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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00:00Macy's has shaped our culture in more ways than we realize, from the way we shop to the way we celebrate holidays, to even the invention of the retail Santa.
00:09At its peak, it was a symbol of retail innovation and cultural significance.
00:14But sales have been slipping for decades, and Macy's has been closing stores and letting go hundreds of people,
00:20making us wonder if the department store will fade in prominence like Sears, Kmart, and other Titans.
00:27So what went wrong, and can Macy's make a comeback?
00:31Macy's started as a small dry goods store in New York City back in 1858.
00:36It was called R.H. Macy & Co., and it was the fourth business attempt by founder Rowland Hussey Macy.
00:42On its opening day, the store only made $11.06, but sales quickly increased, and after a year, they reached $85,000.
00:52In the following years, Macy's expanded into 11 buildings around 14th Street in Manhattan.
00:58That was the store's first location.
01:01With his new business, Macy's implemented a series of business practices that we've never seen before in the retail industry.
01:08For example, at that time, bargaining and bidding were the norm.
01:12Discounts were frequent, and it was common for customers to buy now and pay later.
01:16But Macy added label prices to all goods, and he stuck to it with no negotiation.
01:22He also insisted on immediate payment in cash.
01:25The American entrepreneur started the custom of pricing goods in odd figures instead of round numbers, like $4.95 instead of $5.
01:33He thought this strategy would force his staff to be more diligent with how sales were accounted for,
01:38making it more difficult for them to pocket money without being caught.
01:43Macy was also the first to advertise prices in newspapers and offer money back if customers weren't happy.
01:49His new stores included a made-to-measure clothing service.
01:53That launched the idea of tailoring at big department stores.
01:57In the 1860s, Macy's became the first retail store to get a liquor license to serve alcohol.
02:02By 1862, it created the concept of the Retail Santa.
02:07And just two years later, the company established the tradition of holiday windows, giving birth to window shopping,
02:12and spawning an entire industry dedicated to designing elaborate store window displays.
02:18Rowland Hussey Macy died in 1877, but his family kept running the store until another one took over, the Strauss family.
02:27Nathan and Isidore Strauss were familiar with the store because they were already doing business there.
02:32They were selling imported china and glassware to RH Macy, and had started renting retail space to establish a china department.
02:40In 1896, the Strauss family officially bought the company.
02:44And in 1902, the Strauss family moved Macy's uptown to Herald Square.
02:49The move was a meticulously planned operation.
02:53It included a procession of 250 delivery wagons, all going up 6th Avenue.
02:59The New York Times reported that it was the greatest moving that ever happened in New York.
03:04That nine-story store here would become an iconic location in pop culture.
03:09It had 33 elevators and four wooden escalators, one of the first to be used in an American store.
03:15It initially consisted of just one building and was about 1 million square feet.
03:19But the store soon expanded through new construction, eventually taking up almost the whole block, making it a little over 2 million square feet.
03:28The department store had everything except for one corner.
03:32This tiny slice of Manhattan is known as the Million Dollar Corner because Macy's has never been able to buy it.
03:38And with all this new construction, Macy's eventually became the world's largest store in 1924.
03:45The same year, they hosted their first Thanksgiving Day parade, which included animals from the Central Park Zoo.
03:5110,000 people gathered to watch this amazing event.
03:55After a few additions, elaborate floats were introduced and became an essential part of this iconic parade.
04:01In 1947, Macy's was really making a name for itself in pop culture, especially with its role in the movie Miracle on 34th Street.
04:09What do you want for Christmas, Peter?
04:11I want a fire engine just like the big one.
04:15Macy's ain't got me. Nobody's got me.
04:19And in 1976, it started its annual 4th of July fireworks show, which continues to this day.
04:27Over the years, Macy's continued to scale up, opening regional stores all around the U.S., from San Francisco to Atlanta.
04:35Macy's was capitalizing on growth and taking risks by stocking up on lots of inventory.
04:41While other stores were being cautious in controlling how much products sat on their shelves, Macy's stores always had product to sell.
04:48At the same time, competitors were reducing the number of buyers who chose what to sell and started relying more on suppliers.
04:55Well, Macy's did the opposite.
04:58They hired more specialized buyers so that each could focus on specific sections of the store.
05:03That helped them identify products that customers would love and even uncover new business opportunities.
05:09And while other retailers were investing in research and strategic planning, setting firm targets for return on investment and other benchmarks, Macy's didn't.
05:18They didn't really believe in having strict returns on financial goals.
05:24So in the mid-1980s, the iconic department store started seeing the first signs of trouble.
05:31The whole retail industry was experiencing an economic slowdown.
05:35But for Macy's, the downturn was worse because they had already had high internal costs.
05:42The company was spending a lot of money rolling out more private-labeled products and on ads to attract upscale customers.
05:49Their $500 million expansion across the American South also didn't help.
05:55Reports suggest they overestimated demand, which led to stockpiling way beyond anticipated sales.
06:01They also had to slash prices to clear out their excess stock.
06:04All of that made it very hard for Macy's to pay its bills.
06:09Crushed by a $6 billion debt, Macy's fell for bankruptcy in 1992.
06:16By 1994, Macy's was acquired by Federated Department Stores, a company that already owned its rivals like Bloomingdale's and Abraham & Strauss.
06:25With this purchase, it became the largest department store retailer in America.
06:30In the 2000s, the company tried a few different strategies to revitalize its business.
06:36It launched new brands and smaller stores.
06:39It also started some major collaborations with celebrities like Kate Moss and Sarah Jessica Parker.
06:45It beefed up its rewards card to attract shoppers and opened its off-price store, Macy's Backstage.
06:51But Macy's has been slow to adapt to online shopping and new consumer trends,
06:56at a time when many customers were already walking away from department stores.
07:01On top of that, Macy's has been facing stronger competition from discount retailers like TJ Maxx and Burlington,
07:07and more recently, from fast fashion giants like Zara, H&M, and newcomers like Shein and T-Moon.
07:13So Macy's has not been able to slow down this retail apocalypse.
07:17Sales dropped and Macy's began closing stores around the U.S.
07:20In February 2020, Macy's announced a massive restructuring that would close 125 stores and cut 2,000 jobs.
07:28The goal of the plan was to generate savings of about $1.5 billion a year by 2022.
07:34The plan involved experimenting with concept stores that operate outside of traditional malls.
07:39In 2021, Macy's also joined the crypto craze, auctioning off NFTs depicting its most iconic Thanksgiving Day parade floats.
07:48But in 2023, Macy's closed another wave of stores.
07:53Behind the scenes, the company also underwent a series of executive shakeups.
07:58By February 2023, Macy's CEO Jeff Gannett retired after working at the company for 40 years.
08:05He was replaced by Tony Spring, the CEO of Bloomingdale's.
08:09Today, Macy's runs 502 stores under its own banner.
08:14An investor group offered $5.8 billion to buy Macy's.
08:18The company declined, though, citing a lack of compelling value.
08:23Shortly after, Macy's announced it would close another 150 stores in the next three years.
08:29The closures will leave the company with about 350 full-size Macy's department stores.
08:35That's less than half of what they had a decade ago.
08:38But in March, the same investors returned to Macy's and upped their takeover offer to $6.6 billion.
08:45That offer is still under consideration.
08:48The fate of the retail giant remains unknown.
08:51But no matter what happens next, Macy's will always hold a significant part of our culture, life and history.
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