What's happened
Macy's and Kohl's are closing multiple stores as part of restructuring efforts amid declining sales. Macy's plans to shutter 150 locations by 2026, while Kohl's will close 27 stores this year. Both retailers face challenges from e-commerce and changing consumer preferences.
What's behind the headline?
Key Factors Behind Store Closures
- Sales Declines: Both retailers are responding to significant drops in sales, with Kohl's reporting a 9.3% decline in same-store sales in the third quarter.
- E-commerce Competition: The rise of online shopping has pressured traditional department stores, leading to a shift in consumer spending habits.
- Strategic Focus: Macy's aims to concentrate resources on its best-performing locations, while Kohl's is adjusting its strategy under new leadership.
Implications for the Retail Sector
- Market Consolidation: The closures reflect a broader trend in the retail industry, where underperforming stores are being shuttered to focus on more profitable locations.
- Consumer Behavior: As inflation impacts discretionary spending, retailers must adapt to changing consumer preferences, particularly among younger shoppers who prioritize experiences over products.
- Future Outlook: The ongoing restructuring efforts may lead to a more streamlined retail landscape, but the success of these strategies remains uncertain as economic pressures persist.
What the papers say
According to AP News, Kohl's is closing 27 stores this year as part of a strategy to support its long-term growth, with CEO Tom Kingsbury emphasizing the need for difficult decisions to ensure the company's future. Business Insider UK highlights that Macy's is closing 150 underperforming stores to focus on its best-performing locations, with CEO Tony Spring stating that this will allow for better resource allocation. The NY Post notes that both retailers are grappling with significant challenges, including leadership changes and declining sales, which have prompted these closures. Overall, the retail sector is facing a critical juncture as it adapts to evolving market conditions.
How we got here
Both Macy's and Kohl's have struggled with declining sales, with Kohl's reporting 11 consecutive quarters of sales declines. Macy's announced its closure plan in February 2024, while Kohl's is undergoing leadership changes as it seeks to stabilize its business.
Go deeper
- What are the reasons behind these store closures?
- How will this impact employees at Macy's and Kohl's?
- What does the future hold for department stores?
Common question
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Why are major retail chains closing stores?
Recent announcements from major retail chains like Kohl's, Walgreens, and Macy's reveal a troubling trend of store closures driven by declining sales and economic pressures. As consumers shift their shopping habits and competition from e-commerce intensifies, these closures raise questions about the future of retail and its impact on the economy. Below, we explore the reasons behind these closures and their broader implications.
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Why are Macy's and Kohl's closing stores?
Macy's and Kohl's are making headlines with their recent announcements about store closures. As both retailers restructure amid declining sales, many are left wondering what this means for the future of brick-and-mortar shopping. Below, we explore the reasons behind these closures and their implications for the retail landscape.
More on these topics
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Macy's is an American department store chain founded in 1858 by Rowland Hussey Macy. It became a division of the Cincinnati-based Federated Department Stores in 1994, through which it is affiliated with the Bloomingdale's department store chain; the holdi
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Neiman Marcus Group, Inc., originally Neiman-Marcus, is an American chain of luxury department stores owned by the Neiman Marcus Group, headquartered in Dallas, Texas.
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Kohl's is an American department store retail chain, operated by Kohl's Corporation. As of February 2013, it is the largest department store chain in the United States with 1,158 locations, operating stores in every U.S. state except Hawaii.
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Walgreen Company or simply Walgreens is an American company that operates as the second-largest pharmacy store chain in the United States behind CVS Health.
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Sears, Roebuck and Co., commonly known as Sears, is an American chain of department stores founded by Richard Warren Sears and Alvah Curtis Roebuck in 1893, and was reincorporated by Richard Sears and Julius Rosenwald in 1906.