A breakthrough at Macy’s – in the midst of its second turnaround project in five years – is evident at its Chicago flagship for the first time in well over a decade, Evercore ISI analysts led by Michael Binetti said in a Wednesday client note.
“Our team has hosted tours in the State Street store for 15 years and, in our opinion, the changes the company is making today are driving more positive progress than any point we can remember over those 15 years,” Binetti said.
Improvements in merchandise and customer service were apparent, according to the report, which detailed a visit by analysts and investors accompanied by Macy’s Inc. Head of Investor Relations Pam Quintiliano.
In merchandising, that included the assortment as well as signage. The store contained “a balanced combination of core brands the retailer is known for, trending brands, younger brands, and even some higher-end brands that may not have fit in the stores of the past,” Binetti said. Visual upgrades “go well beyond new flooring and lighting” and brands like Ralph Lauren have participated in elevating their presentations.
Small changes are making a difference, too, with analysts spotting hangers “spaced at least two inches apart (giving the store a more polished feel).” They also noted that associates are better-trained.
“This is a very detailed merchandising strategy and a noticeable update from the way stores have been over-merchandised and non-premium feeling over the last decade,” Binetti said.
These are probably welcome changes to the many Chicagoans who remain resentful of Macy’s takeover — and makeover — of Marshall Field’s, which built the flagship in the late 19th century. Meanwhile, the surrounding area, known as the Loop, is also making headway in its own recovery, after a low point during and after the pandemic. Office space is filling back up, restaurants and stores are opening and foot traffic is on the rise, according to a Q3 report from the Chicago Loop Alliance.
Macy’s customers, in this city and elsewhere, are also set to benefit this holiday season from a distribution center in North Carolina that opened during the third quarter, according to the Evercore analysts. Macy’s has a later e-commerce deadline this year than many of its competitors, in part thanks to the new facility, they said.
Macy’s State Street location is a bellwether for the department store’s trajectory, according to Evercore. Not least, the merchandising has advanced to the point where brands, which a few years ago were exiting Macy’s, are again interested in a partnership. Nike is just one example.
“In other words, there’s a flywheel effect taking place where Macy’s initiatives are compounding traffic and bringing in better brands — which can build on itself if nurtured properly,” Binetti said.
