Another Major Employer Leaves San Francisco, 1,000 Jobs Vanish: Macy’s Shuts Tech Center in Broad “Optimization”

In total, 2,000 tech, admin, and management jobs to be cut and offices closed around the country. In addition, one-fifth of Macy’s stores to close. Brick & Mortar Meltdown.

By Wolf Richter for WOLF STREET.

Unable to dodge the brick-and-mortar retail melt-down, Macy’s is restructuring its business, and this time it’s different: It’s slashing about 2,000 jobs, mostly tech and administrative, 9% of its workforce. And 1,080 of those jobs are in San Francisco, where it will scuttle its entire tech center – the headquarters of, Product and Digital Revenue, and Technology – after having already closed two of its three San Francisco department stores.

The announcement this evening of the restructuring came on top of leaks that had been swirling for weeks and were confirmed on Monday, that the San Francisco tech center would be closed.

The tech center in San Francisco employs 880 full-time workers and about 200 contract workers, including executives, software engineers, and analysts. Its activities will be moved to its headquarters in New York City, and parts of it will be moved to Atlanta which “will serve as the primary technology hub for the company,” it said.

On Monday, the rumors were confirmed when Macy’s CEO Jeff Gennette informed employees that the tech center would be closing on April 1. Some of the employees could apply for jobs at the New York City and Atlanta locations. The remainder would be out of a job.

That’s a lot of people to throw into the local job market from one day to the next. But the local job market is still hot for young tech workers – and that’s a good thing for them. The people that are not so young anymore are going to have a harder time.

Macy’s will also “optimize” its “store portfolio”: 125 stores will be closed within three years, including the 30 stores that are being closed now. This will leave the company with about 400 Macy’s stores.

Macy’s has built a thriving ecommerce business. It’s the seventh largest ecommerce retailer in the US, behind Amazon, eBay, Walmart, Apple, Home Depot, and Best Buy, according to eMarketer. In its announcement today, Macy’s put a dollar figure on its ecommerce business: “more than $6 billion per year.”

This means its brick and mortar business is now down to just $18 billion in revenues a year, and that it continues to shrivel, while its ecommerce business is growing and now accounts for about a quarter of its total sales.

This “campus consolidation” plan also includes shutting down its second headquarters in downtown Cincinnati and its offices in Lorain, Ohio. Most of the 500 people working at the downtown Cincinnati headquarters will be moved to its offices in Springdale, a suburb of Cincinnati, bringing the workforce there to 950 people. Macy’s will also close its call center in Tempe, AZ, and consolidate this activity in its Mason, Ohio, and Clearwater, Florida, facilities.

Macy’s will shuffle much of the expense of closing these centers and laying off 2,000 people into 2019. Going forward, it expects gross cost savings of around 1.5 billion by the end of 2022 – with $600 million of the gross cost savings falling into 2020.

All this might make sense for a retailer whose brick-and-mortar business continues to melt down, despite innumerable initiatives to keep it from melting down, and whose ecommerce business is thriving, but not enough to make up for the melt-down of its brick and mortar business.

The writing is on the wall: regardless of any announced initiatives designed to revive its brick-and-mortar business – and there were more initiatives in this announcement – Macy’s brick-and-mortar presence will continue to shrivel, as fewer and fewer Americans go to department stores to buy stuff. That’s a structural change in how Americans shop, and Macy’s is trying to come to grips with it and slow down the process so that it has some extra time to bring up its ecommerce business.

But the closure of its tech center in San Francisco, and putting over 1,000 tech workers and managers out on the street from one day to the next, has its own dynamics that go beyond the brick-and-mortar meltdown but fit into a trend that has started to play out more broadly in San Francisco – where companies are seeking to get away from the high costs of doing business, particularly office leases and compensation expenses.

Companies in San Francisco that have to make money – so not startups and unicorns and food-delivery companies or companies like Uber and Lyft, which don’t have to make money – but companies like Macy’s and Schwab and others that do have to make money, they’re trying to figure out how to bail out of San Francisco.

Back in 2015, Schwab still had 2,040 employees in San Francisco. By late 2019, it was down to 1,200 as the company had shifted works to other places, particularly its new campus in Westlake, Texas. And in November, Schwab, in its announcement that it would acquire TD Ameritrade, also said it would move the corporate headquarters out of San Francisco to Westlake. Read… After Years of Threats, Schwab Joins Exodus, to Move Headquarters from San Francisco to Texas

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  140 comments for “Another Major Employer Leaves San Francisco, 1,000 Jobs Vanish: Macy’s Shuts Tech Center in Broad “Optimization”

  1. MF says:

    Sears 2.0.

    • RD Blakeslee says:

      This kind of non-contributing comment belongs elsewhere on the internet.

    • IdahoPotato says:

      If you want the rainbows and unicorns bulletin I can recommend a couple of fact-free sites.

  2. MC01 says:

    All these old school B&M retailers are boasting about how much their online revenues are growing but for me the question is another: are they making a meaningful profit on these online sales? Or are they just doing it because everybody is doing it? Are their creditors benefiting from online sales or are they merely subsidizing empty growth figures to try and fool financial market software?
    All business is hard, but online retail particularly so. Margins are minuscule, and too often they just don’t exist at all.

    Investor in the retail sector have gained a reputation for “fighting the last war”: not only they jumped into online when the war was already lost, but they seem to rely too much on brand value to save the day.
    I am no spring chicken, but already when I was living in San Diego and Amazon was just a startup Macy’s was considered a fashion store for “old stiffs”. We saw zero reason to shop there and now that I am old myself I see… zero reason to shop there. Younger generations care even less than mine does for these relics of the gilded past.
    If investors don’t run out of patience before, I fully expect Macy’s to become aware of their image problem with younger generations in… let’s say a decade.

    This is not “fighting the last war”: it’s akin to the French High Command thinking they could beat machine guns and field artillery with guts and cold steel.

    • Frederick says:

      I agree I’m old ( 65) and grew up with Macy’s and even I am done with them after getting some terrible quality furniture from them a few years ago, which by the way was overpriced

    • Erle says:

      MCO1, I repeat that I have always valued your commentary.
      As for any store whether BM or online I just avoid them from boredom. Forty-five years ago I used to buy American made shirts from JC Penny. They would stand up to at least 100 launderings in commercial machines and come out presentable. Obviously I have little fashion sense because I am cheap and tend toward durability. My suits always looked good enough for business. Now I do not care as much as I did in the past when I was cheap.
      All of the stores that I used to go to to get good fitting clothing are now gone and I’ll be damned if I buy something on line that fits like a sack or dancing tights.

      • Dirk says:

        True, the traditional independent men’s store has largely vanished from the American landscape, but retailers like Suitsupply has filled that gap quite nicely for younger men (at least).

        • Dirk says:

          Then there are brick & mortar retailers like J Crew that have broken out their Men’s Shop with a separate entrance so men don’t have to go through the women’s wear to get to what they need.

          I like clothes and so purchase a lot of clothes, many of them online from niche producers who manufacture clothes in the USA. Most of these producers also have small brick & mortar stores as well. As embarrassed as I am to be such a consumer of clothes, it gives me a good perspective as to what is going on: this is a great time in America to be a small, niche manufacturer of clothing and accessories – the variety of what is available is astounding, far better and of far better quality than what is/was available in a mall. Millennials love brick & mortar from what I have seen, but they have to find the stores distinctive with goods that they feel are unique, and not what ever one else has … like what is available in a mall, for example.

      • NBay says:

        I’ll go with the sack fit, some of my t-shirts are that way, and my jeans are sorta baggy. It’s all about comfort, plus you get arrested if you are naked and charged with sex crimes. Besides, any guy who believes, “clothes make the man”, I likely won’t care to talk with for very long.

      • Consumer says:

        The stores are closing because they all have Chinese junk of poor quality. I had no problem shopping when American made. I too still have my us made clothes looking good from high school 50 years later. I won’t wear cheaply made see through clothes made of estrogenic damaging plastic

    • Cindy says:

      One way e-commerce is profitable for some retailers, is they aren’t paying commissions to their sales people. Depending on the company and merchandise/ department, sales people can earn between %3-8 of the sale. When a consumer purchases online that commission cost gets transferred to a shipping cost. At one time working in retail could pay really well. Not anymore, even high end.

    • HowNow says:

      I’d like to be an “old stiff”. I’m just old.

      • MC01 says:

        Wooo, that’s incredibly rude!

        [To be pronounced in your best Hugh Laurie impersonation]

  3. Crush The Peasants! says:

    Still on the fence about their new line of homeless fashion wear.

  4. 2banana says:

    Macy’s got woked – now is going broke.

    When they thought disrespecting PDJT was a good marketing plan, did they consider they were ticking off 50%+ of their customer base?

    • noname says:

      I stated this multiple times here in the past when Macy’s stock-price tanking articles would appear. I gave exact dates of this and when it all began to match his charts, but was met with disbelief by the author. Glad to see someone else acknowledge this.

      Multiple times I have come across something nice at that store online via a deals site (I never shop in-store anymore, but always bought nice clothing there in years past), but then I remember they were one of the first to get woke and I move along. Ain’t happening!

    • Wait a minute there is the anti-Trump base, and they are pretty loyal too. Some people would never shop in a store where a mannequin is wearing a MAGA hat. Loyalty cuts both ways.

    • Zantetsu says:

      That was irrelevant. BM stores are failing regardless of who they pissed off. Stop trying to attach your political leaning to every story, please.

      • noname says:

        Wrong. Follow the timeline of their demise. Poor Wolf won’t let it be published!
        Who owns him?

        • Wolf Richter says:

          Patience! As I replied above to your lament, the headache-inducing data in the trade article I just published took longer to sort out and make readable, and I had to concentrate more on it, and your comment got stuck for a while. But it’s there now. Apologies.

    • Happy Camper says:

      Yep, we MAGA folks are the majority now. I’m even moving from my rabid Lib town of 30 years to a smaller, conservative community.

  5. James Naylor says:

    2banana…..What does PDJT mean?

    • NotEvenAmerican says:

      PDJT –> President Donald J Trump :) //

    • 2banana says:

      The current president.

      The Wolf filters on certain words is why.

      • Wolf Richter says:

        Go ahead and use “Trump” and other names. Don’t use pejoratives, or things like “orange.” Even if a comment goes to moderation for a little while, it’s not a tragedy. But it is election season, and I’m going to crack down on political sniping and name calling, or else this comment section becomes unreadable.

        • andy says:

          perhaps Tesla was pinch of euphoria we’ve been missing.
          Getting closer than ever.
          Still, no reason Msft can’t be valued at Trilion and a half, or even two if things get really unhindged.

        • VintageVNvet says:

          Good plan,,, that is one with which I heartily agree.

          There is a ton of space between a little snark and being rude, etc., and I, for one, am very tired of the really rude stuff from all sides; IMHO that being ”allowed” on any website is reason enough for me to stop going there, stop patronizing any adverts, etc., etc.

          Thank you Wolf.

        • Lisa_Hooker says:

          Hopefully that will include Nancy “tear everything to shreds” Pelosi.

        • Ken says:

          Thank you. Wolf

        • QQQBall says:

          Maybe I missed it – were the stores owned or leased? If owned, the change/repeal of Prop 13 would hurt and the dirt is likely to be very valuable. Even if the stores were profitable, they might not have provided adequate return vs selling the site?

  6. The Count says:

    PDJT = ?
    Don’t you just hate people who use acronyms expecting that everybody else knows what they mean.

    • sierra7 says:

      The Count:
      Thx for bringing that up. Unfortunately too many commenters use acronyms too often assuming everyone is as smart as they.
      And, to stretch the “commenting” format a bit, it would be nice if everyone when responding to someone else’s comments begin the response with the name of that person. It removes some of the confusion of who is responding to who……..It really is all about courtesy.
      Outside of that keep up the great work, Mr. Richter!

    • NBay says:

      I actually thought it was a mall competitor who Macys somehow “insulted” and looked up the stock ticker…..pd=pager duty inc, but no pdjt.

    • johndoe says:

      All these people asking what is PDJT
      I didn’t know either but I did what I always do I GOOGLED it.
      It’s about saving space, bandwidth, time spent typing. Not showing off.

  7. Rick R. says:

    Another big win for Democratic California!!

    • Wolf Richter says:

      Rick R.,

      The problem is the booming economy here in SF that has driven up real estate prices, and thereby office leases and housing costs, and that has driven up tech salaries, and other costs. These are the problems caused by the blistering economic boom in San Francisco. Personally, I’m looking forward for this craziness to slow down a little.

      • RD Blakeslee says:

        Wolf, I know this is a financial blog.

        But there are societal trends that affect financial activity – perhaps transcend it, long-term.

        San Francisco’s society is in decline.

        • Ron says:

          I was driving South on Hwy 280 Friday at 5:30 and all lanes were packed heading North into San Francisco. Sunday afternoon leaving the SF using the Golden Gate we pulled into the Marin side viewing area which along with the bridge itself was packed with visitors and tour busses.

          San Francisco has never been this popular in my 40 years of living in the Bay Area.

        • Harrold says:

          San Francisco has always been in decline, ever since 1776 when it was founded.

        • Mike G says:

          “No one goes there anymore, it’s too crowded.”

        • VintageVNvet says:

          SF in decline? Well, certainly for some folks, me included, but only in certain ways.
          For instance, I used to drive over to SF from Berzerkeley, in my pick up truck, very late at night to pick up all the well made wooden boxes at the curb in Chinatown; I made and sometimes sold, usually just shared, many kinds of useful objects with those boxes…
          Other times, I would ride the bus to the SF terminal, (for a quarter,) walk out to the ocean and back for the exercise and people watching; never had any problems, social or otherwise; but, I could run really fast in those days, and had serious hiking boots, etc., etc…
          IMHO, SF is and always has been a very very dynamic place to be, bee scene, and bee careful… and I hope all of that continues.
          And, to be sure, for many years, decades even, I considered SF the only livable city in USA, comparable to London, my world fave.

        • NBay says:

          I have been in the greater Bay Area all my life. Guess I’ll just go down with the ship.
          Oh well.
          Time to go sit outside in t-shirts with friends at coffee shop.

    • Nat says:

      This is all the result of a gross imbalance of finance and malinvestment: incredible sums of international money injecting themselves into ridiculous companies run by ridiculous people. None of this has to do with democrats or republicans. This is all the free markets doing.

      Once this has all blown up and the financial-economic mess cleans itself up with time and pain, people will start coming back (though not back to the level they were just because their is friction to movement due to costs) even if not a single policy in CA or SF changes.

      • cb says:

        “Ridiculous” money (FED created phony funny money) is the real driver of our financial and malinvestment imbalance.

        There is nothing free market about the massive intervention continuously practiced by the FED and Treasury.

  8. Cas127 says:

    “…relocating to NYC…”

    Although it is only receiving part of the SF Exodus, transfers to equally overpriced NYC (along with SF, 3 to 4 times more expensive than US metro median) does not strike me as a financial winner…

    It never fails to amaze me how many corporate managers fight idiotic rear guard actions against *any* corporate cost svgs moves – even if the “Resistance” leads to much greater employee cuts.

    It is the sort of thing that makes you wonder if various kickbacks are rampant in corporate management.

    I have seen this a *lot* in Corp relo to Austin – the whole pt of which is to save money.

    But the first thing these Cal cost of living refugees do is…lease the most expensive possible Corp RE in Austin (golly why save 65 pct on rent when you can save only 20 pct…)

    It is breathtakingly stupid.

    • 2banana says:

      I could never figure out why Boeing relocated its corporate HQ from Seattle to Chicago.

      From one poorly run bankrupt lefty high tax city to an even worse poorly run bankrupt lefty high tax city.

      If you are going through all the pain of relocating and moving thousands…why?

      The corporate tax breaks must have been breathtaking.

      • Cas127 says:

        “from Seattle to Chicago.”

        Because Detroit was too high-falutin?

        Yep, I remember the Boeing move…Texas was in the running.

        And, yes, in picking Chicago, it is almost like Boeing used highest public pension shortfall (ie, pending corporate villification and increased taxation…) as the primary criteria.

      • lenert says:

        Simple: Boeing execs don’t have to cross the IAM picket lines anymore.

      • MC01 says:

        Phil Condit, the man who really turned Boeing from aerospace engineering to financial engineering (and an excellent reason for bringing back the auto da fé; I am a sucker for Baroque violence), basically milked the system: Boeing shopped around for incentives for their new corporate headquarter, and Chicago literally blew the opposition out of the water.
        Mind here we are talking 2000 dollars, but the City of Chicago and the State of Illinois put together $63 million in assorted direct incentives, while Denver stopped at $20 million and those cheapskates at Dallas could not do better than $15 million.
        These incentives included helping Boeing to buy Rohm & Haas (a chemical company specializing in advanced materials) out of their offices, which Condit and the Forty Robbers had already eyed for their new headquarters.
        On top of this Boeing also got a special EDGE tax credit courtesy of the Illinois General Assembly and it’s widely rumored the City of Chicago agreed to finance a downtown heliport for Boeing executives and various “improvements” at the Midway Airport to service corporate jets.

        In the grand scheme of things Boeing didn’t get much of the deal: a company that size reasons in billions, not millions, but Condit and his Forty Robbers got to show everybody how they could bend politicians to their will.
        But the Second City and the State of Illinois got yet another rotten deal to throw on the big pile that ultimately dragged them down.

        • Cas127 says:


          Thanks for the detail – as usual there is more than enough blame for the idiocy to go around.

          In general, the more insulated the organization is from effective near term feedback (near monopolists, machine politics states, etc) the more advanced the pathologies seem to get.

          Which makes sense.

          The sad thing is just how long insider elites are able to insulate themselves – even in the age of the fast cycling internet.

      • Nat says:

        Chicago has a lot of problems, but people act like the only costs on business are tax, its just not true. Even with its high taxes Chicago is much cheaper for most business (and their workers) then Seattle. There are a lot of problems in Chicago that Seattle (or elsewhere) don’t have, but putting those aside and just look at total business expenses including tax Chicago is still a huge savings over Seattle.

        Locations have far more effect on business costs then just taxes, taxes are usually *NOT* the majority of businesses location related expenses anywhere within the US.

        • Dudu says:

          Majority of people get lost in rhetoric bashing.

          The truth, Chicago is years ahead of other cities. All cities with overpriced housing will be hit with taxation, there is no way around it, unless you have no schools, road, public transportation etc.

          Dallas, Texas has a problem with pension funding
          DC crime rate is something to cry about, but yet no one talks about

      • Harrold says:

        The only reason Boeing moved was to be closer by plane to Washington DC. ( and yet still relatively close to Seattle for when the subordinates need to fly out for meetings ).

      • Mike G says:

        Deliberately moving your executives far away from your manufacturing base, when you make products where quality and precision are extremely important, is an arrogant and stupid MBA spreadsheet-driven move. Boeing are paying for it now; some of the users of their product paid with their lives.

        • EchoDelta says:

          McDonnell Douglas took over Boeing with the purchase by Boeing of McD-D. The reason was government revenue from defense purchases, and that same motivation was the reason for the move of HQ to Chicago. Senator shopping was much more important than geographic location going forward, and with the business plan to spin off manufacturing from Renton and Everett to ensure a broader constituency (e.g. Spirit built components in Kansas, others built wings and other assemblies, new factories in the not too deep South where no unions or labor organizers dare tread).
          In the meantime Boeing is outsourcing large component manufacture overseas for commercial aviation which I suspect is not as profitable as it once was but still critical nationally as a major contributor to gdp and accounting for international trade flows. We aren’t shipping cars and tractors and washing machines out anymore, so each commercial airplane and military purchase overseas covers a lot of imports. It’s bigger than this article can cover but the world is changing and manufacturing even aircraft is in a squeeze with labor cost taking the hit.

      • Shiloh1 says:

        Perhaps favorable judges in Crook County venue, just in case they need them someday?

        • Dave Chapman says:

          What I heard was that the divorce laws in Chicago are better for men, and that the CEO of Boeing was thinking of getting a new wife.

          Call it “Divorce Law Arbitrage”. . .

      • paul gilpin says:

        they were.
        and no property tax for twenty years.
        that’s about now iirc.
        mid-distance between their banking buddies on WS and their manufacturing in washington state.
        would be funny to see them pull the same crap now. funny if no state wanted them. butt every state will fall all over theirselves to prostitute theirselves, just like with amazos.

  9. Pete Stubben says:

    Interesting (this morning’s Financial Times)…PJS


    Thai retailer set to raise $2.5bn in country’s biggest IPO

    Department store operator benefited from strong demand despite coronavirus concerns

  10. Iamafan says:

    So why isn’t Macy’s benefiting from the massive liquidity injections by the Fed?

    What determines the winners or the losers?
    Does ecommerce get the lion’s share? EV or banks?

    As we speak, at least for now, even the corona virus cannot fight the Fed.

    • Lisa_Hooker says:

      “What determines the winners or the losers?”

      Simply: The Club
      You are not in the Club and the Club does not disclose it’s members.
      Feel free to try to tag along if you think you’re smart enough.

  11. Old Engineer says:

    Your statement about companies that have to make money have to leave San Francisco is hilarious. Much of the great wealth of San Francisco is built on subsidies.
    What amazes me are the people who have so much more money than they know what to do with that they are willing to subsidize San Francisco’s boom, on the chance of getting even more money that they won’t know what to do with.

    • Duke DeGuise says:

      Oh, they “know” what to do with: build luxury survivalist bunkers in New Zealand, or on Mars, and leave the Prolz to cannibalize each other on a denuded planet…

      • RD Blakeslee says:

        A bit hyperbolic, maybe, but that’s part of the societal decline I’ve commented on, above. It’s not just human derelicts, their offal in the streets and the unbelievable government programs to put Bandaids on the situation.

    • wkevinw says:

      Old Engineer-

      Yes, there are subsidies and regs like zoning that keep the old money in control. See the various members of the US House of Representatives, one in particular.

      SF has had many booms like this (that old timers like me recall)

      This one is just larger in magnitude because of subsidies, bail outs, financialization, etc.

      I used to like to go to SF. Walking down the street was nice.

      I haven’t been back in years, and many of my family now avoid it (even though we say we “love SF and CA”). We are being nostalgic.

  12. Thomas Roberts says:

    The average persons real income has fallen, cell phones came out and cost a ton of money, and much more. The real killer though is that less high schoolers can get jobs, they have less money, and they gotta get that phone. They can’t afford to go clothes shopping, especially, mall shopping to the same extant. They won’t develop those shopping habits and to top it all off the pro fat movement has killed off alot of motivation to have the new trendy clothes.

    Many clothing stores will enter the death Arena, few will emerge.

    Right now, I’d put my money on TJ maxx and Kohls.

    • Kerry says:

      “cell phones came out and cost a ton of money” No one forced anyone to buy a cell phone. Why people actually PAY to be tracked and have all their personal information made available boggles my mind. But, it is just a symptom of a much bigger problem…

      • Thomas Roberts says:

        No one said they had to buy the smartphones. But alot of families and individuals decided to use a big slice of their shrinking disposable income to buy them and pay excessive carrier fees. Leaving them with less clothes money.

        I agree tracking is out of control, but if you live in America, you already lost the privacy war. There are definitely some steps that should be taken, not getting an Alexa device is a big one.

    • noname says:

      Kohl’s rocks. I used to visit every clothing store in the mall; now I only shop online, almost exclusively at Kohl’s.

      • Cas127 says:

        Kohl’s – an overpriced Penney’s in slightly wealthier neighborhoods.


    • tom says:

      Why is it that high schoolers cant get jobs?

      Not an issue here.

      • Jeff T. says:

        A lot of employers want workers today that are at least 18 years of age. No more 11 year old kids being bused to the strawberry and bean fields.

        • Tom says:

          No issues here for under 18 getting hired.
          No strawberry fields in need of picking….

      • Thomas Roberts says:

        Alot of employers don’t want to hire high schoolers, because of their school schedules, they are only part-time, they might move away, and other reasons.

        It does depend on where you live.

        The city I live in is doing pretty well, overall. But, ever since the 2008 recession alot of old people started working again. So it is alot harder for high schoolers to get a job. It’s not a major issue, but, it does effect alot of their spending habits they will develop, that may last their whole life.

  13. BOhio says:

    I worked for Macy’s (California) in 1983, just out of college. (Long hours, low pay, but didn’t love the work as apparently the Peace Corps touted for their org, ha ha). Even then, Macy’s was floundering, while Nordstrom was thriving. Macy’s customers were, to a troubling extent, paralyzed by when to buy things, because of the incessant sales. Seemingly every week, something was on sale, off sale, White Flower Days, ad nauseam. Nordstrom had basically two sales per year, and much higher quality goods. (Don’t know if that’s still the case, but I don’t have to dress for success now that we’re retired…)

    Shoppers need and deserve a reason to get out and go into stores. Whether it be Macy’s, REI, or a local bicycle shop, customers would like to walk in, see plenty of inventory that would work for their needs, and deal with subject matter experts, at competitive prices. Too often, that’s not the case, and hasn’t been for what, two decades now? I don’t want a store clerk to tell me “We can order that for you”, or to know less than I do about their products. I can order it myself, thanks, and probably at a better price without having to fight traffic, parking, and weather.

    OTOH, Costco seems to be doing very well. They have a simple formula, with staple goods and enough new and changing merchandise to keep even regular visits to their stores interesting. I don’t think it’s just the “free” food and drink samples, although that’s a perk I enjoy way more than a spray in the face of some cologne at a mall kiosk.

    • Wolf Richter says:


      A big part of what drives people to COSTCO stores is their grocery section. That’s an entirely different business in the US. In Japan, department stores have huge thriving specialty food sections in the basement, which attract masses of people. In the US, they haven’t figured this out yet.

      • Petunia says:

        There’s a major department store in Australia closing locations. They have spun out their popular food business to strip mall locations as a deli type business. I thought that was a cool idea.

      • Petunia says:


        I vaguely remember Macy’s Herald Square having a food department in their basement.

        • RD Blakeslee says:

          Re “food department in basements”, I recommend the Mormon policy: a year’s supply of food. (Probably this comment belongs under a thread concerning insurance, most basic kind).

          Several firms offer this in freeze-dry containers, delivered on a pallet and allegedly lasting for 35 years.

        • Harrold says:

          Jim Bakker is hawking food in a bucket on his religious tv show!

      • Iamafan says:

        I love those basements. In Sapporo, there is an UNDERGROUND walkway that is really a shopping mall. It can snow 2 feet outside and you would not care. In the JR train station, I even eat at a french bakery. What a sight? Fantastic. The Japanese got it right. Department stores, train stations and even airports. The CTS airport (Chitose for Sapporo-Hokkaido) shopping-eating simply amazing. I arrive hours before my flight and enjoy the airport. There is a chocolate museum at the airport!
        Nagoya (NGO) food court is even better. I can stay there for half a day enjoying the food. The Kyoto JR train station is another Food Wonder of the World. That and Osaka will blow you away. There’s just food everywhere.
        The Japanese addiction to gift giving is mind boggling. People shop everywhere to take something home to their family like a religious ritual. Actually, Japanification may not look that bad.

        I cannot say the same for JFK here in NY. Complete opposite. I hate that place.

        • Zantetsu says:

          Japanification is same-ification. It’s a delicious sandwich, but every bite tastes the same.

      • IdahoPotato says:

        Talking of specialty food, I don’t know if hot dogs and pizza fall in that category, but Costco is among the top 5 fast food chains in the country, as well as among the top 20 pizza chains.

        You’re right about groceries. Last week on my visit to Costco, about 30% of the produce section was organic.

      • Paulo says:

        It’s the Costco cheese selection and the price of dairy and romaine lettuce that brings us in….about 2/3 of other grocery chains. Light bulbs, work gloves, shop rags, batteries, and all things hardware are also well below other vendors. They occasionally bring in large shipments of decent work clothes. Camping stuff is also priced 1/3 less. We do a run about once per month, and combine it with a necessary appointment to offset the driving expense.

        However, just buying Costco bulk does not mean savings. Other store(s) loss leaders and sale items are often much cheaper. However, loss leader items in the grocery world are usually older products near expiry date and the chain made a purchasing deal.

        My sister-in-law is a major chain grocery store manager and even she shops at Costco for the above mentioned items.

        Furthermore, Costco employees (in Canada) are union, well paid, and always always helpful. They are cheerful. They check your cart against the invoice to ensure you have not been doubled charged for single items. Returns are automatic and their online options and delivery record is stellar. I think they call it service.

        They have a model that works, including the $2 hotdog lunch if customer so inclined.

        You know, years ago grocery store jobs were actually pretty good. I knew many Safeway girls who made damn good money. Then, the two tiered wage system arrived as did the race for the bottom. I mentioned my sister in law in store management. Once you are management, there are bonus payments, perks, expense accounts for moving, hotel stays, etc. Then, there is ‘everyone else’. Welcome to the new reality.

        • sierra7 says:

          Two tiered wage wreckage was in the early ’80’s….6 week strike in SF Bay Area that the retail clerks’ lost……two tiered then spread over the decades to slice apart many other contracts. How do I know? Picket capt. in that strike…..It was awful……Even tho the strike was lost many of the locked out employees found employment with other (at the time) numerous stores.
          In reply to others on Costco:
          Costco has stuck to their basic concept which worked: quality, service, well trained organized workforce, competitive pricing; if you have a family and don’t shop at Costco you are crazy. For someone like me, family grown and single not so much. But it is still a winning formula.

      • I thought it was cut rate gasoline?

      • Iamafan says:

        Wolf, I wonder why American Department Stores haven’t figured out the FOOD draw yet? Is this cultural? In my opinion, many Asians discuss where they think they will eat next while they are still eating their prior meal. No matter what city you go to in most of Southeast and North Asia, you get a constant 24 hour smorgasbord. Even the street food is super tasty. I cannot get the same even in NYC Chinatown. Sorry but NYC is only good for expensive hype.

        I guess the difference is small business thrives in Asia, especially when it comes to food. I wonder even if America copies Japanese Department stores, if they will have a hard time finding the families with skills necessary to run these food stalls.

        • Cas127 says:

          Food brings with it a lot of complicated logistics and liability issues that most dot stores assume (correctly) they lack the skills to handle.

          If they can’t compete in hugely long lived soft goods, moving to high turnover foods would be utter chaos.

          That said, I do think the US needs more food mkt locations – for whatever reason, Walmart has backed away from is Neighborhood mkt concept.

        • Zantetsu says:

          I call it “food worship”. You see it in the overabundance of food shows on TV, food magazines, idolization of famous chefs, referring to food often whenever talking about your “cultural heritage”. And yeah, people who think about their next meal while they’re eating their current meal.

          I don’t care for food worship. Or hero worship, but that’s a different topic.

        • Wolf Richter says:

          What I’m afraid US department stores might do is put the typical mall-food court in the basement, with junk-food galore, instead of offering specialty foods that are hard to find in a regular grocery store.

          What should US department stores offer? I’m thinking: a whole shelf of California cheeses. A whole shelf of Texas ranged-fed longhorn steaks, some of it 60-days dry-aged, along with bison steaks, ostrich steaks… A big section of specialty veggies and herbs. So it’s a unique place to, as my wife says in Japanglish, “drop money.”

      • VintageVNvet says:

        Good point, but IMO, the main reason Costco is doing good is their emphasis on organic foods, vs other similar ”warehouse” vendors who have very little, and that mostly ”out of date” or too close to consider..
        Macy’s, on the other hand , went from one of my faves to out of the loop entirely when walking in there became an invitation to be insulted in one way or another, either by way overpriced stuff or snarky sales people who seemed to go out of their way to be offensive; perhaps they were trying to compete in the snark with Brooks Brothers, I-Magnin, et similar regionals, now out of business, but in any case, I and most of the folks I know just don’t shop there anymore.

        • Lisa_Hooker says:

          I remember Marshall Field’s in Chicago being almost an American Harrods. British American Tobacco bought and started destroying them in the early 1980’s. Then sold to Macy’s who completely destroyed the stores. I haven’t gone there since the mid 2000’s. So sad, wonderful memories gone forever (including food in the basement).

      • Olivier says:

        “In Japan, department stores have huge thriving specialty food sections in the basement” In Germany, too: most Karstadt department stores are like that.

  14. Petunia says:

    I never go to the Macy’s site to retail surf because it is too difficult to navigate. As a consequence, I never buy anything from them. My biggest complaint is they sell merchandise you can buy somewhere else, cheaper, and with more ease.

    As for Macy’s leaving SF, it’s a good idea. If they are offering jobs to current employees at the new locations, keep track of how many actually opt to leave with them. The quality of life issues in SF are real and many Macy’s employees may think of this opportunity as an escape hatch.

    As for the NYC vs SF issue, yes, they are both expensive places. But the NYC metro area has an extensive transportation system that allows workers to move out to cheaper suburbs and still commute reliably.

    • 2banana says:

      There is no “offering” of jobs in NYC to the SF current employees…

      “Some of the employees could apply for jobs at the New York City and Atlanta locations.”

      • Petunia says:

        All companies do this now, you have to reapply for your job in the new location. Loyalty is a one way street to them.

        • p coyle says:

          i doubt loyalty is even expected at this point. by anyone who is paying attention.

        • Lisa_Hooker says:

          Corporate loyalty to employees went away in the 70’s and 80’s as the aging executive management retired. Replaced by fresh new MBAs with a different perspective.

    • Rcohn says:

      I lived in Northern NJ for 35 years and now live in the East Bay.
      I commuted to Wall ST For over 20 years. I would take NJ transit and then take the PATH to the World Trade Center. I was able to get a seat almost all of time on NJ Transit. The seats were comfortable and padded with leather. Either I worked or slept. If anyone had to commute , this was about as good as you can get.
      The BART in SF is on par with subway in NYC . Plastic molded seats that are difficult to get during rush hour.
      In regards to SF to NYC , there is no comparison . SF is more interesting with much greater natural wonders. But it has far too many people and worst traffic. I have driven for decades and never experienced 8 to 10 lanes going in one direction.

  15. Bobber says:

    I think Macy’s can secure a viable long-term niche for itself in clothing. Buying clothing on Amazon or Costco isn’t for people who value trends and want to look their best. I generally buy the cheapest stuff I can find, but I know I am an exception as a guy near retirement.

    I think the smaller Macy off-price locations could work quite well, given the success of Nordtroms, Marshalls, TJ Maxx, etc. in that space. A related questions is – if Macy’s stops supplying Marshalls and TJ Maxx with off-price product, does Macy’s then take a lot of the off-price market share? It seems Marshalls and TJ Maxx have been dependent on Macy’s for a long time now.

    I don’t think all hope is lost for Macy’s B&M. They have some plays left, some of which could potentially lead to growth. Buying clothing over the internet is a hassle because of returns. Clothing never fits the way it should, and you have to see fabrics and colors in person to assess them. Sure, you can buy socks, underwear and belts online, but pants, shirts, jackets, etc. are not so easy.

    • Thomas Roberts says:

      Macy’s could, but I doubt it. I do think clothing stores will succeed over online shopping. Online shopping, especially if you consider groceries, will never replace Brick and Mortar Stores. The problem is that there is simply too many stores in America. Many of these stores have become very over-priced. In order to succeed, they have to be the best and the best priced. Macy’s is over-priced. People are still getting poorer every year in America and that trend will eventually end; but, most stores won’t survive that long. Macy’s customers are getting priced out of Macy’s. Stores like TJ Maxx and Kohl’s that aim at the less well off will probably succeed. There will also be smaller chains of smaller high end clothing stores.

      I expect the B&M bloodshed to intensify. I give Macy’s a 1% chance of success, but I might be too generous. The store as it is cannot succeed, but they waited too long to do a transformation.

      • Bobber says:

        You haven’t been watching. Macy’s is getting into off-price retail, and they just announced an acceleration of that.

  16. Unamused says:

    In the future all restaurants will be Taco Bell and all retail will be Amazon as the crapification of America accelerates. With entrenched screen addiction most people won’t even notice.

    • p coyle says:

      taco bell will need to introduce a chicken sandwich for this future to happen. one worthy of drive-thru combat videos, the new horizon of advertising.

  17. Prairies says:

    So house prices should go up?

  18. HollywoodDog says:

    So, Macy’s went “all in” on technology to compete with online retailers, but is now abandoning San Francisco and downsizing digital operations!? That’s a major strategic reversal that should have analysts and investors very concerned.

    More importantly, Macy’s just doesn’t get contemporary retail. Whether it’s sheets, shirts, or shoes, their stock is dated and poorly displayed. (I go in once a month to grab good quality basics like socks and sweaters at 40% off.) If you want anything that’s going to be moderately fashionable, you have to go to Bonobos or Scotch+Soda.

    At this point Macy’s whole business plan is to get irresponsible consumers to purchase heavily discounted items on a credit card with a 27.49% interest rate. (You have to purchase many items with the credit card to qualify for the 40% discount. I always pay off my Macy’s credit card within the grace period.) I wish I had numbers showing how much of Macy’s profit comes from usury…

    I know that Macy’s has been an American institution and many of us love the parade, but even at $17 it’s a strong sell.

  19. gorbachev says:

    It’s a race to the common.All the same.Give

    me a reason to go to your shop and I will come often.

    • Unamused says:

      It’s a race to the common.

      It’s more profitable to persuade people to prefer it that way. To quote: “Ooh. Shiny.”

      The vulgar crowd always is taken by appearances, and the world consists chiefly of the vulgar.

      – Niccolo Machiavelli

  20. Jerome says:

    Per The Information this morning, $16B has been spent on self driving cars over the last few years with almost no revenue to show for it and billions more needed and years away from every even dreaming that the technology could work. Most of that money has been spent in the Bay Area of Hallucinations, of course.

  21. Jerome says:

    By the way, this is the kind of malinvestment, bubbles, and inequality you get when cash is trash. Thanks, Fed!

    • Social Nationalist says:

      malinvestment is irrelevant cash or not. they will always happen and everywhere. There is no perfect world jerome. accept that, deal with reality.

  22. The difference between companies that “have to make money” and those that don’t is a far richer subject. At what point do companies like Amazon gain profitability and lose the world? Tesla would have to accept a much lower PE if it had any revenue. I wonder if some companies will try to extend their financial “adolescence” as far as they can. I remember a friend in the carpenters union apprentice program years ago, refused to get his journeyman card because he wouldn’t have any work.

  23. Michael Engel says:

    1) AAPL breached support at 306, tested it from above and gap up.
    2) While doing so, AAPL created a trading range (60 min chart), building
    a cause.
    3) This cause can send AAPL either up or down.
    4) If AAPL plunge, SF will be in much bigger problems than Macy’s

    • 2banana says:

      Well, that was a bold and insightful statement.

      “This cause can send AAPL either up or down”

  24. noname says:

    I think there are a couple comments of mine that got lost in pending approval???? *sigh*

    • Wolf Richter says:

      Patience! The headache-inducing data in the trade article I just published took longer to sort out and make readable, and I had to concentrate more on it, and your comment got stuck for a while. But it’s there now. Apologies.

  25. Iamafan says:

    Other than the parade or the fireworks display, can someone here please tell me what Macy’s is good for? I cannot understand. What’s so special about that Herald Square dinosaur? High price?

    • Petunia says:

      Macy’s Herald Square was the biggest department store in NYC. From what I can remember, it was about 10 floors and you could buy anything you needed, clothes, jewelry, furniture, housewares, toys, hair salon etc. Truly one stop shopping and all of it good quality and good service.

      Can’t say that anymore about any of the big department stores.

      • Gold is says:

        I’m still wearing stuff I bought at Macy’s – petty sure it was Herald Square – in December 2000. Shirts, trousers, jackets shoes….the works. It was a ‘50% off’ sale then when I went to pay I got another 10% off for being a ‘foreign tourist’..60% now that’s what I call a sale!

        All good quality and reasonably fashionable, not that I’d worry much about fashion at 60% off. So a bit sad to learn of Macy’s troubles over recent years..

        • Iamafan says:

          The last time I went to Herald Sq. there was a rumor that Imelda Marcos owned the building. That’s about the same time I bought music at J&R. Those were the days. I’m getting old.

      • p coyle says:

        i miss marshall field’s. they gave me my first ever credit card, back when i was a teenager.

        i don’t remember the circumstances of their demise, but i would like to think they chose the “rather die on my feet than live on my knees” business model so prevalent these days.

        but what i really miss, nowadays, is the quality of the products. you paid a bit of a premium to shop at marshall field’s back in the day, but for the most part their products were sort of worth said premium. they didn’t sell crappified wares.

        i have given up hope of finding a dept. store that doesn’t specialize in crappified wares.

        i do have (a small bit of) hope that brick and mortar will still have a retail-esque future. i suspect that, as william gibson put it, “the future is already here- it’s just not evenly distributed.” it may take the form of artisanal stalls at the local flea market, or the sub-divided anchor store model that i believe has already been reported on wolf’s site. people get creative when they are desperate.

  26. Satya Mardelli says:

    Macy’s just finished an Investors Day conference call. It lasted four hours.
    They have identified 400 malls that are doing well in the US and about 300 malls that are dead or dying.
    They’re immediate focus is on their stores in the sub-optimal malls. Although they claim these stores are currently profitable, the profits are shrinking. They plan to close those stores and concentrate their efforts on their stores in high-quality malls.
    The conference call was intended to brief investors on their turn-around plan

  27. Mean Chicken says:

    “the local job market is still hot for young tech workers.”

    Swarf need not apply.

  28. Michael Engel says:

    1) A black candles isn’t a black swan : when a candle open is higher than its close, but the close is above the previous close ==> QQQ daily is black !
    2) Black candle in trading have nothing to do with black people, or political correctness.
    3) Today, QQQ daily made an all time high, but at 2 pm its color is still black. It might become red, or stay black, but I doubt it will become green. QQQ at the open was almost the high of the day and that’s bearish !
    4) Tomorrow QQQ might close Feb 03/04 open gap and popup.
    5) SPY is at 2pm is also black. Its a tiny candle. Today high was lower than SPY all time high, from Jan 22, which is also a black !
    6) SPY have a good chance to become green by the close today, and make a new all time high.

  29. van_down_by_river says:

    It’s hilarious that Macys would have a tech center. No worries for those laid off workers, as long as they are in tech there will be a nearby unicorn offering them 4X what Macys paid.

    Two stories I would enjoy from Mr Wolf are: 1) whatever became of his short position that he reported on Jan. 30th. We have not heard much, did he throw in the towel or is he stubbornly staying the course 2) how much money did roaming Jay-roam Powell print to jam the market higher by 1000 Dow points in 3 days and how much higher does he intend to push it.

    Powell has learned an important lesson: it’s only a bubble if it pops. If he can continue to inflate the market forever, by debasing the currency, then there is no bubble – just ask anyone in Zimbabwe.

  30. NotACommie says:

    Poor Wolf, I must have hit a nerve. Weak!

  31. Island Teal says:

    Interesting article. All the talk of SF and what it was and is now. Yet no mention of either WillieB or KamalaH….

  32. Rcohn says:

    I moved to the East Bay in May, 2018.
    Northern CA was a beautiful place with magnificent natural wonders.
    But given the very high costs on just about everything except real estate taxes and the horrible traffic, I quickly came to the conclusion that it was a great place to live only if you had a high income and did not have to commute for long periods of time.
    I define high income as > $250,000 and long commutes as over 30 minutes. Although there obviously are a number of people who meet both criteria most fail on one or both of these criteria.This sets up the inevitable situation where more and more companies leave the BAY area to lower costs and improve life style for their employees.
    The bottom line for the BAY area and for the entire state of CA is that there are just far too many people .

    • Pedro says:

      People said this about the Bay Area in 50s, 60s, 70s, 80s, 90s, 00s, 10s.

      They built the freeways to make suburbs more accessible. Then they built Bart to reduce freeway traffic. Now they’re banning cars on major city streets like Market in SF and reducing lanes in DT Oakland for bikes and scooters.

      Something is always afoot in the bay. It’s dynamic as hell and always finds a solution to the next problem. As you age you either enjoy the process or just move to some rural farmland where you can enjoy stagnation for the rest of your life. Or move to eastern Europe where populations are collapsing , guaranteed no crowding problems for decades.

      America is a growing country. Get used to it. Every city is getting a squeeze. Even the mid to small tier cities are starting to see explosive growth – ask Boise residents.

      The reason why the Bay keeps attracting people is because it’s doing things differently. Diff culture , different lifestyles, different ways of evolving products and technology. California is always pushing the world to do things differently. Texas is still pumping oil.

      The bay m is the essence of human existence if you think of what’s happened over the last 10,000 years since we emerged from the jungle. It’s where the action is if you want to be part of it. If not just move to Nevada or Iowa.

      You either

      • Pedro says:

        I should say west coast in general. Northeast is catching on as their industries are slowly being disrupted by west coast companies.

        Midwest seems to be stuck in this post industrial haze that won’t ever make a comeback thanks to robotics and global labor pool.

        Southeast shows some promise with Atlanta and Miami , but not much innovation other than cutting edge hip hop and real estate ventures.

        Southwest is just cheap land for anyone willing to exist in that climate

        Would love to see Tesla and the big tech companies spread out their workforces to the Midwest and southeast. Spread the love

      • Cas127 says:

        “California is always pushing the world to do things differently”

        Like where you sleep at night or go to the toilet.

        I *knew* that was unicorn poop – in the city with 1 bedroom rents averaging over 3k per month (which must be netted after CA’s high income taxes).

        There is a point where ambitious dreaming becomes naive delusion – SF/SV is getting past that pt.

        • Mary says:

          I wonder about this reflexive hatred of San Francisco that seems to center on “poop in the street” memes. Have any of these commenters actually visited the city recently? Because I have. Sure there is homelessness and its results, same as any big American city. It’s a national problem and a human tragedy, but to make it an excuse to sneer at the city?? Maybe I should start making mean cracks about Omaha or Fargo, places I’ve never visited. Why? Isn’t there enough meaningless hatred already?

  33. Cas127 says:

    “reflexive hatred of SF”

    It is the combination of factors, Mary.

    1) SF was called the “essence of human existence” by the previous poster.

    That is the essence of Lefty smugness that just begs for deflation, particularly when empirical evidence is so close at hand.

    South Park had the west coast’s number well over a decade ago, when it punctured the self-inflating/fellating culture of “smugginess”

    2) Despite the endless liberal lectures that emanate from the city and its selective moral posturing, the city is host to a lot of pathologies.

    3) It absurdly expensive – three or four times the national median – much of it on the back of ZIRP policies that have expropriated non-SF cautious savers for two decades…and insanely overhyped, incredibly misvalued startups…and not a few established tech players with politically biased agendas.

    4) And yet, despite this vast windfall and nosebleed taxation, SF poseur PC rectitude has created a real world environment where poop-trackers are a real thing and felt need.

    5) Gavin Newsom.

    Don’t feel bad, NYC emits the same hauteur-amidst-the-squalor vibe.

    • NBay says:

      Weep not for us CAS. Let not your heart be troubled.
      Which one of your spiritual leaders says after whipping you into a frenzy of despise and hate….never figured how that was supposed to make it all go away instantly….guess it’s a religious thing.

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