Macy’s and Kohl’s, two of the largest department store chains in the U.S., announced the closure of several stores after experiencing sales declines in recent years.
The closing of department store chains demonstrates the influence of e-commerce platforms and their impact on consumer preferences and shopping patterns.
In January, Macy’s announced it would close 66 stores by the end of 2024, with 150 underperforming stores closing over the span of three years.
In the same month, Kohl’s announced the closure of 27 underperforming stores by this month.
In the fiscal year 2024, Macy’s recorded net sales of $22.29 billion, a 3.5% decrease from the $23.09 billion in the fiscal year 2023. In 2024, Kohl’s sales fell to 9.4% in the fourth quarter, decreasing company sales by 7.2%.
Kohl’s 2024 profit was $109 million, a 65.3% reduction from its 2023 profit of $317 million. The store closures and sales declines indicate that consumers opt for online shopping platforms like Amazon and Walmart for lower prices and convenience.
Department store chains like Macy’s and Kohl’s are losing relevance among the middle-class families that made up a large portion of their consumer base, as lower-priced options like Amazon, Walmart or Ross are considered favorable alternatives.
The decrease in popularity of brick-and-mortar stores is also explained by younger, technology-oriented consumers moving toward alternative online platforms.
The store closures represent a need to return companies to profitable and long-term sales growth.
“As we continue to build our long-term growth strategy, it is important that we also take difficult but necessary actions to support the health and future of our business for our customers and our team,” Tom Kingsbury, former Kohl’s CEO, said in a January press release.
The most popular cities are not spared from massive store closures. Indeed, New York is affected by the closure of several Macy’s stores. A downtown Brooklyn location and a store at Sunrise Mall on Long Island are set to close doors.
California has also been affected by the series of store closures. Kohl’s announced the closure of 10 stores in California, as well as in New Jersey, Colorado and Virginia.
