Macy's Store Closures

With Q3 revenue declines and recent leadership changes, it doesn’t come as a surprise that Macy’s is closing stores. But as we often discuss, not all store closings are made equal. When handled properly, store closings can set the foundation for a strong rebound and ongoing growth. We looked at some recent Macy’s closures to see just how strategically sound these decisions have been. 

Neighbors and Cannibalization

Macy’s East Bridge Street, Homestead, PA location closed in the spring of 2018. Since 2017, traffic had been significantly lower than that of neighboring Monroeville Mall and South Hills Village Mall.

Especially notable is the store’s final winter. January 2018 was a particularly weak month, and while Monroeville and South Hills stores experienced growth relative to baselines, Homestead dipped as much as a 52.3% below baseline the week of January 15th. Following closure announcements in February, traffic surged, peaking at 68.1% growth over baseline the week of February 26th, and remaining steadily strong through the store’s final spring - likely from consumers taking advantage of clearance sales.

When looking at the True Trade Area for the PA locations, the picture becomes even more clear. Homestead traffic significantly overlaps with its neighbors’, showing that the removal of the store likely wouldn’t impact overall Macy’s sales as nearby locations were able to take in the core audience. Due to the high cannibalization risk here, the Homestead location became redundant, and Macy’s smartly identified a location that posed a limited risk in closing - and potentially even a gain.

Over on the west coast, we dove into the W. Washington Ave, Sunnyvale, location, which closed in the spring of 2018. The Sunnyvale store actually performed better than its neighbor to the south, the Stevens Creek store. Sunnyvale’s closing sale from January to March gave it a steady final boost, at a time when the top performer of the three stores, Stanford Shopping Center, experienced a drop. 

But once again, we notice the glaring cannibalization risk here. Both the Stanford location and the Stevens Creek location could serve Sunnyvale’s audience, and it’s clear that Sunnyvale has been competing for traffic with both these stores.

Conclusion 

In an already sparse Macy’s landscape, these stores did not effectively maximize their locations and therefore were rendered ripe for closures. Hopefully, by optimizing its location footprint, Macy’s can funnel more foot traffic into the right stores, focus on its core competencies, and bring its brand back to life. 

With the holidays just around the corner, check back in at the Placer.ai blog to see whether Macy’s can wrap the year up on a higher note.