Can Macy’s at Providence Place Survive? Tens of Thousands of Jobs at Company to Be Cut Across U.S.
Thursday, February 06, 2020
In less than one month, Macy’s — one of America’s largest retailers -- has announced major store closings (30 closures were announced in early January and 125 on Tuesday), 2,000 corporate layoffs, and the loss of tens of thousands of retail store jobs.
In 2018, Macy’s employed more than 130,000 and that number may be slashed to a number closer to 100,000 by the end of this round of downsizing.
The latest Macy’s announcement is a major blow to workers. The loss of a single department store affects 150 or more employees, according to the Washington Post.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThus, more more than 20,000 Macy’s store workers may be impacted in addition to the 2,000 corporate jobs.
At the Providence Place Mall, Macy's opened in 2006, replacing one of the original mall anchors, Filene's. The store is over 200,000 square feet and contains two branded stores within the store -- Macy's Backstage and Finishline. In contrast, Macy's new store models are much smaller -- 15,000 square feet and located in shopping centers rather than malls.
“'Macy’s has too many square feet chasing too few customers,' said Craig Johnson, the president of consulting firm Customer Growth Partners, adding that the company hasn’t moved fast enough to close unproductive stores. 'Sales are going down faster than they can eliminate physical space,'” reports the Wall Street Journal.
Macy's said in their announcement of its store closures and restructuring, "The company completed a rigorous evaluation of Macy’s store portfolio. This included a store-level assessment of each store’s overall value to the fleet, including predicted profitability based on consumer trends and demographics. As a result, Macy’s plans to close approximately 125 of its least productive stores over the next three years, including approximately 30 stores that are in the process of closure now. These approximately 125 stores currently account for approximately $1.4 billion in annual sales."
The company has not announced the locations of the store closings and has not disclosed the timeline for the announcement.
Malls Will Take Another Hit
The announcement by Macy's is another hit for mall real estate firms like Providence Place's owner Brookfield Properties.
Macy's closures are big trouble for malls. The company is one of the top 20 largest retailers by sale, but it is the fourth largest department store. Macy's ranks behind only Walmart, Target and TJX Companies according to Retail Info Systems. Those top three ranked department stores are generally in freestanding locations and not in malls.
Macy’s will be closing one-third of all of its stores with the Macy's name and almost all of the closures are expected to be located in malls.
Job Losses
Retail job losses continue to mount.
"Retail continues to lead all sectors in 2019 with 74,686 cuts, 3,201 of which occurred in November. Industrial Goods manufacturers follow with 68,141, 173% higher than the 24,960 announced through November last year. It is the highest January-October total for the sector since 2009, when 107,895 cuts were announced," according to Challenger, Gray & Christmas, Inc.
As GoLocal reported on January 6, 2020: The new year is only a few days old and many of the top retailers in America are moving forward with — collectively — thousands of new store closings. The past decade saw retailers closing stores and others completely disappear. The latest numbers show that more than 9,200 retail stores closed in 2019 -- a record number.
The retailers who have already announced hundreds of store closures in 2020 include Chico’s 250 stores, Gap (230 stores), and A.C. Moore (150).
"On a recent earnings call of B. Riley Financial, the parent company of liquidation giant Great American Group, Chairman Bryant Riley told investors that the liquidator was experiencing 'one of the busiest periods in its history.' Great American has closed more than 6,800 stores since 2013, including recent liquidations for Barneys New York, Toys R Us, Payless ShoeSource, and Gymboree," reports the Wall Street Journal.
Performance
“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc.
“Following a weak 2019, department stores must radically accelerate changes to their format and product offering in 2020,” wrote Moody’s analysts led by Christina Boni, a vice president with the group, in a report published Jan. 15.
