The History Of Macy’s: Can America's First Department Store Survive The Retail Apocalypse?
Back in the beginning, in 1858 to be exact, Macy’s was one lone department store in New York City. Macy’s ($NYSE:M) was founded by entrepreneur Rowland Hussey Macy. He opened the first R.H. Macy & Co. on the corner of 14th Street and 6th Avenue in New York City, then a low-rent district just north of the city’s other dry good stores. On the very first day the store was open, Macy’s made $11.08 (equivalent to $326.82 today).
The first year of business saw $85,000 in sales. Over the next several years, Macy’s expanded to occupy 11 adjacent buildings and opened new departments as it did so, effectively launching the modern department store.
Groundbreaking Innovations and Publicity
Throughout the first 40 years in business, Macy’s used then-groundbreaking publicity events like an in-store Santa Claus and lighted window displays to draw in customers. The window displays introduced the concept of “window shopping.” Macy also introduced the buying and selling of merchandise with cash only.
He eliminated the then-common practice of bargaining for goods, he stated the exact price of products in newspaper ads, he offered money-back guarantees and introduced the tea bag, the Idaho baked potato, and colored bath towels. Macy’s in Herald Square had New York City’s first liquor license. The store also offered made-to-measure clothing in-house for both men and women.
R.H. Macy took on two partners in 1875, his nephew Robert Valentine and Abiel T. La Forge, the husband of a cousin. R.H. Macy died in 1877 from inflammatory kidney disease. La Forge died in 1878 and Valentine died in 1897. Ownership of the store stayed in the Macy family until 1895, when Isidor Straus and his brother Nathan, who had a license to sell china and other goods to Macy’s, acquired the store.
The Opening Of The Herald Square Macy’s
In 1902, the flagship Macy’s store moved to Herald Square, where it remains today. At the time, the store at 34th Street and Broadway was so far north of other dry goods stores, that Macy’s offered a steam-powered shuttle from 14th Street to 34th Street. Over the years, the Herald Square Macy’s expanded to occupy almost the entire block bordered by Seventh Avenue, Broadway, 34th Street, and 35th Street.
There was one exception, a small five-story building on the corner of 35th and Seventh had been purchased by Robert H. Smith in 1900 for $375,000 ($11.5 million today). His plan was to stop Macy’s from building the largest store in the world.
It has long been thought that Smith was working on behalf of the company Siegel-Cooper, which built what they thought was the world’s largest store in 1896. Macy’s ignored Smith’s obstruction and just build around the store. In 1912, Isidor Straus and his wife Ida died when the Titanic sunk. The building that houses Macy’s in Herald Square was added to the National Register of Historic Places as a National Historic Landmark in 1978.
We wrote about Macy's foot traffic not too long ago, which you can read right here.
Macy’s Literal and Figurative Expansion
Today, the Macy’s Thanksgiving Day Parade is an annual tradition. It was started in 1924 by Macy’s employees. It was originally called the Macy’s Christmas parade and featured live animals from the Central Park Zoo. The first parade drew a crowd of 10,000 people. That same year, the stores Seventh Avenue expansion was completed, officially making Macy’s the largest store in the world.
We all know the classic 1947 movie Miracle on 34th Street. Did you know that the movie largely takes part in the Herald Square Macy’s and revolves around that store’s Santa? Macy’s has played an important part in 20th-century American pop culture.
Macy’s began to expand nationally in the 1960s with a store on Queens Boulevard in Elmhurst, New York. However, it wasn’t until 1983 that Macy’s began opening stores outside of the New York City-Long Island area. The first was a store at the Aventura Mall in the Miami suburb of Aventura, Florida, followed by stores in Plantation, Florida, Houston, New Orleans, and Dallas.
Then, in 1986, Edward Finkelstein, the Chairman and CEO of R.H. Macy & CO, led a leveraged buy-out of the company and then lost a takeover battle with Federated Department Stores. A number of acquisitions and rebranding efforts took place throughout the 1980s and 1990s.
The Modern Era
In 2005, Macy’s owner Federated agreed to acquire The May Department stores and rebranded regional May’s owned stores, such as beloved Chicago store Marshall Field’s as Macy’s. This was met with outcry and derision by the people of Chicago. Marshall Fields had been in operation since 1852, six years before Macy’s was founded. As a result of the rebranding of a number of former May’s owned stores, by the end of 2006, Macy’s had approximately 850 stores in the U.S.
However successful Macy’s has been, it has not been immune to the effects of online shopping and the retail apocalypse. In January 2015, Macy’s announced that it would close 14 stores across the U.S. In September 2015, the company announced that it would close 35 to 40 underperforming stores by early 2016. In January 2016, Macy’s laid off 4,800 employees for a total savings of $400 million after a disappointing 2015 holiday sales season. As of January 2016, Macy’s had 770 stores.
The store closures continued. In August 2016, Macy’s announced that it would be closing 100 stores in early 2017, laying off 10,000 people, which would save $550 million a year. The company announced that it would invest $250 million in its online business as well as growth strategies for remaining stores.
In February 2019, there were 867 Macy’s Inc stores including Macy’s, Bloomingdales, Bluemercury, Backstage, and Story—641 of those were Macy’s. In the second quarter of 2019, shares of Macy’s fell more than 13%, hitting their lowest point since February 2010 in August 2019, which shares fell to $15.82.
The last time we wrote about Macy's was during the holidays, which you can check out right here.
The question is: can a venerable old school department store like Macy’s adapt for the current retail climate? It doesn’t appear so. On January 8, Macy’s announced that it would close 29 more stores.
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