Macy's began as one of the first department stores and expanded into a retail giant with locations across the US. But now it's closing stores and cutting staff. Can Macy's survive the retail apocalypse?
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00:00 Macy's has shaped our culture in more ways than we realize.
00:04 From the way we shop to the way we celebrate holidays,
00:06 to even the invention of the retail Santa.
00:09 At its peak, it was a symbol of retail innovation
00:12 and cultural significance.
00:14 But sales have been slipping for decades.
00:16 Macy's has been closing stores
00:18 and letting go hundreds of people,
00:20 making us wonder if the department store
00:22 will fade in prominence,
00:23 like Sears, Kmart, and other Titans.
00:27 So what went wrong, and can Macy's make a comeback?
00:31 Macy's started as a small dry goods store
00:33 in New York City back in 1858.
00:36 It was called RH Macy & Co.,
00:38 and it was the fourth business attempt
00:39 by founder Rowland Hussey Macy.
00:42 On its opening day, the store only made $11.06,
00:46 but sales quickly increased,
00:48 and after a year, they reached $85,000.
00:52 In the following years, Macy's expanded
00:54 into 11 buildings around 14th Street in Manhattan.
00:58 That was the store's first location.
01:00 With his new business, Macy implemented a series
01:03 of business practice that we've never seen before
01:06 in the retail industry.
01:08 For example, at that time,
01:09 bargaining and bidding were the norm.
01:12 Discounts were frequent, and it was common
01:13 for customers to buy now and pay later.
01:16 But Macy added label prices to all goods,
01:19 and he stuck to it with no negotiation.
01:22 He also insisted on immediate payment in cash.
01:25 The American entrepreneur started the custom
01:27 of pricing goods in odd figures instead of round numbers,
01:30 like $4.95 instead of $5.
01:33 He thought this strategy would force his staff
01:35 to be more diligent with how sales were accounted for,
01:38 making it more difficult for them to pocket money
01:40 without being caught.
01:42 Macy was also the first to advertise prices in newspapers
01:46 and offer money back if customers weren't happy.
01:49 His new stores included a made-to-measure clothing service.
01:52 That launched the idea of tailoring
01:54 at big department stores.
01:56 In the 1860s, Macy's became the first retail store
01:59 to get a liquor license to serve alcohol.
02:02 By 1862, it created the concept of the retail Santa.
02:06 And just two years later, the company established
02:09 the tradition of holiday windows,
02:10 giving birth to window shopping
02:12 and spawning an entire industry dedicated
02:15 to designing elaborate store window displays.
02:18 Rowland Hussey Macy died in 1877,
02:22 but his family kept running the store
02:23 until another one took over, the Strauss family.
02:27 Nathan and Isidore Strauss were familiar with the store
02:29 because they were already doing business there.
02:32 They were selling imported china and glassware to RH Macy
02:35 and had started renting retail space
02:37 to establish a china department.
02:40 In 1896, the Strauss family officially bought the company.
02:44 And in 1902, the Strauss family moved Macy's uptown
02:48 to Herald Square.
02:49 The move was a meticulously planned operation.
02:53 It included a procession of 250 delivery wagons,
02:56 all going up Sixth Avenue.
02:59 The New York Times reported that it was the greatest moving
03:01 that ever happened in New York.
03:03 That nine-story store here would become
03:06 an iconic location in pop culture.
03:08 It had 33 elevators and four wooden escalators,
03:11 one of the first to be used in an American store.
03:14 It initially consisted of just one building
03:17 and was about 1 million square feet.
03:19 But the store soon expanded through new construction,
03:22 eventually taking up almost the whole block,
03:24 making it a little over 2 million square feet.
03:27 The department store had everything,
03:29 except for one corner.
03:31 This tiny slice of Manhattan is known
03:33 as the Million Dollar Corner
03:35 because Macy's has never been able to buy it.
03:37 And with all this new construction,
03:39 Macy's eventually became the world's largest store in 1924.
03:45 The same year, they hosted their first Thanksgiving Day parade,
03:47 which included animals from the Central Park Zoo.
03:50 10,000 people gathered to watch this amazing event.
03:55 After a few additions, elaborate floats were introduced
03:57 and became an essential part of this iconic parade.
04:00 In 1947, Macy's was really making a name for itself
04:04 in pop culture, especially with its role
04:07 in the movie "Miracle on 34th Street."
04:09 - What do you want for Christmas, Peter?
04:11 - I want a fire engine, just like the big one.
04:15 Macy's ain't got any.
04:16 Nobody's got any.
04:18 - And in 1976, it started its annual
04:21 Fourth of July fireworks show,
04:23 which continues to this day.
04:25 Over the years, Macy's continued to scale up,
04:29 opening regional stores all around the U.S.,
04:32 from San Francisco to Atlanta.
04:35 Macy's was capitalizing on growth
04:37 and taking risks by stocking up on lots of inventory.
04:40 While other stores were being cautious
04:43 in controlling how much products sat on their shelves,
04:45 Macy's stores always had product to sell.
04:48 At the same time, competitors were reducing
04:51 the number of buyers who chose what to sell
04:53 and started relying more on suppliers.
04:56 Well, Macy's did the opposite.
04:59 They hired more specialized buyers
05:00 so that each could focus on specific sections of the store.
05:04 That helped them identify products
05:05 that customers would love
05:07 and even uncover new business opportunities.
05:09 And while other retailers were investing
05:11 in research and strategic planning,
05:13 setting firm targets for return on investment
05:15 and other benchmarks, Macy's didn't.
05:18 They didn't really believe in having strict returns
05:20 on financial goals.
05:21 So in the mid-1980s, the iconic department store
05:27 started seeing the first signs of trouble.
05:30 The whole retail industry was experiencing
05:33 an economic slowdown, but for Macy's,
05:36 the downturn was worse
05:38 because they had already had high internal costs.
05:41 The company was spending a lot of money
05:44 rolling out more private label products
05:46 and on ads to attract upscale customers.
05:49 Their $500 million expansion across the American South
05:53 also didn't help.
05:55 Reports suggest they overestimated demand,
05:57 which led to stockpiling way beyond anticipated sales.
06:01 They also had to slash prices to clear out their excess stock.
06:05 All of that made it very hard for Macy's to pay its bills.
06:08 Crushed by a $6 billion debt,
06:12 Macy's fell for bankruptcy in 1992.
06:15 By 1994, Macy's was acquired
06:19 by Federated Department Stores,
06:21 a company that already owned its rivals
06:23 like Bloomingdale's and Abraham & Strauss.
06:25 With this purchase, it became the largest
06:27 department store retailer in America.
06:29 In the 2000s, the company tried a few different strategies
06:34 to revitalize its business.
06:36 It launched new brands and smaller stores.
06:38 It also started some major collaborations
06:41 with celebrities like Kate Moss and Sarah Jessica Parker.
06:45 It beefed up its rewards card to attract shoppers
06:47 and opened its off-price store, Macy's Backstage.
06:51 But Macy's has been slow to adapt to online shopping
06:54 and new consumer trends,
06:56 at a time when many customers were already walking away
06:58 from department stores.
07:00 On top of that, Macy's has been facing stronger competition
07:03 from discount retailers like TJ Maxx and Burlington,
07:07 and more recently, from fast fashion giants
07:09 like Zara, H&M, and newcomers like Shein and T-Moon.
07:13 So Macy's has not been able to slow down
07:15 this retail apocalypse.
07:17 Sales dropped and Macy's began closing stores
07:19 around the U.S.
07:20 In February 2020, Macy's announced a massive restructuring
07:24 that would close 125 stores and cut 2,000 jobs.
07:28 The goal of the plan was to generate savings
07:30 of about $1.5 billion a year by 2022.
07:35 The plan involved experimenting with concept stores
07:37 that operate outside of traditional malls.
07:40 In 2021, Macy's also joined the crypto craze,
07:43 auctioning off NFTs depicting its most iconic
07:46 Thanksgiving Day parade floats.
07:48 But in 2023, Macy's closed another wave of stores.
07:53 Behind the scenes, the company also underwent
07:55 a series of executive shakeups.
07:58 By February 2023, Macy's CEO, Jeff Gannett,
08:01 retired after working at the company for 40 years.
08:05 He was replaced by Tony Spring, the CEO of Bloomingdale's.
08:09 Today, Macy's runs 502 stores under its own banner.
08:13 An investor group offered $5.8 billion to buy Macy's.
08:18 The company declined, though,
08:20 citing a lack of compelling value.
08:22 Shortly after, Macy's announced it would close
08:25 another 150 stores in the next three years.
08:29 The closures will leave the company
08:31 with about 350 full-size Macy's department stores.
08:35 That's less than half of what they had a decade ago.
08:38 But in March, the same investors returned to Macy's
08:41 and upped their takeover offer to $6.6 billion.
08:44 That offer is still under consideration.
08:47 The fate of the retail giant remains unknown,
08:51 but no matter what happens next,
08:53 Macy's will always hold a significant part
08:55 of our culture, life, and history.
08:58 (gentle music)
09:01 (upbeat music)
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09:11 (upbeat music)