On Thursday, Macy announced the closure of another 100 of its brand-name stores. This is a decision that demolishes 15% of all Macy department stores. Macy’s did not announce which stores would be closed, but these stores will be closed by the beginning of 2017.
This isn’t the first time Macy’s is closing its stores. Macy’s has been plagued with store closures since the recent success of online shopping options such as Amazon. Walmart is also on the same boat with its own closure of 269 stores. In an attempt to save itself, Walmart recently acquired Jet.com (azn’s business rival) for $3.3 billion.
Walmart is only one of the many retail stores suffering from the trend. One of the nation’s most influential sports retail stores, Sports Authority, went bankrupt after the closure of all its 450 stores. In addition, Target, JC Penny, K-Mart, Sears, and Kohl’s are shutting down hundreds of its stores.
With the closure of thousands of retail stores, the number of layoffs also increase. According to Challenger, Gray & Christmas data, 44,000 retail workers were laid off this year, 16,000 alone from Walmart.
Despite heavy layoffs, Macy’s will try to transfer its unemployed workers to other Macy’s locations. All the unemployed workers will be given severance benefits.
While Macy’s is closing down its stores, it’s also facing a decrease in sales for the 6th consecutive quarter. Luckily, the latest quarter sales did not fall as much as expected. Despite Macy’s sales, Macy’s stocks increased by 17% after its store closures.
Macy’s is changing their sales plan. Macy’s will focus on its best-performing stores by investing in better staff, new products, and better technology.
Macy’s expects a total loss of $1 billion dollars despite accounting for shoppers who would shop online or from other stores. To prevent a loss in sales, Macy plans to cut funding.
Macy’s store closures are also affecting malls. Malls that lose big department stores, like Macy’s, will also lose a fraction of its customers. The reduced amount of customers contributes to a lower amount of foot traffic, which could benefit other stores in the same mall. Mall owners such as General Growth Properties and Simon Property Group decreased in shares with GGP losing 3% and SPG losing 2%.