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Citing Holiday Doldrums, Macy’s Closes 40 Stores

The exterior of a Macy's department store in d...

As the Cincinnati-based retailer suggested it would back in September, Macy’s has announced the closure of 40 stores across the US.  Citing a series of “cost-efficiency and process improvement measures” to be implemented 1Q 2016, the retailer aims by 2018 to ultimately save $500 million in selling, general and administrative expenses (SG&A) with the closures.  The move will lay off over 2,700 employees by my count and affects 4.4% of the company’s portfolio of stores.

“In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations. Moreover, we believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy’s and Bloomingdale’s omnichannel businesses faster and with more intensity. We will continue to invest in strategic initiatives that anticipate emerging customer needs and create shareholder value,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc. “The cost efficiencies represent more than two-thirds of our goal of annual SG&A expense reduction of $500 million, net of growth initiatives, from previously planned levels by 2018. In some cases, there will be short-term pain as we tighten our belt and realign our resources. But our eye is on a long-term vision of Macy’s, Inc. as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace.”

Which Stores Are Closing?

Final clearance sales at the following Macy’s stores closing in early 2016 will begin onMonday, Jan. 11 and run for between eight to 12 weeks (with the exception of Westfield Century City, North DeKalb Mall and Roseburg Valley Mall, where final clearance sales are already in progress):

  • Irvine Spectrum, Irvine, CA (140,000 square feet; opened in 2002; 112 associates);
  • Country Club Plaza, Sacramento, CA (165,000 square feet; opened in 1961; 111 associates);
  • Westfield Century City, Los Angeles, CA (136,000 square feet; opened in 1976; 108 associates). Note that this store will be closed in January 2016 and replaced with a new, larger store to open in this same shopping center in spring 2017;
  • Enfield Square main store, Enfield, CT (166,000 square feet; opened in 1971; 84 associates);
  • Enfield Square furniture/home/men’s store, Enfield, CT (76,000 square feet; opened in 1971; 20 associates);
  • North DeKalb Mall, Decatur, GA (190,000 square feet; opened in 1965; 89 associates);
  • Kailua, HI (59,000 square feet; opened in 1946; 57 associates);
  • Palouse Mall, Moscow, ID (41,000 square feet; opened in 1979; 47 associates);
  • Northwoods Mall, Peoria, IL (165,000 square feet; opened in 1985; 62 associates);
  • Cortana Mall, Baton Rouge, LA (243,000 square feet; opened in 1976; 108 associates);
  • Valley Mall, Hagerstown, MD (120,000 square feet; opened in 1999; 59 associates);
  • Berkshire Mall, Lanesborough, MA (111,000 square feet; opened in 1994; 58 associates);
  • Eastfield Mall, Springfield, MA (127,000 square feet; opened in 1994; 71 associates);
  • The Shoppes at Stadium, Columbia, MO (140,000 square feet; opened in 2003; 81 associates);
  • Middlesex Mall, South Plainfield, NJ (81,000 square feet; opened in 1976; 69 associates);
  • McKinley Mall main store, Buffalo, NY (88,000 square feet; opened in 1989; 65 associates);
  • McKinley Mall home store, Buffalo, NY (31,000 Square feet; opened in 1989; 10 associates);
  • Arnot Mall, Horsehead, NY (120,000 square feet; opened in 1995; 79 associates);
  • Hudson Valley Mall, Kingston, NY (121,000 square feet; opened in 1995; 72 associates);
  • Eastern Hills Mall, Williamsville, NY (127,000 square feet; opened in 1971; 80 associates);
  • Cary Towne Center, Cary, NC (107,000 square feet; opened in 1991; 63 associates);
  • Chapel Hill Mall, Akron, OH (169,000 square feet; opened in 1967; 91 associates);
  • Midway Mall, Elyria, OH (105,000 square feet; opened in 1990; 64 associates);
  • Quail Springs Mall, Oklahoma City, OK (146,000 square feet; opened in 1986; 87 associates);
  • Pony Village Mall, North Bend, OR (41,000 square feet; opened in 1980; 54 associates);
  • Roseburg Valley Mall, Roseburg, OR (40,000 square feet; opened in 1980; 59 associates);
  • Suburban Square, Ardmore, PA (102,000 square feet; opened in 1930; 74 associates);
  • Century III Mall, West Mifflin, PA (173,000 square feet; opened in 1979; 101 associates);
  • Ridgmar Mall, Ft. Worth, TX (181,000 square feet; opened in 1998; 92 associates);
  • Chesapeake Square, Chesapeake, VA (95,000 square feet; opened in 1999; 69 associates);
  • Virginia Center Commons, Glen Allen, VA (110,000 square feet; opened in 1993; 81 associates);
  • Peninsula Town Center, Hampton, VA (173,000 square feet; opened in 1977; 109 associates);
  • Military Circle Mall, Norfolk, VA (153,000 square feet; opened in 1976; 95 associates);
  • Regency Square main store, Richmond, VA (100,000 square feet; opened in 1990; 100 associates);
  • Regency Square furniture/home/men’s store, Richmond, VA (124,000 square feet; opened in 1990; 35 associates);
  • Downtown Spokane, Spokane, WA (374,000 square feet; opened in 1947; 94 associates).

Macy’s stores closed in the final three quarters of 2015 (previously announced):

  • Owings Mills Mall, Owings Mills, MD (164,000 square feet; opened in 1986; 90 associates);
  • Bedford, NH (180,000 square feet; opened in 1966; 105 associates);
  • Essex Green Shopping Center, West Orange, NJ (93,000 square feet; opened in 1975; 101 associates). Note that this location was converted to a Macy’s Backstage store.
  • Downtown Pittsburgh, PA (1,158,000 square feet; opened in 1946; 170 associates).

Automated Kiosks: The Retail Floor Space Game-Changer

Large format vending machineLocalism alert: While shopping at the downtown Chicago Macy’s the other week, I noticed a small line of customers queued up in a corner of the store.  The line led not to a counter and a salesperson but to an automated kiosk for a skin care product.

Maybe I’m not the most dedicated shopper, but I had never seen anything resembling a large vending machine in a top-end retail store before.  I was curious, so I came back to Macy’s a few days later to take another look.  Same line – if anything, it was longer.   Ladies and men were feeding credit cards into the machine – more like an automated booth –  and watching branded video displays on skin care as the machine dispensed packages of product.

With no salesperson, and (apparently) no Macy’s stock-keeping requirements, plus a modest space requirement in a off-center location in the store, I imagined the net revenue dollars per square foot on this approximately 3×8′ kiosk was a pretty impressive number — even more so when compared to what stood there before: effectively nothing.

The product was Proactiv.  You can find these kiosks around the country here.

What also struck me about the  machine was how little it clashed visually and experience-wise with the surrounding sales floor.  Situated at the edge of the cosmetics section, the kiosk’s video display and favorable lighting reflected the kinds of tones you expect from a cosmetics counter. The fit was excellent.

But still: a vending machine?  In a top-end store?  It nagged at me for an explanation.

In the end, I thought what I was seeing was in part explained by the nature of the product.  Because Proactiv is aimed at skin problems, maybe, I thought, the kiosk afforded shoppers a kind of privacy.

And that’s what I imagined until I saw this today: luxury menswear kiosks.

Quattro Clothiers, a Toronto-based luxury menswear shop, is using an automated retail kiosk by Signifi to dispense designer Italian shirts, according to a news release.

The SpotShop kiosk uses a tray system to carefully handle the shirts, which carry price tags ranging from $225 to $395. The solution can be custom designed to each brand and features a digital display screen to promote the products. Quattro intends to use the machines to drive traffic back to their brick-and-mortar store by placing units within a three-to-four-mile radius, according to the release.

Well, there goes the idea that privacy alone drives kiosk sales.  There’s nothing sensitive about designer Italian shirts.

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