What's going on?
US department stores Macy’s and Nordstrom both cut their revenue and profit outlooks earlier this week.
What does this mean?
Macy’s and Nordstrom specialize in nice-to-haves like clothing and homeware, so they were always going to find it tricky to appeal to a belt-tightened shopper. But the shift in spending habits has happened faster than anyone expected, and the stock they built up since the pandemic has become nearly impossible to shift. Keep in mind too that both retailers said footfall in their stores had dropped off, which means they’ll probably have to offer heavy discounts to clear their shelves. And even though they’re tweaking the amount of stock they order in going forward, it seems like it’s too little, too late: both cut their full-year sales and profit outlook.
Why should I care?
Zooming in: Macy’s Plan B.
Macy’s already has a couple ways it’s planning to try to bring shoppers into the fold. For one thing, it’s been opening smaller stores in more populated areas to make it more convenient than a day trip to a mall. And for another, it’s struck a partnership with Toys R Us to bring toys and games to hundreds of Macy’s locations just in time for the holidays.
The bigger picture: Malls are not a priority.
Macy’s did say that spending at its Bloomingdale stores – where the average household income of its customers is over $250,000 – continued at a healthy pace, but that those with customers on a lower typical income saw a slowdown. After all, lower-income shoppers spend a bigger proportion of their salaries on food and energy, which are only becoming less affordable: new data has shown that a record one in six US households have fallen behind on their utility bills (tweet this). So if Macy’s and Nordstrom think those customers are going to splurge on a Nutribullet, they have another thing coming.