With Macy’s announcing plans to close approximately 150 stores, retail competitors are already strategizing on how to capitalize on this opportunity for growth. Target CEO Brian Cornell and Kohl’s CEO Tom Kingsbury see the department store’s decision to shrink its footprint as a chance to increase their own sales. Off-price chain T.J. Maxx could also benefit from the closures, as they carry similar merchandise and have stores near Macy’s locations that might shut down. Additionally, other retail names like Ross and Nordstrom could see a boost in business as they already cater to Macy’s shoppers according to Earnest Analytics data.
The wave of closures by Macy’s will leave a void in the retail landscape, similar to other brands like Bed Bath & Beyond and J.C. Penney that have shrunk in size over the years. The closures could potentially put up to $2 billion of market share up for grabs, given the department store’s net sales of $23.1 billion in the most recent fiscal year. However, Macy’s aims to focus on driving higher sales at its remaining locations and plans to invest in its higher-end department store Bloomingdale’s and beauty chain Bluemercury.
Macy’s has not yet disclosed which specific locations will close or when they will shutter, but a total of 50 stores are expected to cease operations by early 2025. This move will not only impact Macy’s but also have implications for shopping malls, as the department store serves as a key anchor in many mall locations. With department stores losing market share to strip malls and online shopping, competitors like Target and specialty stores such as Abercrombie & Fitch have already seen benefits from other closures in the past.
Off-price retailers like T.J. Maxx and Marshalls, both owned by TJX Cos., are well-positioned to benefit from Macy’s closures. A significant percentage of Macy’s stores have a T.J. Maxx or Marshalls within close vicinity, indicating a high overlap in customer base. Off-price stores draw a similar customer profile, with a tendency towards a more affluent demographic. Given their lower prices and convenient locations, off-price retailers have emerged as a major competitive threat to traditional department stores.
Other competitors like Kohl’s, which has the largest number of department stores in the country, also see Macy’s closures as an opportunity for growth. Kohl’s CEO Tom Kingsbury highlighted the advantage of strip center locations, where successful companies are often situated. Similarly, Target CEO Brian Cornell hinted at potential expansion plans in the wake of Macy’s closures, further emphasizing the trend of retail displacement within the industry. Macy’s itself has been exploring new strategies such as opening smaller stores in strip centers and incorporating off-price shops like Backstage within its department store locations.
Macy’s closures are set to have a significant impact on the retail landscape, creating opportunities for competitors to expand their market share and attract new customers. As the industry continues to evolve with changing consumer preferences and shopping trends, retailers must adapt and innovate to stay competitive in the ever-changing marketplace. Macy’s itself is taking proactive steps to reposition its business and drive higher sales, but the ripple effects of its closures are sure to be felt across the retail sector for years to come.