Dive Brief:

• Macy’s Inc. Wednesday announced that it will eliminate about 4,800 positions after releasing a disappointing post-holiday sales report. The retailer said that employees could find other positions within the company, with some 2,700 cuts due to 40 store closings announced last fall and about 2,110 of cuts due to reduced staffing at stores, consolidating regional stores, and simplifying back-office organizations. A list of store closings (and a few openings) of Macy’s and Bloomingdale’s stores is here. 

• Warm weather in the Northeast and the strong dollar, which hampered sales by international tourists, hit the department store hard, according to CEO Terry J. Lundgren, handing the retailer its worst holiday season since 2008. Same-store sales in November and December fell 4.7% and the slide continues. Macy's Q4 report is expected to miss its expectation of a sales drop between 2% and 3%. 

• While the department store in recent months has resisted calls to spin off its real estate holdings or otherwise extract value from its vast real estate portfolio, Wednesday the company said it is hiring consultants to look more closely at its options in that area.

Dive Insight:

The American department store began as a captivating innovation in brick-and-mortar retail, then shifted to become the anchors of suburban malls. Today the concept is struggling, for a variety of reasons. Where Macy’s once had a more diverse merchandise mix, it and other department stores these days depend heavily on apparel sales, a tough area right now.

Solidly performing departments, like Macy’s home-goods Cellar department, eventually were discontinued and the stellar customer service gave way to hard-to-find salespeople and discounts upon discounts, Mark Cohen of Columbia University’s business school, told Retail Dive last year.

“The department stores got tremendous value from being in the malls, but lost their franchise. Then the downtowns got decimated, so they lost their shoppers. Then, the big box players could move an enormous amount of volume," Cohen says. "It’s not that the department stores had no chance. But they didn’t attempt to reengineer themselves. By the time the Internet came on, all but Nordstrom were late to the party and are still catching up. Meanwhile, there’s Amazon, a virtual marketplace that’s kind of like an infinite shopping mall, where you can get with one click anything you want to buy.”

Macy’s Wednesday statement is full of plans to find efficiencies by closing underperforming stores and through other cost-cutting measures, and to boost its online and omni-channel efforts. But the plan is also to open more off-price Backstage stores, entering an increasingly competitive space that, perhaps most importantly, could further erode its own brand, Cohen warns. 

“They’ll do a lot of business. The question is: How much is truly incremental, how much simply represents transfer sales,” Cohen told Retail Dive. “And more insidious than that, how much will it further erode Macy’s brand equity?”