Following a wave of mass store closures and reporting ongoing sales declines, while navigating an uncertain economy, tariffs, and a slowdown in consumer spending, Macy's has unveiled a new strategy to win back shoppers.
Macy's is teaming up with Abercrombie & Fitch to bring Abercrombie Kids into its stores nationwide, just in time for back-to-school season shopping.
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This strategic partnership is a mutually beneficial situation for both retailers, especially as the newly implemented tariffs on foreign imported goods threaten to disrupt supply chains and raise prices.
Related: Macy's mass store closing plan could have unexpected benefits
With tariffs causing manufacturing expenses to surge, companies are pressured to maintain competitive pricing without compromising value and burdening consumers.
Image Source: AFP/Getty Images
Macy's has a significant advantage amid economic uncertainty
As a big-box retailer, Macy's (M) is better equipped to navigate tariffs, since it can secure better pricing, absorb higher import costs, and streamline operations.
Such retailers have larger operations and a broader product assortment, allowing them to diversify suppliers. They also buy in bulk, obtaining better pricing and lower shipping costs.
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Unlike big-box retailers, Abercrombie & Fitch (ANF) is a much smaller retail company. Its costs are therefore much higher, limiting its flexibility amid market disruptions.
By partnering with Macy's, Abercrombie & Fitch would gain a new distribution channel, access to lower wholesale costs, more efficient operations, and greater exposure, allowing it to remain competitive in a complicated retail market.
Macy's new strategy is part of a broader turnaround plan
Abercrombie Kids is just one of many brands Macy's is spotlighting during the back-to-school season.
The retailer is also partnering with other top labels to promote value that better meets consumers' needs during economically uncertain times, while providing them with all the essentials in one place.
“From apparel to accessories, this school year Macy’s is providing students with the best styles, brands, and value from Nike, Jordan, The North Face, Epic Threads, Abercrombie Kids, and more,” said Macy's Editorial Content Director Dana Cohn in a press release.
Related: Macy's sits on gold and shareholders are angry
These brand partnerships may help Macy's increase in-store traffic, enhance the customer experience, and boost sales as it continues to turn around its business.
Macy's announces mass store closures
In February 2024, Macy’s announced it would gradually close around 150 underperforming stores across the U.S. by 2026 as part of its restructuring plan, “Bold New Chapter,” with 66 locations closing this year alone.
For the remaining 350 stores, Macy's will redirect its attention to its higher-end, more profitable brands. It will also move away from malls for the next two years and build 30 smaller-concept stores.
In the first quarter of 2025, Macy's reported a 5.1% decrease in net sales compared to last year, with comparable sales down 2%.
