Macy's: What we learned this week

Happy Thanksgiving! It's Thursday, Nov. 27, and welcome to this week's Business & Finance newsletter. Today, in honor of the Macy's Thanksgiving Day Parade, we're revisiting one of our favorite Thanksgiving traditions with a special edition newsletter on the business of Macy's.

We'll be back tomorrow with our usual three-topic newsletter with all the bells and whistles (hint: we're covering Black Friday), but until then, enjoy learning about Macy's journey from retail innovator to bankruptcy—plus, what the first-ever Macy's Thanksgiving Day Parade looked like.

—Phoebe Bain, 1440 Business & Finance Section Editor

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Macy's

Background

Macy’s is more than a 167-year-old department store—it’s an American cultural institution. In 2006, Macy’s ran over 800 department stores and was estimated to be worth more than $20B. Today, Macy’s runs around 500 stores and is set to close dozens of them. Its market cap, as of 2024, was just under $5B.

Despite the swift downward trend, it’s easy to forget that the department store was an early retail-industry disruptor. The way Americans shop, celebrate holidays, and pay for goods and services likely wouldn’t be the same without a few innovations from Macy’s founder.

How Macy's Became an Icon

In 1858, Rowland H. Macy opened RH Macy & Co. as a dry goods store. At the time, the store—which sold household goods such as linens—was located on New York City’s 14th Street.

Macy’s pioneered a few industry-disruptive retail concepts in its early days. For instance, at a time when bargaining was still the norm, Macy’s prices were nonnegotiable. Macy’s also required its customers to pay immediately rather than using the era’s prevailing “buy now, pay later” system. Macy’s is also known as the first store to organize its clothes by size rather than style.

If you’ve ever wondered why you’re paying $5.95 for something rather than $6, that might be because of Macy’s, too. RH Macy believed that pricing products with odd figures rather than round numbers would force his staff to be more diligent about how sales were accounted for, making it harder for them to pocket money without getting caught.

Other Macy’s innovations include helping popularize the “retail Santa” in 1862 (although there’s some debate over this) and holiday store windows in 1864.

In 1902—a few years after Nathan and Isidor Straus acquired the company and assumed full control of the business after RH Macy’s 1877 death—the store moved uptown to the Herald Square flagship that it still occupies today (here’s why it doesn’t occupy one corner of its block).

The flagship was initially around 1 million square feet. After expansion, the store grew to over 2 million square feet and became the world's largest store in 1924. The Strauses soon began opening Macy’s stores around the country, too (see the brand’s full historical timeline).

Macy's Thanksgiving Day Parade

The first Macy’s Thanksgiving Day Parade took place in 1924. It was originally intended to promote Macy’s upcoming holiday sales. Although it took place on Thanksgiving Day, the parade was initially called the Macy’s Christmas Parade—the name didn’t change until 1927.

The 1924 parade drew a crowd of thousands and included animals from the Central Park Zoo, with Macy’s employees and professional entertainers walking alongside the animals. The parade marched down from 145th Street in Harlem to the newly expanded Macy’s flagship in Herald Square.

The large balloons associated with the parade debuted in 1927, replacing the zoo animals. Felix the Cat had the honor of being the first-ever parade balloon.

The parade marched on through the Great Depression but was canceled from 1942 to 1944 due to helium and rubber shortages during World War II. It hasn’t missed a year since 1945.

In 1948, the parade arrived on national television screens for the first time. Snoopy, Charlie Brown’s beagle, holds the record for the most frequent character balloon in the parade’s history, totaling 40 appearances up to 2019.

Macy's Today

Despite its early innovations, Macy’s has arguably struggled to keep up with the ever-evolving retail industry. It filed for bankruptcy in 1992, citing store expansions and tough financials. The holding company Federated Department Stores acquired Macy’s in 1994, agreeing to pay more than $449M for a stake in the department store. By 2007, Federated had renamed itself Macy’s Inc.

Macy’s has spent the past few years since the pandemic closing swaths of stores, and it doesn’t seem to be stopping these closures any time soon—in 2024, ​​Macy’s said it aimed to close an estimated 150 stores through 2026. Experts attribute the brand’s change in strategy to both the coronavirus pandemic and moving stores out of underperforming malls.

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