Macy’s Store Closings: 4 Valuable Lessons For Retailers


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Much has been written about Macy’s brand struggles and its 100 store closures ahead of the 2016 holiday season. Among the observations being made:

Macy’s may be a “harbinger of weakness” for the retail industry.
Macy’s isn’t doing enough to appeal to millennials.
Discount chains, outlet stores, and online retailers continue to upstage traditional retailers.

These are all fair points (although none of these issues is beyond Macy’s power to change; we’ve argued as much here, here, and here).

Here’s the real question, from our point of view:

What did Macy’s know, and when did the brand know it?

Macy’s decision to close such a large percentage of its stores, at this point in time, suggests the iconic retailer may have been caught off guard by the extent of its problems. Perhaps it over-expanded, expecting its store footprint to support a lot of other things it’s doing. Unfortunately, Macy’s move may be too little, too late to stop the bleeding.

So what lessons does this hold for the rest of the industry?

Here are four big takeaways.

1. Avoid the dreaded chain of assumptions.

Energy is a constant in the universe. The same is true for retail dollars spent. Consumers might be spending less with a particular brand, but those dollars haven’t disappeared. They’re just going somewhere else.

Let’s assume we know the reason(s) a brand’s revenues are declining—for example, the convenience of online vs. brick-and-mortar shopping. We build on that assumption, and so on. Six logical leaps in, we make a drastic change to the organization.

Here’s why this chain of assumptions is a brand killer. If your first assumption is off base, the rest will be even further off. Thus your plan of action will do nothing to address the real issue. Best case, your solution or initiative falls flat; worst case, it drives customers into the arms of your competitors.

2. Surface improvements won’t solve underlying problems.

No one can claim that Macy’s (a household name since 1858) has fallen behind the times. Quite the opposite, in fact. When it comes to omnichannel offerings and in-store technology (beacons, kiosks, etc.), Macy’s has always been at the forefront.

In attempting to distinguish the customer experience in this way, Macy’s fully expected to reap big market gains. But shoppers weren’t impressed enough to visit more often and spend more over time. Today, the brand has little to show for these investments.

Bottom line: All the cutting-edge sophistication in the world can’t cure a brand’s core business issues—the ones that actually drive (or dry up) revenue. The only surefire way to turn things around is to keep a running dialogue with your customers—and to truly listen.

3. Don’t make a move unless you’re on solid ground.

It’s one thing to deploy customer satisfaction surveys (CSAT) and examine what’s happening in your stores (mystery shopping). It’s quite another to:

  • gather solid, precise data;
  • interpret the results correctly; and
  • apply what you’ve learned.

The truth is, few brands have mastered the art and science of customer experience research. But they’re very easy to spot. They keep their customers loyal and continue to grow and thrive—even in a supposedly harsh industry climate.

Useless customer data (i.e., shoddily collected, misinterpreted, or never acted upon) is like the fabled tree that falls in the forest. It might as well not exist. To see real results, you must ask the right questions, acknowledge what the data is telling you, and respond appropriately.

4. It all boils down to the customer experience.

First, Nordstrom introduced Nordstrom Rack. Then Macy’s introduced Backstage. Both offer discounted merchandise to complement (and perhaps feed) their full-price retail business.

So why is Nordstrom Rack doing so much better by comparison? It has a clear edge: brand consistency.

Just as full-price Nordstrom stores are known for their exceptional customer experience, Nordstrom Rack offers new, clean, wide open spaces; high-quality merchandise; helpful associates; and customer-friendly policies that scream, “We value you.”

Backstage, according to some, falls short of the Macy’s brand ideal. Ambience, layout, and engagement appear to be lacking. Backstage seems to be all about price—which even the most bargain-obsessed customers aren’t.

Bottom Line: Listen to Your Customers, and Proceed Wisely

With the right tools and behaviors, retailers can confound the industry analysts and defy the prognosticators—even in the age of Amazon and periods of slow economic growth.

What are the right tools and behaviors? In a nutshell: solid research, and an expert read on it. An insatiable drive to innovate, without fear of failure. Small pilot programs. And cumulative successes.

What are your big takeaways from Macy’s store closures, or of any of this year’s retail failures?

Please share your thoughts in the comments below!

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This article was originally posted to our blog where you can find more posts like this at ICC/Decision Services Blog.

Kevin Leifer
Kevin and his team at StellaService help their clients build solutions that optimize front-line team performance and improve customer experiences across contact centers and stores.


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