Macy's, flagship store, synonymous with holiday tradition, is no stranger to change. The Marshall Field's name plate momentously came off of the Loop property to signal the end of one era, and now the Tribune reports that the company will investigate its redevelopment--along with their three other flagship locations in Minneapolis, Manhattan, and San Francisco.
It means that underutilized portions of the store, their largest retail property that stands on an entire block, could be reused to be more profitable. It could be through nontraditional means, such as joint ventures with third parties. Perhaps a coworking space, or a deal with Donald Trump for special Loop ties could be the solution?
While its valued at $21 billion, the era of online and offline experiences means that the way in which stores sell needs to be rethought. Sears and Bed Bath and Beyond both struggle with the right system. In the Minneapolis Macy's, 400,000 s.f. of upper floor office space was rented. Eventually, it may sell the entire property and lease back the lower level for retail space. In the Loop, the bottom eight floors are for retail, and the ninth floor is for events like the flower show. Upper floors hold their regional office, the Chicago Fashion Incubator, and storage.
Customers can buy online, never stepping foot into a physical store. But it's not just a matter of shrinking store space, because the physical presence of an item--touching the material or trying it on--may be the catalyst to buy in the first place. In fact, there have been studies warning customers to stay away from literally touching items, because you psychologically become more attached to it and may buy something you really didn't want or need.
If people aren't coming in the door, then that's an obvious reason to rethink the store. But with the growing presence of residential units--800 on State Street alone now-- there is a heightening energy on the Loop as it becomes active day and night. We'll see. In the meantime, if you're hankering for some nostalgia because you're nervous about change with Macy's, then look at Miracle on 34th Street--the Macy's in that movie will never change.
· Macy's considering redeveloping State Street store [Tribune]
· The Neuroscience of Touch [Sappi]