Well, the Downtown Macy’s is going to close. Shame. Maria Saporta’s column today was filled with a sort of passionate anger, though I think it was misdirected. According to Saporta, downtown boosters, namely Central Atlanta Progress, did too little to keep Macy’s in town. In actuality, CAP and the City bent over backwards to make sure that Macy’s would stay. Saporta is right to say that nobody worked hard enough (or at all) to market the Downtown location, but this is not the only factor leading to the store closing.

One problem encountered by Macy’s was that when Downtown was on the decline, fewer people shopped downtown, so it became necessary to keep a smaller inventory at the store. As inventory shrunk, the store became less adequate to fill shopping needs. Then a whole endless spiral would erupt. The store was inadequate, so fewer people shopped there, so inventory was reduced, so the store was inadequate, so fewer people shopped there, so… you get the point. This is one of the problems with large corporations. Typical corporate managerial thinking is risk-averse, so if a product is dying, it no longer matters how much market potential there is in the product should a small investment be made in response to the market.

In the case of Macy’s Downtown, the product was the store itself. The market dictated a more adequate department store that would attract both tourists and locals who would have to go out of their way to get to Lenox. How large was the market? Who knows. It’s reasonable to say at least that the market has grown over the past two years. The Downtown housing market has grown over that time, and all indicators show continued growth, even if the market bubble in the rest of Metro Atlanta busts. That spells a potentially captive audience for Macy’s.

So why is Macy’s ignoring the market? They’re not. To figure out what they are doing, one would have to read between the lines in the AJC articles that have been written on the story.

If you read only the headlines, you would almost come to the conclusion that only the Downtown store is closing. This is not the case. Macy’s is closing stores in malls where there is both a Macy’s and a Rich’s in favor of a single store in each mall. The exception to that is in Lenox and Perimeter, where all stores are closing in favor of the more upscale Bloomingdale’s. This particular move speaks louder than the closing of the Downtown store. What this move says is that Macy’s is not ignoring the market. They’re actually abandoning a whole market in favor of a more upscale market. Think about it. Midscale retail has taken a beating by the discount stores ever since the establishment of Sprawl-Mart. In order to adjust to the midscale market, department stores have had to do all sorts of things to attract customers, mostly in the form of big discounts.

In the end, the safest thing for Macy’s and Rich’s to do is abandon the midscale market in favor of their upscale sibling in the Federated family. This brings me back to my earlier point of risk-averse thinking among corporate managers. The change in corporate strategy makes sense. When I think of Macy’s or Rich’s, I think of a good place where I can afford to buy myself a tie or a dress shirt that is actually tasteful. Bloomingdale’s, being more upscale, is supposedly not as affordable. In an entrepreneurial environment, Macy’s or Rich’s would take a turn to attract more of the discount crowd, but that would supposedly hurt the brand, which would be risky. The potential rewards would have been fairly high compared to closing the stores altogether.

What’s in store for the Downtown location’s future (no pun intended)? Perhaps a Target location? God forbid…

When Post Properties proposed (backed by CAP) that the upper floors of Macy’s be turned into apartments, Macy’s initially gave a positive response. That was until a separate company bid a higher price just so they could place telephone switching equipment in that space. Macy’s, having no long-term vision, accepted the telephone switching deal for the sake of short-term gain, foregoing the possibility of a very captive audience living in the same building.

Macy’s continuing record of bad moves in favor of short term gain tells me that maybe we should be glad that Macy’s is out of Downtown. With the possibility of a new investor in that building, we have the prospect of new management that is less afraid to take a risk. I think the closing of Macy’s Downtown will be a blessing in disguise, a new opportunity for all of Downtown’s residents and businesses.