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Macy is shrinking stores to deal with Penney, Sears Store Closings

With Sears (shld) now in bankruptcy and JC Penney (jcp) struggling, Macy's (m) is forced to rethink how it operates its stores in the malls that anchor with rivals.

Sears filed for bankruptcy protection last year and announced another round of retail locations a lot and Bon-Ton was liquidated earlier this year, while Penney struggles to steer water despite the conversion of 140 weak stores in 2017. Malls like those The chains left, but where Macy is still having a store, has almost become ghost towns: while not appropriate, rival retailers disappear that anchor a macy shopping center, as it means less overall shopper traffic.

To solve this problem, Macy said on Wednesday that it was creating a three-tier classification of its 600 plus stores that determine how much investment they will receive. Shops in weak malls and centers where Macy is the last warehouse standing will typically be part of the subset called "neighborhood" stores of the company.

Concretely, it means they will continue to get investments like better lighting, flooring and fixtures, but on a much more modest scale than other Macy sites. The idea is that these stores, while underperforming, are still profitable and worth keeping. But the state of the malls they live in means that Macy should not guarantee anything more comprehensive or sumptuous.

"We are experiencing [that trend] at our malls where we are the only anchor left and it has really informed our neighborhood store strategy," told Macy's CEO Jeff Gennette Fortune . "Such stores are usually used for trips to fill the basics rather than explore and look for new fashion, which customers do by going to a better Macy, "said Gennette. The neighborhood stores will shrink in size by about 20% and have fewer employees.

Still, Gennette says The stores still need to be up to a certain standard. Such neighborhood stores will include self-service cashiers and self-catering shoe sections. Most importantly, these stores are the key to supporting Macy's red hot e-commerce growth and will offer online order pickup and return handling as all stores do [1[ads1]9659002] "There may not be enough reason to get to the balance of the mall so that you & # 39; I have to give them enough reasons to come to your store, "says Gennette.

Stores in the next level, Macy's so-called" magnet "stores will get a lot more investment. Some 50 of these stores have been a part of Macy's "Growth50" project, which has tested new merchandising and presentation ideas at specific stores to quickly see what works and is worth rolling out to more stores. These stores will be more involved face lifts, more crew, offer A wider range of goods, including many stores, more advanced goods. In some places, Macy has tested things like lockers to retrieve online orders. Another 100 Macy will get it in 2019.

The highest The tier stores include Macy's Herald Square million square foot store in Manhattan and ten places like Union Square in San Francisco.

The idea of ​​smaller stores is one that grows in retail. Kohls, for one, also reduces inventory in many stores Cuts to rotate them and down the line, cutting space to sublet to other retailers as merchants who generate frequent shop visits. Nordstrom and Target are among the others who roll out smaller places.

Macys, often beaten for storage, already shows signs of progress: In a research note Wednesday, GlobalData Retail said the survey found that 67% of customers considered this to act like Macy's "good or very good" up from 59% a year ago.

It helps to explain why Macy's rebound seems to get steam. The food chain reported that comparable sales increased by 3.1% in the third quarter, fourth quarter of consecutive growth well above Wall Street forecasts for 2.2% growth, according to Consensus Metrix. And it raised the whole year's forecast just as the crucial holiday is going on, one that Gennette said that Macy is ready.

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