: Dillard's. They focus less on innovation, more on steady returns for investors. It's not flashy, but their stock performance is surprisingly strong. 💸 This is an industry in flux. We could see iconic stores fade away, or witness a dramatic transformation. The future of department stores is definitely up for grabs! What would it take for YOU to shop at a department store again? #retail #business #investing #innovation #fashion #india #china #mexico

Crumbs of comfort… many department stores are stuck in this comfort zone of doing things in the same way and expecting better results. Processes must be innovated. Experiences must be excellent. Customer service must be out of this world. Staying in the comfort zone will not increase profits. As Neil says… the decline is not over yet. #retail #TRE #departmentstores #stores #merchandising

Do You Have A FORMULA X For Retail Survival, or is it Formula ABC? News of SAKS buying Neiman Marcus prompts this post. My view is that department store survival depends on finding refuge in an infrastructure that allows for a sustainable business model to exist and compete. However, the opportunity of M&As has always been believed to be synergies. Most come with changes to the back of the house and operations. As much as organizations try to keep brands separate, cultures merge, and one brand can lose to others in the portfolio. And the size of organizations shrinks. Other changes in these environments include marketing, merchandising, buying, and design in the name of synergies, but that doesn't always work; in fact, it seldom works. Strategies overlap and are ineffective. There is only one formula in retail. It must be a brand that can keep itself relevant with consumers who, in turn, see it as the place for X, whatever that means to them. However, retail brands struggle to find Formula X and settle for other ones that usually don't prevail. They are often not innovative or have become lackluster. Department stores started losing their edge with the Walmart Effect. They felt compelled to mimic what Walmart was doing. Once in that space, there was no turning back. Why did they chase this strategy? Consumer economics were changing, and Walmart could meet them. To meet those prices, Department Stores had to cut costs, and ultimately, service and executive talent paid the price as well. In my experience, struggling retail brands use the same generic formula, ABC, which is "Avoid-Blame-Copy." Avoid the real issues, Blame external factors, and Copy Competitors. After three decades of leading, building, and turning around retail brands, work on finding your own Formula X. #retailing #strategy #ceo #technology #innovation

Macy's Q4 results: 💵 Total sales: -1.7% 🛍 Comp sales: -5.4% 📉 Net income: -114.0% (unadjusted) These are mediocre numbers. Even with an extra week of trading, Macy's could not engineer sales growth - including off the back of a weak prior year. The big news is that Macy's has a new plan called "Bold New Chapter" which includes "modernizing the shopping environment", pushing more into luxury via the addition of new Bloomingdale's and Bluemercury stores, and streamlining operations. The plans are sensible and give an early sign that new CEO Tony Spring wants to put Macy's house in order. However, Macy's has come up with grand plans before and has completely failed to execute. So most will reserve judgment until they start to see improvements underway. Nevertheless, this is a step in the right direction. #Macys #departmentstores #trading #economy

This year has been one of change for department stores. New leaders have started at several chains. There are takeover and merger attempts in the offing. And we have heard a lot about step changes in the way operations are managed. While the word renaissance is far too strong, there has been hope that department stores can finally stem the long run of decline. Sadly, the results from the second quarter are not positive. Most of the main chains are still in decline and there is simply no real growth on the board. Sure, there are some crumbs of comfort. Sales at Nordstrom have now stabilized. The first fifty stores Macy’s has revitalized saw sales grow by 0.8%. And Bloomingdale’s, which is exposed to a soft luxury market, has performed admirably. But none of these things really change the trajectory. For the chains shown below, collective second quarter sales are down by 8.8% since the same period in 2019. That’s a reduction of $1.21 billion in revenue. And this has been delivered during a time when the consumer economy has been on fire. While changes are coming through and efforts are genuinely being made at some chains, these things will take quite some time to produce overall better numbers. And they will, at least in the immediate term, be offset by structural shifts as department stores continue to close stores to meet new levels of demand. The decline is not yet over. The very modest hope is that it will reach a plateau in the next few years. ___ For reference, here are the Q2 2019 v Q2 2024 sales changes: * Kohl's: -15.4% * Macy's: -11.0% * Nordstrom: -0.6% * Dillard's: +4.4% #retail #retailnews #departmentstores #economy #spending

Macy’s Inc. has a new turnaround strategy that excited Wall Street, but the department store is recycling an old turnaround strategy that smacks of desperation to keep the idea of the American middle class — and upward mobility — alive, writes Leticia Miranda for Bloomberg Opinion. Over the last half a century, the middle class has tumbled and taken Macy’s down with it. Decades of fiscal policy, recessions and inflation all combined to hollow out middle America. Middle-class incomes have grown at a slower pace than higher-income households, resulting in a wider wealth gap. At the same time, consumer trends splintered along economic lines. Pinched shoppers shifted their spending to off-price stores such as T.J. Maxx, while well-off ones went higher up the value chain toward luxury brands.  #retail #shopping #middleclass #money #economy https://lnkd.in/dNJK25ER

Macy’s decision to cut a handful of stores and trim its workforce is part and parcel of the chain’s longstanding policy to shrink itself to bolster profits. While some pruning of the store estate and good personnel discipline is necessary at any retailer, the latest round of Macy’s cuts is, at least in part, a consequence of poor management and a lack of focus on growing the top line. Macy’s obviously needs to keep investors satisfied, and its focus on profit has accomplished this at a time when sales performance has been extremely lackluster. However, this strategy comes with an expiry date: ultimately no retailer can shrink itself to success. Under the incoming leadership of Tony Spring, Macy’s desperately needs to focus on improving the retail experience and bolstering its trading numbers. This path is admittedly challenging but, in the long term, it is far more sustainable than constant cost-cutting. Thanks to The New York Times for including my thoughts in the article linked in the comments. #retail #retailnews #departmentstores