history of the American retail chain Macy’s

This week it became known that several investment funds want to buy the Macy’s department store chain. The brand is practically synonymous with luxury and fashionable department stores. On top of everything else, innovative. Fixed-price merchandise, tea bags, colored towels and the concept of a guest Santa Claus – all of the above have one thing in common: Macy’s was the first or one of the first to use them.

Shop trendsetter

The history of Macy’s began in 1858, when 36-year-old businessman Rowland Macy opened his first store in New York, on the corner of Sixth Avenue and 14th Street in Manhattan. During the first day of work, Macy’s sold $11, which was significant for a small haberdashery store. . However, already in the first year, Macy’s sales exceeded $85 thousand. The choice of the manager played a big role in this. More precisely, the manager. Her name was Margaret Glatchell. Under her leadership, the store began to expand: to the usual lace and other haberdashery goods, she soon added many others, including home decoration, gifts and jewelry.

By 1877, Macy already owned a full-fledged department store, located in 11 adjacent buildings. It cannot be said that Macy’s became the first department store in the world – there were already stores of this format in major cities, including Paris, London and New York.

But what is absolutely certain is that Macy’s greatly influenced this format and was in many ways a trendsetter. So, in the 1870s, the store was one of the first to sell goods at a fixed price – customers did not have to negotiate the price with the seller, they just had to look at the price tag. It was also rare that Macy’s sold goods only for cash, and not on credit, as in many other stores. In addition, the store was one of the first to print the price directly in advertisements, and also guaranteed the possibility of returning the goods if the buyer was dissatisfied.

Other Macy’s innovations include the ability to tailor clothes according to client’s measurements directly in the department store, as well as the opening of a cafe in the store. As a result, Macy’s was one of the first to become the prototype of a modern shopping center – a place where you can buy a variety of goods and eat.

Much attention was already paid to the marketing component. Glatchell came up with the recognizable Macy’s symbol in the form of a five-pointed star. At her insistence, they began to pay special attention to the design and lighting of shop windows. A soda fountain was installed in the store itself – all to attract customers. And Macy’s was one of the first to use the image of Santa Claus for marketing purposes.

Since 1867, Macy’s began working on Christmas Eve until late in the evening. For its time, this was almost a revolution, so the department store became popular among those who were late buying gifts for Christmas.

Famous Department Store and Thanksgiving Day Parade

After the founder’s death in 1877, the store continued to be run by members of the Macy family. And in 1895, they sold Macy’s to brothers Isidore and Nathan Strauss, who successfully continued to develop the business.

By the end of the 19th century, Macy’s was a chain of seven stores. In 1902, the company’s most famous store opened on Harald Street, which now occupies nine floors and an entire block. This building would become a symbol of Macy’s for decades to come.

By 1924, after renovation, the department store was recognized as the largest store in the world. Now 20 million people a year come to this complex, not only shoppers, but also tourists who want to look at the famous department store, which is included in the American National Register of Historic Places.

Since the new building was located very far from the old complex, the company even launched an express train between them for customers based on a now unusual (and quite rare then) vehicle – a steam car.

The department store on Harald Street became a symbol of modern shopping at that time – a bright, luxurious and attractive building with beautiful windows, expensive goods and restaurants inside. Macy’s was one of the first stores where escalators appeared, and by modern standards they were quite unusual – they were made of wood. Some of them are still working.

It is believed that over the years it was Macy’s that was the first to come up with the idea of ​​selling tea in disposable bags and colored rather than white towels. In the early 1930s, the department store was the first to receive a license to sell alcohol after the end of Prohibition.

In the 1920s, Macy’s came up with another tradition that has survived to this day: the employee costume parade. In 1924, such a parade was held for Christmas, but soon the timing shifted to Thanksgiving. True, initially the procession even caused a small scandal: several patriotic societies filed a complaint against it, saying that it could undermine the traditions of celebrating Thanksgiving that existed at that time.

Already in 1927, its most characteristic participants appeared at the parade – huge inflatable figures of pop culture characters who were carried through the streets of New York. The parade often features famous performers, school orchestras, and ends with the passage of Santa Claus – a sign of the beginning of the pre-Christmas season.

Largely thanks to its parade, Macy’s became part of pop culture. Thus, this parade and the department store itself are at the center of the action in the popular Christmas comedy “Miracle on 34th Street,” released in 1947. Also, the Macy’s parade or inflatable figures from it are shown or mentioned in the TV series “Friends”, the film “Ghostbusters”, the Woody Allen film “Broadway Danny Rose”, a Green Day song and many others.

And since 1976, Macy’s has also annually organized a fireworks show for Independence Day. It also became popular in New York, although it is far from the fame of the Macy’s parade.

A legend in decline

For a long time, Macy’s was a purely New York company. Spread to other states began only in the 1960s.

In the early 1990s, Macy’s almost went bankrupt. A few years later, the company was bought by the largest chain of department stores, Federated Department Stores, adding it to the portfolio of its brands – Lazarus, Filene`s and Bloomingdale`s. Soon the company itself and many stores of these chains were renamed Macy’s.

At the same time, the store began to attract celebrities to advertise its products, including Kate Moss and Sarah Jessica Parker. In 2010, the company launched a chain of more budget stores, Macy’s Backstage.

However, Macy’s has not been doing very well in recent years. Like others department storesMacy’s faced competition from online retailers, and the company was also hit by the COVID-19 pandemic, when stores remained closed for a long time.

Recently, the chain had to close more than 300 stores. If at the beginning of 2020 there were more than 870 stores in the chain, now there are only 500. Since 2015, Macy’s shares have fallen by about three and a half times. The company completed 2022 with revenue of $24.4 billion and profit of $1.2 billion—slightly worse than the year before.

This week, information appeared that investment funds Arkhouse Management and Brigade Capital made an offer to buy Macy’s for $5.8 billion. According to Bloomberg Intelligence analyst Mary Ross Gilbert, buyers are most likely primarily interested in store buildings. After all, the capitalization of the network, which before the appearance of this news was estimated at $4.7 billion, is inferior to the value of its real estate – about $8 billion. According to another assessmentmade by TD Cowen, the network’s real estate is worth even more – $11.6 billion.

So many experts consider the deal unprofitable for Macy’s, especially since the situation in retail trade has been improving recently. Moreover, a deal based solely on interest in prime real estate in good areas is unlikely to improve Macy’s position as a unique store.

“A group of investors that sells off the property and probably does something else, such as spinning off online retail as a separate business, will definitely make a short-term profit. But if some of those profits are not reinvested in its core retail business, Macy’s will end up worse off,” said Neil Saunders, managing director of consulting and analytics firm GlobalData.

Yana Rozhdestvenskaya