Macy's will close 150 stores, reshaping the retail landscape

Macy's, a longtime anchor in many malls, is slated to close about 150 of its U.S. stores by early 2027. The decision is expected to trigger a wave of changes in the retail landscape, as the closings will release important commercial spaces, which can pave the way for smaller commercial establishments, apartments or entirely new developments.

The stores slated to close make up 25 percent of Macy's total floor space but account for less than 10 percent of its sales, according to CEO Tony Spring. The company plans to focus more on the remaining 350 stores and expand its top-performing brands, Bloomingdale's and Bluemercury.

The closings are seen as a catalyst for malls to adapt to changing consumer tastes, as online shopping continues to grow and demographic changes affect the viability of malls in certain regions. Chris Wimmer, senior director at Fitch Ratings, believes the closures could be beneficial for many malls, allowing them to reinvent themselves and stay relevant.

Macy's owns most of its stores, a legacy of when mall owners offered space to department stores to attract shoppers. The closures will open up opportunities for real estate developments that align with the changing demographic and economic conditions of their surroundings.

However, some of the closing Macy's stores may be difficult to repurpose, which could lead to the decline of already struggling malls. The company has closed more than a third of its stores in the past decade, and other anchors such as Sears, Lord & Taylor and JCPenney have also downsized or disappeared from malls.

The number of malls has also declined, with a steeper decline among lower-tier malls. Anand Kumar, associate director of research at Coresight, predicts that by 2030, tier-one malls will attract a larger share of total mall spending, while more lower-tier malls will close or convert more space in non-commercial uses.

The closings of Macy's and other anchor stores have led to the creation of new apartment complexes, entertainment wings and other miscellaneous projects. For example, Brookfield Properties has invested more than $2 billion in the redevelopment of more than 100 anchor boxes since 2012. In some cases, former Macy's locations have been transformed into training facilities, corporate offices and even Amazon fulfillment centers.