Macy’s has announced that it will cut around 3.5% of its workforce while shutting down five of its namesake mall locations.
The department store is taking these measures as it tries to reduce costs and reinvigorate slow sales. Approximately 2,350 positions across Macy’s corporate office and stores will be affected as a result of the move, marking a significant shift for the company.
Chris Grams, a Macy’s spokesperson, confirmed the job cuts will be accompanied by the closure of five mall locations. The stores set to be shuttered are located in Arlington, Virginia; San Leandro, California; Lihue, Hawaii; Simi Valley, California; and Tallahassee, Florida. Grams added that these stores will all be closed by early 2024. The company notified affected employees of the layoffs on Thursday, with January 26, 2022, set to be the last day for those who will be impacted.
In a statement, Macy’s acknowledged the difficulties inherent in the changes, but insisted that the job cuts and store closures were necessary to prepare the company for an evolving market. The statement read: “As we prepare to deploy a new strategy to meet the needs of an ever-changing consumer and marketplace, we made the difficult decision to reduce our workforce by 3.5% to become a more streamlined company.” The company hopes to emerge as a “more streamlined” entity, as it seeks to win over consumers who are researching products online and looking for value.
Macy’s is in the midst of a broader transformation effort aimed at revitalising the 166-year-old department store. The company is looking to connect with consumers who are moving towards online shopping, who are looking for value, and who are increasingly turning to other retailers for their purchases. Key competitors for Macy’s include e-commerce giants like Amazon and Shein, big-box retailers such as Target, and discounters like TJX-owned T.J. Maxx.
The restructuring comes as Macy’s third-quarter comparable sales had risen 6.7% and the retailer raised its full-year earnings outlook. Nonetheless, the move suggests the chain is revamping itself in response to the changing retail landscape as growing numbers of consumers are eschewing brick-and-mortar stores in favour of online shopping.
Despite the job cuts and store closures, the spokesperson said Macy’s remains a “thriving” company that will continue to invest in its workforce and new growth opportunities. The company has taken steps to navigate the economic uncertainty created by the Covid-19 pandemic, and it believes its new strategy will lead to long-term success. According to industry analysts, it is too early to say if such measures will be successful, and there is still a lot of work to do before Macy’s can achieve a lasting transformation that fully responds to the changes impacting the retail sector.
