Has Macy’s become a different and better retailer?

Photo: RetailWire
Feb 23, 2022

Macy’s had a good year in 2021 and perhaps will silence, at least temporarily, those who say that department stores are going the way of the dodo bird.

The retailer, which operates its namesake chain, Bloomingdale’s and Blue Mercury, reported that same-store sales in the fourth quarter were up 27.8 percent versus last year and up 6.1 percent when compared to the same period in 2019.

The company attracted new customers in the fourth quarter, with 7.2 million buying merchandise sold in Macy’s stores and on macys.com. Fifty-eight percent of those shopped on Macy’s website. The retailer’s digital sales improved 12 percent over the fourth quarter of 2020 and 36 percent over 2019.

“We are now more digitally led and customer-centric in our planning and execution,” Macy’s CEO Jeff Gennette said yesterday on the company’s earnings call. “We have also demonstrated the value of an integrated company, meeting customer expectations for a more seamless shopping experience across digital and store offerings.”

Macy’s announced on the call that it would not split off its digital business in the face of investor pressure led by Jana Partners. The activist investor in October delivered a letter to Macy’s board demanding that the company “de-omnify.”

Mr. Gennette told analysts that Macy’s digital platform is fully integrated with the rest of the company’s business. This was not the case in 2019 when digital ops were a “siloed organization.”

“We have a scaled platform, operating the number two website in our categories in the nation with 39 percent digital penetration, an increase of nine percentage points versus the fourth quarter of 2019,” he said.

Since that time, he added, Macy’s has closed stores in C and D malls in order to focus more on A and B locations and to open smaller non-mall locations in high traffic areas. Mr. Gennette said Macy’s has actually slowed closing some C and D mall stores as it scales up its standalone properties.

Macy’s has also simplified its promotional strategy.

“Pricing is simpler and clearer, allowing our customers to better understand the value they are receiving,” said Mr. Gennette.

Macy’s technology efforts are focused on improving the customer experience.

“We successfully built a new enterprise data and analytics organization that is helping us to embed data and analytics into everything we do,” he said “We have already seen improvements in our efforts around personalization and pricing. In short, we are a different Macy’s.”

DISCUSSION QUESTIONS: Is Macy’s a different and better retailer today than it was in 2019? Has it done enough to make itself relevant in the marketplace?

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29 Comments on "Has Macy’s become a different and better retailer?"

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Mark Ryski

The recent results are commendable, and they have made some interesting progress, but I don’t see it as an entirely different retailer than it was in 2019. The pandemic created a lot of “noise” in the marketplace, and so we’ll see how they continue perform as we put the pandemic in the rear view mirror. One key decision Macy’s leadership made was to not separate their online from offline businesses – a smart, if not obvious move.

David Naumann

Macy’s has changed significantly since 2019 and it has shown in its improved financial performance. Integrating the digital platform with its physical platform was a huge step to help enable a more seamless omnichannel shopping experience. I think it was a smart move to not sell its digital business, as that could have harmed the customer experience. Closing unprofitable stores in C and D malls was another smart decision to improve overall profitability. Macy’s appears to be on the right track for success.

Neil Saunders

In a word: no. There is no denying that Macy’s grew strongly in 2021, but this came off the back of a 29.4 percent decline in 2020. It also coincided with a massive surge in consumer spending. In 2021, spending in retail as a whole increased by about 20 percent over pre-pandemic 2019. Macy’s sales in 2021 compared to 2019? Down by 0.4 percent. This is a dismal performance and runs counter to the headline narrative that Macy’s is pushing. And no, it’s not because department stores are dead – it’s because Macy’s, at least in stores, is an abysmal player with poor merchandising, weak assortments and a completely lackluster approach to retail. Yes, it is doing some creative things like adding Toys “R” Us and introducing more own-brands, and investing in e-commerce but these things do not add up to a revitalization of the business.

Georganne Bender

I agree, Neil. Everything else aside, to be a better retailer, Macy’s needs to pay more attention to what happens on the sales floor, particularly in branch locations.

Craig Sundstrom

The picture (at the top of the article) itself illustrates — no pun intended — what you’re saying: I believe this is the main aisle of the Union Square “flagship.” When it was remodeled 20+ years ago it was gorgeous, with pearwood paneled columns and gold leaf ceilings. A few years ago — during the store’s downsizing (the gsf was cut ~40%) — it all was painted over…white; commonplace, unimaginative and unexciting.

Dave Bruno

It’s not quite a Miracle on 34th Street, but Macy’s turnaround is impressive nonetheless. I am thrilled to see such positive results from Macy’s, and I believe their success is a testament to the wisdom of integrated omnichannel experiences and execution. As Macy’s story demonstrates, integrated experiences lead directly to more revenue opportunities, while integrated execution leads directly to opportunities to preserve margin. Who knew?

David Spear
David Spear
VP, Professional Services, Retail, NCR
1 year 3 months ago

I don’t necessarily subscribe to Macy’s being a “different” company as highlighted by the CEO. What has changed, however, is some of their digital capabilities, which is good for their digital native consumers who are seeking merchandise that aligns with their daily lives. Fundamentals are important and if they can continue to drive improvement on a wider array of their core business operations, their equity will continue to rise.

Gene Detroyer

Has Macy’s become a different and better retailer? They better or the future is short.

Hmmm. Same-store sales up 6.1 percent since 2019? That is 3 percent per year. How much of that increase is more price and less promotion?

Dave Wendland

This is an interesting question. I do think that Macy’s has added consumer-centric features that increase its relevance and integrated elements of its operation to improve its overall business. However your question asks whether the company is different and better than it was in 2019. As a result of the changes it has made, it is indeed a better company but not necessarily different.

I remain cautious whether the integrated experience they have striven to deliver will address the needs and desires of future shoppers. At its core, it is still Macy’s and without continued evolution and transformation, it may lose its luster.

Christine Russo

This report was surprising and impressive – they seems to be evolving past their 2019 self. However it’s a quarter by quarter “Show Me” story as the Street will be evaluating on a short term basis. Since they are not DTC/digitally native, CAC is not a focus for that digital growth – I am interested to know what that is.

Ken Morris

Macy’s ability to attract new customers via multiple channels is impressive. It has digitized and added technology throughout its operations, so it’s better able to handle this additional business. They have quietly been building a technology-driven juggernaut with a multi-billion dollar website and RFID technology that allows them to understand their inventory in real time, thwart shoplifters with state-of-the art RFID theft tracking (they can track an item all the way from a store to the thief’s fencing operation), and smart merchandising choices. RFID also allows them to lessen their dependence on safety stock and, in some instances, eliminate it by selling to the last item.

Macy’s has also made strategic moves in store location, online shopping, and pricing strategy. Their focus on the customer experience — made possible by technology — is paying off. “De-omnify?” I don’t think so.

Cathy Hotka

I ordered a lot of Macy’s products online during the Christmas season because they were so inexpensive. The store experience can be discouraging, but the online experience is a dream.

George Anderson

Ditto. That’s been my experience, as well.

Shawn Harris
Shawn Harris
Board Advisor, Light Line Delivery
1 year 3 months ago

Looking at Macy’s financials, I still see a retailer who is continuing to show secular decline. Here are some quick stats from macrotrends:

  • Macy’s 2021 annual EBITDA was $-3.498B, a 278.93% decline from 2020;
  • Macy’s 2020 annual EBITDA was $1.955B, a 27.19% decline from 2019;
  • Macy’s 2019 annual EBITDA was $2.685B, a 4.45% decline from 2018.

This is a company in need of structural change.

Brandon Rael

Macy’s will keep its digital business connected to its stores, and this is a critical move at a time when the customer is fluidly navigating between shopping channels. This was the right move, as two separate businesses would create friction and a fragmented customer experience.

Mr. Gennette gave four critical reasons why Macy’s decided not to spin off its e-commerce arm. One is that Macy’s isn’t currently constrained for capital to invest in its business. The second is that a breakup would come with high separation costs. The third is that running two separate businesses would increase ongoing expenses. And lastly, according to Mr. Gennette, is the risk that a breakup could deter customers from shopping the Macy’s brand.

Liza Amlani

Macy’s has not become a different retailer but perhaps it’s become a little better. Macy’s is on the right track in terms of its realization that customers should come first – from a connected omnichannel shopping journey to driving key partnerships. Removing siloed ways of retailing is an important strategy and one that more retailers should embrace.

The challenge still remains with Macy’s physical stores and its merchandising strategy.

Streamlining assortment and product decisions, closing the customer feedback loop by enabling insights across channels to drive product decisions, and getting closer to the customer is how Macy’s can stay relevant.

Cleaning up physical stores by reducing SKUs and being more purposeful with store planning and visual merchandising, training brand ambassadors and enabling digital tools to connect teams is critical. The store experience needs an overhaul in addition to further investment to delight and engage loyal and new customers.

Bob Phibbs

A rising tide lifts all boats. Macy’s is a huge operation to turn around. I wish the store experience were better instead of being cluttered with signs and dirty but, that’s where they are. They connected with a lot of customers and I would expect Q1 to still be an increase. It would be a mistake to say Macy’s is not relevant to customers with numbers like that.

Rich Kizer

It amazes me on how easily and frequently many experts can find this company to be a perfect target for criticism, constantly. With chains, some store locations are always better than others — it’s a fact of life given varying local management of stores and departments. However, and over all, in conversations with in-store with customers, Macy’s ratings seem high with that important segment. That’s what I always look for.

Mohamed Amer, PhD

Macy’s is a different retailer than it was before the pandemic. The most impactful change focuses on data, insights, and digitization. However with the return of consumers to physical stores seeking connected and compelling in-store experiences, the company has more work. The future of retail is hybrid. Macy’s needs to nurture and develop both the physical and the digital simultaneously to become the better retailer it can be.

Steve Rowen

I am genuinely happy to hear this news. As a lifelong city dweller (and uncle to six) I don’t think I realized what an important role malls still play in giving bored teenagers – especially in the city – something to do after school and on weekends. This one became real clear – real fast – in the earliest days of the pandemic.

So kids need malls (who knew?) And malls need Macy’s. So here we go, Macy’s. Now if the brand was just able to get the kids to spend money there…

Brian Delp
1 year 3 months ago

Macy’s is not afraid to try things and has been an early adopter to testing new concepts including visual displays. I do think they have had a bit of an identity crisis between focusing on private brands versus national brands, and have lost a bit of ground here as Kohl’s, Walmart, and Amazon increase their fashion brand focuses, however they are still the leader in this regard and should leverage it further into all categories. Home is one area that is underdeveloped from a national brand perspective.

Rick Wilson

Right now, Macy’s embrace of a data-driven omnichannel shopping experience suggests a real confidence and momentum around the customer. They are making every correct move for the customer of 2022. But I wouldn’t be so fast to dispel the idea that Macy’s will eventually choose to separate out their online business completely, as the “compound insight” returns on all that data will drive (continued) exponential growth online. If in just a few years, these efforts result in 70+ percent of Macy’s business coming from e-commerce, would we still call it a “silo” or a “spin-off”? It feels like the company is in the healthy middle-ground of a perhaps decades-long transition to exactly this.

Steve Dennis

Better is not the same as good. And it certainly isn’t the same as being remarkable. Moderate department stores have been losing relative market share for more than 20 years and while Macy’s has done slightly better than average during that time it is largely because its most direct competition on the mall (Sears and Penney’s) have closed more than 1,000 stores. The bounce in sales and margin is mostly about pandemic induced effects that will soon dissipate. Nothing has fundamentally changed in the sector or in Macy’s strategy that suggests a reversal in long-term fortunes. A slightly better version of mediocre is not a winning strategy.

Shep Hyken

Macy’s is different (and better), but you could ask the same question every few years, and the answer would be the same: Yes. Macy’s, as most other successful retailers, continue to adapt. Before 2019 we were talking about the problems malls and major retailers were experiencing. The survivors (including Macy’s) learned to adjust to the consumer’s changing buying habits as they started doing more and more online purchasing.

Gib Bassett

I suspect if Macy’s has turned a corner and can remain a competitive integrated omnichannel retailer, it has a lot to do with this reported in the NYT yesterday:

“The big difference at Macy’s now versus previous times we dealt with inflation is we have this data analytics and pricing science at a much more granular level that is helping us make the right choices,” Jeff Gennette, the chief executive, said in an interview.

1 year 3 months ago
Internet improved dramatically, but the store and the offerings are the same. You snooze you lose; if they do not make a dramatic change they will end up like Sears and Lord & Taylor. Just listen to the customer. They have voted clearly for the last 15 years for value, with the exception of the highest luxury level. It is ridiculous to have acres of space devoted to Michael Kors when it is all over TJX. It is ridiculous to have Hilfiger, Lauren, Nautica, Nike, etc, when it is all over so called discount operations. They should take out all these brands, force better prices, take lower markup and showcase the newest deliveries at great prices. The customer will immediately respond. This must be done in all departments. Dramatic presentations. Macy’s name and real value on the newest merchandise with ego satisfaction and competitive pricing — this formula is new and will bring dramatic results. The only retailer that comes close to doing this is Costco and look at their results. Macy’s will be much… Read more »
Jeff Sward
I’ve had a chance to study Macy’s for a long time. First as a competitor, then as an employee, then as a wholesale customer, and now finally as a high profile player in the evolution of the department store and the mall. The legacy of Macy’s is one of being a great merchant. The best, you could say, by virtue of being the one big department store that survived. Federated renamed itself as Macy’s in honor of that legacy and the strength of the brand in the eyes of the customer. Then came the One Day Sale and the ’90s and the 2000s. Great merchandising took a back seat to the ODS and cost efficiencies. Macy’s knows that is has to bring back the days of great merchandising, and it also knows that it will be a lot more complicated than the old days. But physical retail is alive and well even if the mall count is down a little. Macy’s definitely has the opportunity to evolve and redefine what “mall anchor” can stand for… Read more »
Craig Sundstrom

Weren’t we asking this same question (with appropriate changes in the dates) in 2019? IIRC, at that time Macy’s was:

– busy closing stores
– endlessly test-marketing ideas (of which we seemed to hear little later)
– trying to embrace its inner-omnichanneldom

And today it is…well you get the idea.

This narrative might seem simplistic, and perhaps a little unkind, but I think it get to the big point: Macy’s continues to struggle. Sure it’s a “better” retailer…but so are all its competitors. (The ones that aren’t have likely gone out of business.)


I don’t think Macy’s has truly changed at their core. They are still very merchant/buyer driven versus really understanding customer needs. I’m glad they’ve decided not to cave to the street and split off digital, which makes no sense. But they still have a ways to go in becoming truly customer centric and not chasing after every hot new tech trend.

"The store experience can be discouraging, but the online experience is a dream."

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