What is Macy’s Thinking?
I realize I’ve been posting a lot about San Francisco lately – I would stop if it became less newsworthy. Instead, the hits just keep on coming, with yesterday’s BOMBSHELL that MACY’S IS PLANNING TO CLOSE ITS 700,000 SQ FT UNION SQUARE FLAGSHIP IN THE COMING YEARS (link below). This was no doubt a heavy blow, and at the same time, a bit of a headscratcher, given that Macy’s owns its building and would be selling into a down market. Moreover, large brands need the visibility generated by flagship stores in major markets – which Macy’s presumably understands better than others, seeing as its 34th Street location in Manhattan has effectively carried the company for years. And it needs that visibility especially in a omnichannel model, with the role that brick-and-mortar must play in customer acquisition and retention. Obviously there’s a lot we do not know, but to me, this move does not compute, at least at first glance, which suggests a couple of possibilities. One, Macy’s and its new CEO are responding to pressure from activist investors eager to monetize its real estate. Two, it is putting the City on notice, as leverage for securing a hoped-for reassessment, a cash subsidy and/or even greater urgency in revitalizing the district. (Note that the store would not be closing until 2025 at the earliest). In any event, Macy’s is definitely one of those legacy brands that I discussed in my last article (“What Really Happened to Downtown Retail”, posted on 2/21), struggling mightily to stay relevant. Amidst all its flops in recent decades, it has also made some shrewd decisions. This, though, does not seem like one of them.