The decrease of mall culture and its effects on consumer shopping behaviors.
When was the most recent occasion you visited your local mall out of sheer necessity?
Had that question been posed several decades earlier, you might have responded with something like “last week” or “it’s on my list of things to do this weekend.”
However, that’s likely no longer true.
Currently, a decreasing number of consumers make an effort to visit their local malls because, quite frankly, it’s no longer necessary.
Due to this shift, Australian consumers are becoming less loyal to specific brands, resulting in a more level playing field in the market. Businesses now have to compete primarily based on their strengths, pricing strategies, and perceived popularity.
Shopping malls are no longer seen as the ultimate choice for accessibility and convenience. The growth of suburban strip plazas with equally extensive inventories, along with the ease of online shopping, has made it simpler than ever to access your preferred brands.
Due to the growth of online shopping, the emergence of suburban shopping plazas nearby, and a wider array of options, we no longer need to go to large indoor shopping malls to acquire the items we could previously only get by driving for half an hour, parking in a large garage, and spending half a day navigating through stores.
Macy’s approach for rejuvenation and emphasis on the luxury market
Macy’s has been negatively affected by declining interest in shopping malls.
Legacy mall retailers such as JC Penney and Macy’s (M) have been particularly impacted by this trend. Formerly dominant anchors of mall culture, these stores are now significantly diminished, burdened with high rents while experiencing declining foot traffic and fewer bargain-seeking customers.
Clearly, this business strategy is not sustainable. Macy’s has been vocal about a revitalization plan, announcing it will close approximately 150 stores by 2026 to improve sales and boost profitability.
The company has also taken a proactive approach by presenting what it believes will be appealing new offers. It has started to rejuvenate its in-house brands, such as the children’s label Epic Threads, aiming to attract loyal customers looking for exclusive, value-oriented brands.
As part of its revitalization efforts, Macy’s has introduced or reintroduced various brands such as On 34th and State of Day. The company also intends to unveil a new menswear collection in 2024, followed by a new kids’ line soon after.
Macy’s is making a significant investment in its luxury product line.
However, reviving classic products is just one aspect of Macy’s major overhaul. The mall retailer is apparently increasing its focus on well-known, high-margin luxury brands to attract wealthier customers.
The retailer announced that it will shift its focus to designer fragrances, which continue to feature highly coveted brands such as Dior and Chanel but are more affordable compared to items like designer handbags.
“According to Nicolette Bosco, VP of beauty at Macy’s, ‘Fragrance represents that accessible element of luxury.’ She added, ‘[Fragrance] is significantly more attainable than, for example, a product that costs a few thousand dollars from the same brand.’”
“In the past three years, following Covid, we’ve been dedicated to enhancing and delivering a luxurious beauty experience to our consumers,” she added.
Several Macy’s locations have already started carrying premium fragrances from designers such as Cartier, Tom Ford, and Creed. However, the department store chain intends to further enhance its selection of designer fragrances by implementing a strategy to broaden its luxury beauty product range — particularly focusing on fragrances — to 42 stores by the close of 2024.
Macy’s announced plans to introduce mini store-in-store concepts, similar to Target’s collaboration with Ulta and Kohl’s successful partnership with Sephora.
“We’ve progressed by fostering collaborations and what I refer to as ‘retailtainment’ — though my CEO prefers to call it retail theater. We have the capability to host various collaborations because we have the required space,” Bosco stated. “I believe this will be integral to our future growth and what we will be offering to consumers.”
Besides fragrances, Macy’s aims to broaden its selection of luxury apparel and accessories. The company is betting on the notion that consumers are inclined to invest in high-quality, prestigious products, despite reducing spending in other areas. Although this approach carries certain risks, Macy’s is confident that emphasizing luxury will set it apart from other retailers and draw a wealthier clientele.
Additionally, Macy’s is making significant investments in its online presence to augment its in-store luxury products. The company is improving its e-commerce platform to deliver a smooth shopping experience, featuring virtual try-ons and customized recommendations. This digital initiative is designed to attract the increasing number of consumers who favor online shopping but still seek the upscale items that Macy’s provides.
Although the path to revitalization is filled with obstacles, Macy’s is hopeful that a mix of high-end products, creative in-store experiences, and a strong online presence will enable it to regain stability in a swiftly evolving retail environment. For Australian investors and business observers, Macy’s approach provides a fascinating example of how established retailers can adjust to new market conditions.
