That’s essentially what Macy’s chairman/CEO Terry Lundgren said on the business talk-show circuit today, in explaining the company’s decision to shut about 14 percent of its store base next year.
According to the outgoing chief executive (president Jeff Gennette will succeed him in 2017 as CEO), not just Macy’s but the entire U.S. landscape is overstored.
Specifically, America maintains 7.3 square feet of retail space per human being, Lundgren said, a situation he described to CNBC as “ridiculous” when compared to France and Japan (1.7 square feet) or the United Kingdom (1.3 square feet).
“We have five-and-a-half times the number of retail physical locations in America per capita than any other country in the world and so there has to be a rationalization,” he noted.
In Macy’s case, that will require closing 100 of its least profitable stores, while hopefully driving traffic to the remaining 575 full-line locations with in-store events and more branded shops.
See:Best Buy Testing CE Shops In Macy’s
Apparently Wall Street agreed, as Macy’s shares soared more than 16 percent on the news despite reporting second-quarter sales and earnings declines.
Bringing home the point was Bloomberg Gadfly, which posted a telling table from Green Street Advisors showing how many locations leading department stores would have to close in order to return to their sales-per-square-foot levels of 10 years ago:
Lundgren is a retail star who orchestrated the 2005 merger of the Federated (Macy’s, Bloomingdale’s) and May (Lord & Taylor, Marshall Field’s, Filene’s) department store chains, and is credited with revitalizing the channel with private-label programs, localized assortments and other merchandising innovations.
Hat tip to Clark Schultz at Seeking Alpha.
