Macy's (company)

Company Information

Date Founded: 1858

Industry: Retail

Corporate Headquarters: Cincinnati, Ohio

Type:Public

Overview

Macy’s is an American chain of department stores owned by the publicly traded holding company Macy’s, Inc. and headquartered in Cincinnati, Ohio. For many decades, the company has been one of the most successful department store retailers in the United States, but it faced struggles in the retail dynamics of the early twenty-first century.

Macy’s was founded by American businessman Rowland Hussey Macy in New York City in 1858 as a small dry goods store called R. H. Macy & Co. After a slow start, the store eventually became a sensation among New York consumers. This mostly was due to Rowland’s unique vision of how his business could differentiate itself from other retailers. For instance, Macy’s became the first retail store to sell goods using a one-price system, which charged one set price for specific goods rather than allowing customers to haggle over prices, a common practice at the time. Macy’s also distinguished itself from other stores by advertising prices in newspapers, conducting transactions with cash only, and offering customers money-back guarantees.

Macy’s also pioneered the concept of the department store by becoming the first American store to sell such diverse items as tea bags, colored bath towels, men’s and women’s clothing, and Idaho baked potatoes. The store later became the first to own a New York City liquor license, allowing it to add alcohol to its already varied array of goods.

By the late 1920s, Macy’s was generating tens of millions of dollars in yearly profits. It continued to grow throughout the rest of the century, opening new locations across the United States and posting ever-increasing annual sales.

Federated Department Stores, Inc.—later Macy’s, Inc.—acquired Macy’s in 1994. Into the twenty-first century, the corporation expanded the Macy’s brand by acquiring various other department store chains and converting them to Macy’s stores. In the early 2010s, Macy’s operated nearly 1,000 stores throughout the United States and was one of the most successful retail stores in the country. However, by 2016, as the department store chain faced continued competition from physical bargain stores such as T. J. Maxx and Marshalls as well as online from the likes of Amazon, the company announced a plan to close a large number of stores in an effort to refocus its business on those that had consistently proven the most profitable. Despite having begun opening a number of discount stores designed to compete directly with T. J. Maxx and Marshalls in 2015, with some independent locations and others contained within Macy's stores themselves, called Backstage, by 2016 the company slowly started to close at least one hundred planned stores, with around eighty reportedly shuttered by early 2018.

In addition to downsizing, Macy's executives discussed experimenting with new loyalty programs and committing to selling more unique brands, particularly of clothing. This continued in 2020 as the company closed its corporate offices in Cincinnati, Ohio along with offices in San Francisco and Lorain, Ohio. Aiming to reach more online customers, Macy's announced the launch of its digital marketplace in 2021, providing customers access to more brands, categories of merchandise, and products from third-party merchants. In 2022, the company reported 42.7 million active shoppers, a 4 percent drop compared to the previous year.

History

Rowland Hussey Macy was born in Nantucket, Massachusetts, in 1822. As a young man, he opened numerous dry goods stores in various locations in Massachusetts, but all of these failed. In 1858, the upscale R. H. Macy & Co. in New York became Rowland’s first successful business. The store made $11.06 on its first day and about $85,000 after its first year.

Rowland’s revolutionary business model of offering customers a miscellaneous range of goods for fixed prices quickly brought the company financial success. This prosperity eventually allowed Rowland to expand his store from its singular location in downtown New York to eleven additional storefronts in nearby buildings, making Macy’s the first true American department store.

In subsequent decades, Macy’s introduced numerous sales concepts that would become popular practices in American retail stores. In 1862, Macy’s became the first store to employ a Santa Claus at Christmas. Two years later, Macy’s installed lit window displays in its storefront to advertise to street pedestrians; this tactic popularized the activity of window shopping.

Rowland died in 1877, leaving Macy’s to his surviving family. In 1895, the company was acquired by brothers Isidor and Nathan Straus, who for many years had leased Macy’s basement to sell china. By 1902, Macy’s had become so large and successful that it had to be moved to a multistory building on Herald Square at New York’s 34th Street and Broadway. This new location became Macy’s flagship store. It featured more than thirty elevators and four wooden escalators, the first installed in an American store. A 1924 expansion project brought the Herald Square Macy’s floor space to more than one million square feet. The New York Macy’s thereby became known as the world’s largest department store and was frequented by customers from around the world.

Also in 1924, Macy’s immigrant employees established the Macy’s Christmas Parade to celebrate their new American identities. The parade featured floats, bands, and live animals and attracted a crowd of about ten thousand people. This annual event ultimately transformed into the Christmas-themed Macy’s Thanksgiving Day Parade, a tradition that continued into the twenty-first century.

Macy’s continued expanding over the next several decades, principally by opening new locations in other regions of the United States. For example, in 1945, Macy’s purchased San Francisco’s O’Connor Moffatt & Company and converted it into a Western Macy’s division.

In 1994, Macy’s was purchased by Federated Department Stores, Inc., which already owned and operated more than four hundred department stores throughout the United States. The addition of Macy’s locations and financial assets made Federated Department Stores one of the largest department store companies in the world.

Over the next decade, Federated Department Stores continued to acquire smaller department store chains and convert some of them to Macy’s stores. By 2006, Federated Department Stores had converted most of its stores, including more than four hundred former locations of May Department Stores Co., into Macy’s locations, bringing the total number of Macy’s stores to more than eight hundred. In 2007, Federated Department Stores changed its name to Macy’s, Inc. By this time, Macy’s department stores could be found in nearly every region of the United States. In April 2023, Jeff Gennette announced he would retire from the company after forty years in February 2024.

Impact

Rowland Hussey Macy built the Macy’s brand and style from nothing and left behind an enterprise that became one of the most successful department store chains in the United States. Macy’s developed numerous business tactics that set precedents for future retailers. These included newspaper advertising, setting permanent prices, and selling a wide-ranging inventory of items in a concept that became known as a department store.

In the twentieth and twenty-first centuries, Macy’s came to the attention of Americans nationwide every Thanksgiving and Christmas season. It did this with its annual Macy’s Thanksgiving Day Parade and with its famous Santa Claus appearances in its flagship New York store throughout the Christmas season. Through these public events and the quality of its stores and products, Macy’s continued to enjoy the American people’s trust and business over many years.

Bibliography

"A Glance at Macy’s History." Seattle Times, 9 Nov. 2010, old.seattletimes.com/html/businesstechnology/2013385486‗apusceointerviewmacysglance.html. Accessed 14 June 2016.

"At Macy's, a Digital Marketplace Is Born." Wall Street Journal, deloitte.wsj.com/articles/at-macys-a-digital-marketplace-is-born-01670948411. Accessed 5 May 2023.

Hanson, Kerl. "The History of Macy’s: From Humble Beginnings to Stunning Success." Macy’s, www.visitmacysusa.com/article/history-macys-humble-beginnings-stunning-success. Accessed 14 June 2016.

"Macy's Has a Plan to Survive the Retail Apocalypse." Bloomberg Businessweek, 21 Nov. 2017, www.bloomberg.com/news/features/2017-11-21/macy-s-plan-to-survive-the-retail-apocalypse. Accessed 20 Apr. 2018.

"Macy’s, Inc. History." Macy’s, Inc, www.macysinc.com/about-us/macysinc-history/overview/default.aspx. Accessed 14 June 2016.

Thomas, Lauren. "Here Are the Stores Macy's Is Closing Next." CNBC, 4 Jan. 2018, www.cnbc.com/2018/01/04/here-are-the-stores-macys-is-closing-next.html. Accessed 20 Apr. 2018.