It's a fickle time to operate in the retail space right now.
Consumers are decreasingly brand loyal, which means competition has gotten flatter, and companies must compete based on their merits, pricing power, and perceived popularity above all else.
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Legacy mall retailers, for example, used to enjoy relative supremacy simply because they had access to the most foot traffic. Mall operators would charge outsized rents to these stores because their location was worth the premium. Customers would wander in and often make purchases because, often, that's just what you did at the mall.
Nowadays, however, that model has slipped.
Malls are no longer considered the gold standard for shopping access and convenience. Thanks to the rise of more suburban strip plazas with comparably impressive inventory, plus the rise of online shopping, getting access to your favorite brands has never been easier.
Instead, customers care a great deal more about pricing. And since retailers like TJ Maxx, Ross, and online hubs still offer brand names at better discounts than what's typically found at your city mall, these once giant mall hubs have begun to crumble.
The impetus, therefore, is on retailers to attract buyers in different ways. Whether it's with competitive pricing, better inventory, or easier access, a retailer must capture at least one of these factors in order to stay relevant in 2024.
Macy's has been struggling
There is perhaps no better example of how the changing consumer landscape has forced once-dominant retailers to rethink their strategy than Macy's (M) .
The once high-flying mall store used to be the gold standard of retail. Replete with multiple glistening floors stocked to the brim with fragrances, home decor, fashion, and more, Macy's used to be the flagship (or anchor) store for many malls in the United States.
The stores did well because you quite literally had to park in a Macy's parking lot, enter through a Macy's entrance, and ostensibly shop through one of its floors to gain access to the rest of the mall. At the very least, Macy's was the first and last thing on your mind during a mall trip.
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Now, however, the decline of shopping malls has spelled an even more rapid decline for Macy's. The retailer said it planned to close approximately 150 stores by August 2024 and has been struggling financially.
Net sales for the retail giant in 2023 were $23.1 billion, down 5.5% compared to the year prior. Comparable store sales were down by 6% over the same period.
Macy's brings back a new brand
Understandably, the retailer has been trying to sidestep a fate similar to JC Penney's, making a herculean effort to avoid being dragged into the slippery and seemingly inescapable graveyard that is bankrupt mall retailers.
So it has been borrowing a page out of Target's (TGT) book, introducing new in-house brands that other retailers don't have in an effort to regenerate intrigue and exclusivity into its stores.
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Macy's announced on Tuesday that it would relaunch its popular children's label, Epic Threads, which features products like brightly colored sundresses and floral tees.
The refreshed line will feature about 200 pieces, including t-shirts, pants, dresses, outerwear, and accessories, and garments will range in price from around $10 to $50.
Macy's has launched or re-launched several other brands in its revitalization effort, including On 34th and State of Day. It plans to launch an unnamed menswear collection later in 2024 and another kids' line shortly thereafter.
Management maintains that its in-house private labels are by far its most lucrative, representing about 15% of its overall sales. The initiative comes as a part of Macy's overall "Bold New Chapter" plan, which intends to regenerate growth for the company and return profits to shareholders.
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