Who ‘Mugged’ Macy’s


The three biggest department stores in the 1960’s – Macy’s, Hudson’s and Marshall Field’s. Macy’s is now the lone survivor…for the moment!

“In 1878 a New York Times headline announced “The Great Sixth-Avenue Bazaar; Opening Day at Macy & Co.’s – A Place Where Almost Anything May Be Bought.”
‘The special attraction, the article noted, was the “universality of the stock, almost every article of dress macys-330and household furniture being for sale there, and at the most reasonable prices.” In November of 1902, the store moved to its present site, but it wasn’t until 1924, when it doubled its building size, that it began to really grow and to take the lead as a retailing giant. That year it presented its first holiday parade called “Fairyfolk Frolics in Wondertown.” By the end of the 1920s, Macy’s had become the country’s largest department store.” Jan Whitaker Consumer Historian


xLast week, Macy’s after 139 years as an American Icon,

Macy’s was forced to put itself up for sale.


What happened?


xDisruption is not just a ‘buzzword’ anymore


The 2016 holiday shopping season is a great vantage point from which to visualize the ‘concept’ of disruption through a lens of reality. In 2006 department and big box stores dominated retailing. Just 10 years later … not so much!


Net Promoter, NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld

Big box and department store sales plummeted, as consumers increasingly went online to do their shopping. This holiday season, revenue estimates for big box and department stores are equal to just 62% of their totals in 2006.

Pam Goodfellow at Prosper Insights & Analytics did a masterful job of shifting complexity to simplicity in two slides. Prosper surveys around 7,000 consumers each month. The first chart indicates that of those shoppers that identified themselves as regular Macy’s customers, 76.7% shopped at Amazon during the holidays while only 67.4 % of Macy’s identified customers … bought holiday items at Macy’s. Ouch! Then if you look to the 2nd slide, the Net Promoter Score, as reported by Macy’s core shoppers, for Amazon is almost twice that of Macy’s. It’s rough retailing when your own customers like shopping at a competitor … almost twice as much as shopping with you!


For the 2016 Holiday Shopping Season Macy’s sales dropped 4.7%

For the 2016 Holiday Shopping Season Amazon’s sales increased 22%


Again … Big Box and department store sales plummeted, as consumers increasingly went online to do their shopping. This year, it is estimated that revenues are equal to just 62% of their totals in 2006. However, being an Amazon competitor in online is not easy either. Many brick and mortar retailers are also trying to create an online presence.


Overall, Amazon’s share of the 2016 holiday online market share was 38%. Best Buy was a distant second, at 3.9%, Target at 2.9% and Walmart at 2.6%. (Walmart just spent $3 billion plus on Jet.com in an effort to ‘catchup’. The 2017 holiday season will be one to watch.)


How disruptive is disruption?



The above slide from Tyler Durden at Zero Hedge indicates that the Market Capitalization for Amazon on December 30th 2016 was $355B. The combined value of 8 major brick and mortar department and big box retailers was $297B or around 16% less. [Walmart, Target, Sears, JC Penny, Macy’s, BestBuy, Nordstrom, Kohl’s] On January 27th, the market cap of Amazon was posted at $397B up from $355B just a few short weeks ago.


But the trend does not get better, the blue days are not over for big box and department stores. If the below trend line is realized as estimated for 2016-2020, big box and department store retailers will have lost 43% of their total revenue in just 14 years. 


And that’s what ‘disruption’ means!

To read Prosper Insights & Analysis’s excellent article, click here.





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