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Saturday, February 09, 2008

Macy's Layoffs: Do Department Stores Have a Future?

It seems the Chicago area isn't the only region that has the same problem with Macy's. Oh yeah hat-tip InstaPundit who seems to have similar feelings about the loss of a local nameplate just like many Chicagoans feel about Macy's taking over Marshall Field's and then changing the chain's name...

Macy’s is hurting; sales are down. (Apparently someone did tell Gimbels.) Locals will be laid off. Not unexpected. There’s a two-pronged problem here.

Department stores face a torrent of competition – catalogs, online, Target on one end, upscale boutiques on the other, the other department store across the mall. Perhaps it’s an outmoded model for retail. It made sense once to concentrate all the goods in one massive store, but few stores need to be everything to everyone anymore. They’re like giant overladen pack animals, panting as they climb the hill. Department store spent the 20th century getting bigger and bigger; now they’ll spend the 21st century shrinking. Sad it may be for some, but that’s retail – without change, there wouldn’t even be a Macy’s on 34th in New York, because the retail core would still be stuck down on 14th.

There’s something else at work, though. I can’t help wondering if the decline of local brands didn’t sever some psychic bond people had formed with the very concept of department stores. In the short run, I’m sure they made money streamlining the brands, but in the end they made them interchangeable and rootless. Herberger’s is still expanding – they’re opening up their 17th store in Minnesota. Sure, they’re owned by Bon-Ton now, but the company kept the local nameplate.

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