If anyone is really surprised by Macy’s announcement last week of closing 100 stores, they haven’t truly been paying attention to the evolution of retail the past few years, especially in the fashion apparel space. Beyond challenges and issues that Macy’s or any other long-standing retailer may have in the areas of assortment, pricing, customer service, etc., this most recent news speaks volumes of the impact of changing consumer desires and expectations. Yes, she does still want to shop in stores – but not as often, and typically for a very specific occasion. She wants different opportunities and choices to shop, and flexible capabilities from her retailer on browsing, comparing, and buying.

The overriding consensus in the case of Macy’s is that they did in fact have too many stores. They were on a growth trajectory for a number of years, riding seemingly endless waves of success with brands, marketing, and consumer loyalty. However, as shopping habits changed along with shifting demographics near once-vaunted mall locations, the volume of stores became a drag on earnings and profitability versus an engine for growth.

We should also keep in mind that Macy’s, like other leading retailers, has not been ignoring the online trend, and in fact has been investing heavily in ecommerce growth and consumer-facing capabilities over the past decade or so. Macy’s has not been alone: other department stores and apparel retailers have been pushing themselves to develop new capabilities in not just selling online, but connecting with their customers in numerous ways, and providing choices for how that consumer wishes to interact and shop.

Further, like many other retailers, they have also been implementing new solutions to improve their assortment planning, to allocate better to stores, and generally set themselves up for merchandising success.

But the overall consumer trends have presented challenges especially to those legacy retailers that still have heavy store space, who are working to remain relevant while pivoting to an omnichannel world, and also driving their larger brick & mortar enterprise to shift and change. A large percentage of underperforming stores means that too much inventory is dispersed in locations where it will not sell, or certainly not at full price. The combination of slow moving inventory in certain locations, along with lost sales due to not having the right inventory available elsewhere, is a frustrating situation for a retailer, and certainly brings negative impacts on revenue and margin.

It’s not just about having assortment and inventory available for the consumer in different channels, but it’s also about ensuring store associates understand that metrics and expectations for them are changing as well (hint for management – compensation structures need addressing along with other processes and very likely an overall review of the field and operations organizational model itself). As many have learned, having a clean website, mobile capabilities, and the tools to support fulfillment options – these are only part of the equation. The overall experience for a consumer has to include the store and customer service execution, which speaks to development of enhanced training programs. Today’s shopper may not always buy in the store, but she needs to feel excited about being there, and she must feel engaged with the brand regardless of whether she is in the store, using an app, reading an email, text, tweet, etc.

As for Macy’s, they still have an extremely strong brand, and while they have work to do, this move will position themselves competitively – and the street seems to be rewarding the news already. As other retailers have learned, closing stores and cutting related expenses only address part of the equation for the new business model. They need to crack the formula on top-line growth associated with online sales as well – including a strong focus on mobile – and understand how to effectively operate in an omnichannel world. And for those stores that do remain open, there should be an even tighter focus on data-driven assortment planning and execution, cross-channel inventory management and visibility, as well as leading-class customer service, in order to push improved comp store sales and reduce promotional markdowns and clearance. Today’s shoppers have so many choices, the winning retailers will work even harder to gain their business and then keep them as long-term, loyal customers.

On a side note, while the commentary above is generally true for most retailers, another trend in today’s economy is that discount retailers have fared better. They have a lower cost model, and are enjoying higher sales per square foot. Macy’s is somewhat stuck in the middle, certainly not a discounter, and not a premium brand like their sister banner Bloomingdale’s, or others such as Nordstroms and Neiman Marcus. The moral as in other industries is don’t get stuck in the middle, but if you are, you need to execute extremely well to stand out from the crowd.

– Clay