Macy’s dropped a bombshell this week when it said it would close 125 stores and lay off more than 2,000 corporate employees. Thousands more store workers are also likely to lose their jobs as the company shutters one-fifth of its locations in the next three years.
The announcement is the latest in a string of bad news from the nation’s largest department store chain, and one that analysts say is likely to reverberate throughout the industry – and beyond. From shopping malls to newspapers, here are five ways the Macy’s closures will affect American consumers, workers and businesses.
– Already-struggling malls
There is a widening divide among America’s shopping malls: The most profitable properties are thriving, while the rest are stuck in a downward cycle of dwindling traffic, lower sales and disappearing storefronts. Macy’s decision to close 125 anchor stores at “lower tier malls,” analysts say, is likely to accelerate the demise of some of the country’s most vulnerable shopping centers.
“Although this is prudent and sensible for Macy’s, it is a bad sign of where some of the country’s second- and third-tier shopping malls are headed,” said Neil Saunders, managing director of GlobalData Retail. “When a major retailer like Macy’s or Sears or J.C. Penney closes, it weakens the viability of the shopping mall and gives people even fewer reasons to stop in.”
Dozens of shopping malls have closed in the past decade, and hundreds more are in decline as they lose key anchor stores. One in four U.S. malls is expected to close by 2022, according to a 2017 report by Credit Suisse.
– Mall chains, small businesses and kiosks
Macy’s, which anchors hundreds of U.S. shopping malls, has become a coveted neighbor for all types of smaller retailers that rely on the department store to drive traffic to their shops and kiosks. Macy’s locations also tend to have brightly lit entrances and sprawling parking lots that draw people in.
The loss of a major anchor store, analysts say, is likely to reverberate throughout the industry. Mall staples like Gap, J Crew and Victoria’s Secret, which already are facing sales declines and dwindling foot traffic, will likely be hard hit, as are nearby kiosk-operators and food courts.
– Retail workers
The retail industry cut 77,475 jobs last year – more than any other sector – according to outplacement firm Challenger, Gray & Christmas. Analysts say they expect the trend to continue this year as retailers like Express, Pier 1 and Papyrus follow through with planned store closures.
Macy’s latest announcement is a major blow to workers. The loss of a single department store, they said, can easily affect 150 or more employees. Multiply that by 125, and more than 18,000 jobs could be on the line.
For 26 years, Macy’s has split its headquarters between Cincinnati and New York. Now the company says it will close its Ohio headquarters and move operations to the Big Apple to cut costs. In all, the company said it will lay off about 2,000 workers, or roughly 10% of its corporate and support staff.
City officials say the move will probably cost Cincinnati 500 jobs – and $500,000 in a payroll taxes. Macy’s is one of the region’s largest employers.
“It is very disappointing for the City of Cincinnati,” Council Member Amy Murray told local news station Fox 19. “Macy’s has been a good corporate partner through the years, and though we understand their decision, obviously (we) wish that they were staying here for the long term.”
Macy’s is one of the top sources of advertising revenue for newspapers across the country, and analysts say widespread store closures and cost-cutting efforts will likely cause a further pullback on print ads.
The company is already scaling back: Politico reported in 2016 that Macy’s had cut about half of its newspaper advertising, leaving newspapers with $100 million in lost revenue. “Depending on the market, a publisher would see a drop of as much as $900,000 . . . the equivalent of at least 10 newsroom jobs,” Politico reported.