The Herald Square store will undergo a $400 million renovation, with a focus on upgrading technology and selling space.
By Adrianne Pasquarelli @SheLikesToBake
November 1, 2011 10:51 a.m.
Following the lead of Lord & Taylor and Bloomingdale's, Macy's Inc. will revamp its flagship store in Herald Square.
Updated: November 1, 2011 1:07 p.m.
In four years, New Yorkers shopping at Macy's Herald Square might not recognize the storied department store. The Cincinnati, Ohio-based Macy's Inc. announced Tuesday that its flagship will undergo a $400 million renovation, beginning this spring and lasting through the fall of 2015. The massive project, which includes upgrades of nearly every department, will create 1,600 construction jobs and add 800 new positions to the store's existing 4,600-employee fleet.
“[Herald Square] is our company's most productive store and experience shows that improvements in this location consistently result in higher customer traffic and sales volume,” Terry Lundgren, CEO of the $25 billion Macy's, said in a statement, noting that the costly renovation represents an investment in the future of the flagship and in New York City itself.
Overall, the selling floor will be expanded by 100,000 square feet to a total of 1.2 million square feet. The shoe department, complete with a digital shoe location system, will be upgraded to 39,000 square feet; 300 additional fitting rooms will be added and new restaurants are also being planned. Overall, the store will feature 22 restaurants and food stations, including a second-floor coffee, wine and chocolate bar. Even Macy's legendary exterior is getting restored to its historic look.
Rumors of a large-scale renovation for the 850-unit chain have been circulating in the retail community for nearly two years.
“The store is very classic looking, but also somewhat antiquated,” said Kenneth Stumphauzer, a retail analyst at Sterne Agee & Leach Inc. “It was probably due for a renovation.”
While Macy's has never disclosed what percent of annual sales the Herald Square location represents, Mr. Stumphauzer estimated it could be between 4% and 6%. He noted that much of the upgrade is focusing on areas where Macy's has had success, such as footwear.
Macy's is not alone in its renovations—it's just a bit behind. As recently as last fall, several major stores including Lord & Taylor, Bloomingdale's and Saks Fifth Avenue spent millions on renovation projects. Lord & Taylor's upgrade of its Fifth Avenue flagship, completed last October, cost between $20 million and $25 million and included a lavish unveiling party.
Faced with declining numbers—sales in the category fell 11% between 2009 and 2008, for example, to $67.1 billion, according to Kantar Retail—department stores are focusing on new measures to remain relevant in an age dominated by specialty and discount stores. Holiday sales for the sector are only expected to increase 1% this year, predicts Kantar Retail, compared with 3% growth last year.