Can Macy’s win back America? How CEO Tony Spring is moving past denial and embracing change

At a well-appointed Macy’s store in Los Angeles’ upscale Topanga Westfield mall in June 2024, Spring walked the former darling of the brand through improvements he had begun rolling out in 125 “priority” stores: sleekly designed mannequins and more staff in key areas; Double the number of employees in the women’s footwear department; And three times the number in the dresses area. There were even living humans manning the fitting rooms.

Saunders had to admit he was impressed. “Their promotion is more visible,” Saunders said. luck. “There’s more hygiene in the store. They’re starting to elevate the shopping experience.”

He said it’s probably the biggest change Saunders has seen luckSpring was open to criticism – as evidenced by his willingness to take on one of the brand’s harshest critics. “This has been a really big change,” Saunders said.

It’s a position the CEO himself sees as essential for the 167-year-old retailer to carve out a new place for itself in today’s retail world.

“Neil didn’t take pictures of things that didn’t exist,” Spring said. luck In an interview at Macy’s headquarters in New York. Spring, who took the reins of Macy’s Inc. in early 2024 after a successful decade-long stint as CEO of the Bloomingdale’s division, said the venerable department store had long been in denial about the depth of its problems.

“We had to have a moment of reflection and say, ‘We’re not as good as we think we are,’” Spring said. “We can be proud of Messi’s history, but we cannot be proud of Messi’s current performance.”

In fact, the brand’s performance has been terrible for years. Customer service scores declined year over year, contributing to a decline in sales from an all-time high of $28.1 billion in 2014 to just over $22.3 billion a decade later. The company closed hundreds of stores as customers took their business elsewhere amid the “retail apocalypse” unleashed by the rise of Amazon and the growing popularity of cheaper retailers like Target. Meanwhile, brands trying to raise their own image were tired of the substandard presentation of their products in many Macy’s stores: Ralph Lauren, Coach, Nike, and Levi’s, among others, removed their products from shelves.

The plan for spring is simple at its core: return to retail basics. This means having enough staff to ensure customer service that justifies shopping at a department store rather than online or at a discount; Well-maintained stores with more attractive product display; And newer brands instead of the same old brands, over and over again – all while keeping costs low. Ultimately, his strategy is to create a Macy’s with fewer but more attractive stores, complemented by e-commerce. The goal is to go from the current 449 locations to 350 or so, including the 125 priority stores that will get a disproportionately higher investment for things like more employees and new lighting.

There are promising signs that Macy’s has, at long last, found a turnaround plan. In the most recent quarter, Macy’s posted its best comparable sales performance in 12 quarters. Sales were up just 1.1% year over year, but that’s a victory at a time when shoppers are grappling with economic anxiety — and an encouraging sign that spring may be on to something.

Adjust position

To have any hope of a successful turnaround, Spring felt Macy’s needed a cultural reset first, to inspire a workforce battered by years of declining revenues, store closings, and headcount cuts, and get buy-in for his strategy. “The big impact we’re finally seeing comes from the fact that we’re all singing from the same hymn,” Spring, 57, said.

Macy’s, founded in New York City in 1858, benefits from a huge reservoir of goodwill among its 40 million annual customers, many of whom remember trips to the department store as children, to pick up graduation outfits or sit on Santa’s knee. The Macy’s Thanksgiving Day Parade in Manhattan, which is watched by millions across the country on television each year, has cemented the brand’s place in American culture.

But while many associate the brand with its Manhattan flagship and its famously elaborate display windows during the holiday season, for decades Macy’s was primarily a mall-based department store chain with hundreds of large stores in suburbs across the country. It’s a form of shopping that consumers have been turning away from since the 1990s, and Macy’s was no exception.

At its peak just over a decade ago, Macy’s had more than 773 stores under its namesake. The company, which also owns Bloomingdale’s and the cosmetics chain Bluemercury, became a Frankenstein giant after a massive $11 billion merger in 2006, absorbing several regional chains, including Filene’s, Marshall Field’s, Foley’s, Hecht’s and Kaufmann’s It put the name “Macy’s” on all stores. This massive deal also created a massive challenge for Macy’s: too many of the brand’s stores were grouped together, cannibalizing each other’s customer base.

During that period, Macy’s bureaucracy ballooned, and the character of the regional department store chains that absorbed it faded.

“They were never able to create a unified culture from all these pieces they put together,” said Cathy Gersh, president of consulting firm Cotter International.

In addition to the “priority” stores, Macy’s will keep open another 225 or so stores once it finishes closing a few dozen other locations in the next few years.

In the 2000s, Macy’s continued to grow, fueled by the implosion of longtime rivals Sears and JCPenney. But those gains masked the problems facing Messi. Amazon, with its low prices and fast delivery, captured market share, as did TJ Maxx, where shoppers could get designer clothes at much lower prices, and Ulta Beauty, which captured many of the beauty customers who were among the most frequent visitors to Macy’s stores.

The more Macy’s business came under pressure, the more it cut back on spending, creating a vicious cycle that undermined the service standards and pleasant atmosphere needed to justify department store prices.

Case in point: A decade ago, Macy’s tried to save labor by converting its shoe department into self-service “open sale” areas, a short-lived but disastrous move. “If you want an open sale, you can go to TJ Maxx,” Saunders said.

Macy’s, like many other retailers, has fallen into the trap of putting more merchandise on the selling floor to reduce the number of times workers have to restock shelves. But this created a messy, crowded look reminiscent of a clearance store.

The very dense sales floors also made it difficult to do storytelling – called “visual merchandising” in retail – with mannequins. More staff were also an obvious need for the jewelry and handbag departments, where customers want higher-priced items to be displayed from the boxes. “It’s not rocket science, it’s about getting back to retail standards,” Spring said. Here’s what customers told Macy’s directly: In the first months of spring, the company surveyed 60,000 current and former customers to get a deep understanding of what they wanted.

Spring pointed to the mistakes the company made in the past decade, as investors lost patience with Macy’s and its mediocre performance. Macy’s was so desperate to placate Wall Street that it announced in 2015 that it planned to install “smart mirrors” in fitting rooms. (It often didn’t work properly, and was seen as an expensive failure.) “We became enamored with shiny things and felt like we needed to keep up with everyone instead of playing by our own playbook,” said Spring, who was on Macy’s leadership team as an executive at Bloomingdale’s.

In 2015, an activist campaign by Starboard Capital, which saw little value in Macy’s retail business, sought to pressure the company to spin off its best properties. This was the first of four activist campaigns by different companies targeting Macy’s in the past decade.

The pressure to keep costs under control became more urgent during the pandemic when Macy’s was struggling to stave off bankruptcy. Wall Street still imposes strict restrictions on Macy’s regarding its expenses.

One story Spring likes to tell is that a decade ago, when he was director of Bloomingdale’s stores, he visited the store with other executives. He and the “suits” were intercepted by a shopper who told him that everywhere she went, employees were asking how she was doing. Spring remembers he was expecting a compliment, but instead heard a complaint: “No one can even wait for a response,” she told him. Spring said the blame was a punch in the gut.

“It was a good reminder that we were so focused on training people to say the line that we forgot to explain to them why,” Spring said. The “why” is that it makes the chat feel less transactional, even as it gives the store worker insights into what the customer might need or want to buy.

Spring’s training was in hospitality: he studied hotel and restaurant management before starting at Bloomingdale’s as a management trainee in 1987, and his first job ever was in the service industry, at a Burger King in the 1980s. He wants a hospitality mentality to take hold and for store workers to feel like their job is about more than just folding clothes and managing cash registers. It’s also about injecting the shopper’s experience with romance and theatrics, an endeavor he says can make the job more fun and fulfilling: “We’re all driven by psychological reward.”

Still mid?

Armed with some promising results, Spring worked to attract new brands to Macy’s and bring back others. In July, he staged a coup when children’s maker Abercrombie & Fitch began selling its products in Macy’s stores. Other brands recently added by Macy’s include Reiss, Good American and Theory. Spring is also betting that he can get valuable partners to return to many of the Macy’s stores they left.

Spring is quick to admit that Messi still has a lot to prove. But its early results have raised hope that the matter has finally turned the corner at long last.

Even if critics like Saunders calm down on Spring’s moves, they also say there is more to be done. “Macy’s is still halfway there,” Saunders said. “They need to continue to raise the level of expertise.”

And that’s exactly what Spring intends to do, by capitalizing on the cherished associations many Americans have with the Macy’s brand. “There’s a lot of love for this brand,” he said. “If we bring our best effort to the table, we have a chance to win back their business.”