Macy’s is the US department store market leader, but the company has experienced falling sales and consequent loss of market share in recent years. To find out where those shopper dollars have gone, we surveyed US consumers and asked those respondents who said that they shop less for apparel at Macy’s than they used to which retailers they have switched their apparel spending to.
Macy’s leads among US department stores, and it is America’s second-biggest retailer of apparel. But it has underperformed over recent years, even when benchmarked against a sector hit hard by declining sales. The company saw a 410-basis-point decline in sector share as annual revenues declined by $3 billion between 2012 and 2017. Only struggling Sears has seen a comparable decline in sector share, according to data from Euromonitor International.
So, where have Macy’s shoppers taken their apparel spending? The obvious answer is Amazon, but does that retailer account for all of the declines at Macy’s?
To find out, we surveyed US apparel shoppers, asking if they now spend less of their clothing and footwear budget at Macy’s than they did about three years ago (including if they stopped shopping for apparel at Macy’s altogether during the period). Our survey found that:
We then asked the 26% of shoppers who had cut their apparel spending at Macy’s which retailers they had switched some or all of their apparel spending to. We summarize the findings in the following sections.
This report forms part of our How the US Shops series, in which we share insights into Americans’ shopping behavior based on the findings of our original consumer research.
It’s likely unsurprising to readers that Amazon has been the overall biggest gainer when consumers have redirected some or all of their apparel spending away from Macy’s. Yet Amazon is far from dominant: much less than half of those surveyed who spend less of their apparel budget at Macy’s than they used to said that they had switched that spending to Amazon.
So, the full picture is more complex, as these shoppers have splintered their apparel spending among a variety of retailers, including off-pricers, mass merchandisers and other department stores, as we chart below. In terms of gaining share of apparel spending when shoppers switch from Macy’s, T.J.Maxx/Marshalls is in second place after Amazon, while Target is in third place and Kohl’s in fourth.
A natural churn between retailers likely accounts for some of these shifts—and that churn means that Macy’s, too, may have gained shoppers from some of the retailers shown below over recent years.
The preponderance of value retailers in the ranking above reflects an apparent downgrading of apparel as a spending priority among shoppers. Fully 37.5% of the US consumers we surveyed said that they agreed with the statement “Compared to around three years ago, clothing is now less of a spending priority for me.” We think this deprioritization of apparel partly explains why so many consumers have switched away from shopping at midmarket department stores.
Migration of apparel spending to Amazon is not uniform. In particular, our survey found very different trends between those shoppers who have an Amazon Prime membership and those who do not. Among all respondents who said that they spend less of their apparel budget at Macy’s than they used to:
Young consumers are not leading the charge to Amazon: those ages 18–29 show a below-average rate of switching their apparel spending from Macy’s to Amazon. Instead, it is consumers ages 30–60 who switch most to Amazon.
Meanwhile, the 18–29 age group showed an above-average rate of switching to value retailers such as T.J.Maxx, Target and (not charted below) Old Navy.
Amazon is only partly responsible for declining sales at department stores such as Macy’s. Among survey respondents who said that they spend less of their apparel budget at Macy’s than they used to, much less than half said they had switched that spending to Amazon.
Amazon Prime membership is a big differentiator in terms of apparel spending being redirected from Macy’s: Prime members are much more likely to have moved some or all of their apparel spending to Amazon than are those with no Prime membership.
Value retailers such as off-price stores and mass merchandisers are popular options for switching, reflecting the deprioritization of apparel spending among some consumers in recent years.