Samsung and Macy’s on Tuesday debuted an elaborate store-within-a-store at the department store’s flagship Herald Square location in New York, according to a press release.
The specially curated 1,000-square-foot space on the store’s main floor features a television wall featuring a gallery-like art display called "The Frame," a 4-D virtual reality roller coaster experience powered by Oculus and opportunities to try out numerous products, among other things.
Electronics was once a department store strong suit, which was ultimately challenged a few decades ago by specialty big-box retailers like Circuit City and Best Buy. Department stores like Macy’s that could once count on sales of cameras and the like at the holidays abandoned most of those sales and devoted those spaces to apparel sales instead.
Many categories within department stores have folded like that — with beauty just the latest to be pummeled by retailers like Sephora and Ulta — and the habit of leaning on yet more apparel to replace them has helped lead to the apparel glut.
"It is like putting a bandage on a wound requiring stitches," says retail analyst Nick Egelanian, president of retail development consultants SiteWorks International, regarding the Samsung effort. "It is just too little too late and will have little or no positive impact. Macy’s is leading an industry that is in the final phases of a 30- to 40-year decline due to deconstruction of its 'department' model into more effective 'category killer' retail stores. From linen stores to oil change stores, what once transacted in full line department stores no longer does."
That has "little or nothing to do with Amazon or internet sales," either, he told Retail Dive in an email. "This becomes obvious when observing sales trends over the last 30 to 40 years, during which annual department store industry sales in the U.S. dropped from hundreds of billions of dollars to under $75 billion today."
In many ways Macy’s Herald Square is an outlier for the chain, which, with the closure of some 100 stores nationwide, has been unwinding the massive proliferation it undertook at the beginning of the century. To be sure, the edifice in mid-town Manhattan enjoys a location, history and architecture that overshadows most of its locations in mid-level American malls, and the highly experiential Samsung space is poised to enjoy substantial holiday traffic.
"At Macy’s, we are focused on providing what matters most to our customers — an even more engaging shopping experience and the best, most innovative products," Marc Mastronardi, Macy’s executive vice president of business development, said in a statement. "With the new Samsung experience at Macy’s Herald Square, we are creating an innovative and beautiful, one-of-a-kind digital playground in a flagship department store, featuring numerous installations and touch points for customer engagement."
Unfortunately for Macy’s, that’s not the story in most of the country. The ongoing contraction of its footprint is a much-needed correction to its previous over-expansion, but the retailer has suffered nevertheless as store closures have hit sales. Meanwhile, its opportunity to capitalize on its lucrative property value inevitably shrinks with every sale and lease of its real estate. Its woes — and those of rival J.C. Penney — this week led Citi analyst Paul Lejuez to downgrade Macy’s, saying, "We don't believe [Macy's] has found the right tools to offset negative store traffic and margin pressures," according to a report from The Street.