When Macy's announced earlier this month its plan to close 100 stores, or 14% of its 728-unit fleet, consumers panicked, investors cheered and analysts gave a slow clap. In the age of omnichannel shopping, almost all retailers are rethinking their brick-and-mortar strategy by trimming stores and allocating more assets to e-commerce.
Since Macy's is keeping mum on which stores will get the axe next year—a spokesman said the department store chain will publish its list once decisions are made and the company has no comment until then—some firms are researching the issue themselves. 1010data, a data analytics company, recently analyzed consumer behavior and market share to develop its own list of the top 10 likely store closures.
The Midwest-heavy list includes Milwaukee, Wisc., where 1010data found Macy's has lost 14% of its market share between 2014 and 2015 to retail rivals; Pittsburgh, Penn., where Macy's has lost 12% of share; Hartford, Conn., where the brand lost 9.4% share; Philadelphia, Penn., where it lost 9.1%; and Detroit, Mich., where it lost 8.2%. Stores in Cincinnati, Ohio; Daytona Beach, Fla.; St. Louis, Mo.; and Columbus and Cleveland, Ohio round out the list.
1010data partners with a variety of data providers offering information about shopper purchases and habits. The firm gathers data on debit and credit card transactions, receipts from mobile and online purchases sent via email, and clickstream data showing the digital steps shoppers take before purchase. Debit and credit card data was the key to analyzing the health of particular Macy's stores, said Samir Bhavnani, area VP-consumer insights at 1010data.
"We wanted to really dig in and say, 'Where could they possibly be closing stores?'" he added.
The firm evaluated spending at Macy's locations throughout the U.S. in comparison to what people spent at Dillard's, Nordstrom, and Lord and Taylor stores in the same areas, comparing data from second quarter 2015 to the second quarter of this year. The company measured local share for each in those markets, and considered how frequently shoppers visited the stores, how much was spent in a given period, and whether people were spending more or less at the stores. The data company did not, however, measure external factors that might affect shopping behavior, such as weather or sporting events, said Mr. Bhavnani.
Other companies have also researched the repercussions. Morningstar Credit Ratings found that 28 Macy's locations reported sales below the company's 2014 national average, and are therefore the highest-risk real estate investment properties for the chain. Of the list, only one site, on the outskirts of Philadelphia, fell into the urban regions predicted by 1010data's report.
And analysts say more cuts will come.
"We see no evidence that the next 100 closures will be the last," wrote Michael Binetti, a retail analyst at UBS Investment Bank, in a recent report, noting Macy's shuttered 40 stores last year and 15 the year before.
Macy's, which recently hired Richard Lennox of Toys R Us as its new chief marketing officer, spent $718.7 million on measured media in the U.S. last year, according to Ad Age's Datacenter. The brand is the third-largest marketer in retail, following Amazon and Walmart. Though sales have declined in recent quarters, there are some bright spots. A recent retail survey conducted by Brand Keys, a research consultancy, found that department stores should attract 65% of back-to-school spending, up 10% from last year. The survey ranked Macy's fifth in top brick-and-mortar stores and sixth in e-commerce for the shopping period, the second-most-crucial after holiday.