“Macy’s of today is like in soul and spirit to
Macy’s of yesterday; Macy’s of tomorrow…”
— Edward Hungerford, The Romance of a Great Store, 1922
If today is yesterday’s tomorrow, the Macy’s of 2017 would be unrecognizable to its founder, Rowland Hussey Macy. Except, perhaps, for the ubiquitous red star, the company’s logo, which was inked onto his forearm as a young sailor, while working on the whaling ship Emily Morgan, based out of New Bedford, Massachusetts. The star was inspired by the North Star, which, according to legend, guided him to port and an optimistic future. Today, the company — and, by extension, the traditional retailing industry — rocked by an exceptional gale, looks to the heavens for safe harbor and secure future. The turbulence, however, is a healthy sign of the creative destruction of capitalism. Accordingly, let traditional retail perish.
Last April, a New York Times expose, “Is American Retail at a Historic Tipping Point?,” revealed that 89,000 Americans have been laid off in general merchandise stores since October 2016. “That is more than all of the people employed in the United States coal industry, which President Trump championed during the campaign as a prime example of the workers who have been left behind in the economic recovery.” About one out of every 10 Americans works in retail. That’s nearly 16 million people (both online and in stores), confirms the federal Bureau of Labor Statistics. Unsurprisingly, only 5 percent are represented by unions.
More than 300 retailers have filed for bankruptcy just in 2017. Among them: Gymboree (operating 1,300 stores), rue21 (1,200 stores), Payless ShoeSource (4,400 stores), The Limited (250 stores), and a century-old regional department store company, Gordmans Stores (106 stores, in 22 states). In the past year, Macy’s has announced it would close 100 stores (identifying 68 locations, eliminating 10,000 jobs). J.C. Penney will close 138 stores. Sears (which also owns Kmart) is shuttering 150 stores and said last March that the company has “substantial doubt” about its survival after 13 decades in business. Since 2010, Sears has lost $10.4 billion and has closed several hundred stores.
A report released this spring by Credit Suisse, the financial services firm, estimates that 8,640 retail stores will close by year’s end and, more staggering, approximately one quarter of the nation’s 1,100 malls will close in the next five years.
“Modern-day retail is becoming unrecognizable from the glory era of the department store in the years after World War II,” notes the Times. “In that period, newly built highways shuttling people to and from the suburbs eventually gave rise to shopping malls — big, convenient, climate-controlled monuments to consumerism with lots of parking.” The glitz and glamor of shopping reminiscent of the Mad Men period is over. Instead, a wrenching, permanent restructuring is likely under way. As it should be.
Shifting consumer shopping habits driven by, and probably, a result of, e-commerce. Stated simply: “market forces.” A concept understood by ordinary people. Alarmingly, though, highly compensated retail executives were slow in identifying these new dynamics. For which many big retailers are now desperately, but not adequately, adapting to these changes. They are failing.
Devoid of any romance, today’s retail is a hard scrabble of Sisyphean drudgery. Product comes in. Product goes out. Product comes back in … Repeat. Generic and dingy department stores are full of tired-looking mannequins and haggard-looking, under-paid sales associates pushing promotions and credit cards. But stores are empty of customers.
America is called “overstored” — having too much retail space, which now totals about 7.3 square feet per capita. On a comparative basis, that is well above the 1.7 square…