Introduction

The companies we selected to compare are Macy’s and Nordstrom. Both of these companies are American luxury department store chains that have an assortment of apparel for all ages. Macy’s was founded in 1858 and Nordstrom was founded in 1901. These two brands are strong companies who are globally recognized and have large consumer bases.

We selected these companies because they are both well-known and have been around for a very long time. They offer a wide variety of brands, some of which are sold through both companies. They have similar price points and target market. We will be analyzing their data and seeing how they compare. We’ll achieve this through the comparison and analysis of data from 5 major sections: Revenue per Store, Trends in Online versus Brick and Mortar Stores, Number of Employees, Number of Locations, and Breakdown of Locations by State.

Background

Macy’s - In 1858 Macy’s first started as a dry goods store in New York. Within their first year their sales were only $85,000. In 1902 Macy’s moved to Herald Square in New York City and by 1924 this location became the largest store in the world. This was also the year they started their Macy’s parade which today is known as their Macy’s Thanksgiving Day parade and is very popular. In 1939, Macy’s started offering credit which helped them develop a good reputation for themselves in the community when people were struggling. In 1979, they held their first Fourth of July firework show that is today the largest Independence Day firework show in the nation. Today, we see Macy’s being a huge department store that is in every mall. They now offer online pickup in stores or shipping to your house. Macy’s came a long way by not only the items they sell but also by the services they offer and loyalty within the community.

Nordstrom - Nordstrom department store all started when John W. Nordstrom came to the United States at age 16. He did not have money so he started working in gold mines which is where he met Carl F. Wallin. Carl was a shoemaker and offered John a partnership in a shoe store. In 1901, they opened their first store which was called Wallin & Nordstrom and was located in Seattle. In 1928, John and Carl retired, leaving their share of the company to the Nordstrom sons. In 1960, the company really began to grow. They had 8 locations in Washington as well as Oregon and was the largest independent shoe chain in the United States. They then decided they wanted to add more to their company and by 1966 they had Women’s, Men’s, and Children wear also offered. In 1968, the brothers handed the store off to the third generation and a couple years later they renamed the brand Nordstrom Inc. From here their success has gone up. They opened their clearance store known as Nordstrom Rack and have customers all over the world. Today, they have online services, shipping, loyalty programs, partnerships, and so much more.

Revenue per Store

Throughout the last three years, both Macys and Nordstrom have seen a decline in their brick and mortar stores. During the pandemic, we have seen consumers shift from in-store purchases to online retail purchases. Nordstrom’s revenue of $15,860 million shows a positive trend of 2.47% for 2018. Trends percentage has decreased significantly since 2018 with a trend of -2.12% in 2019 and -30.98% in 2020. Nordstrom does however have a greater revenue per store over Macy’s. This can be attributed to Nordstrom’s largest presence in the modern retail market. They have kept their revenue afloat during the pandemic with store pickups where consumers can order a product online and pull up to the store all while staying in their vehicle. They also have their traditional Anniversary Sale which attracts a ton of foot traffic in store and online.

In 2018, Macy’s had a total revenue of $25,640 million and a trend of -0.54%. Macy’s revenue per store was $29,573,241.06. However, 2019 brought a positive profit trend of 0.39% even as they started to close down some of their brick and mortar stores. They began to see a rise in e-commerce sales throughout this time. In 2020, their total revenue declined to $25,330 million, which created a trend of -1.59%. During the beginning of the pandemic, consumers started to focus their purchases on medical supplies and standard home supplies. Not many were shopping for the latest styles. They also began a new socially accepted quarantine attire which mainly involved activewear and comfy apparel.

Trends in Online versus Brick and Mortar Stores

Trends in online and brick-and-mortar stores have changed in different directions since the past years due to technology advancement and newly social customs, but there have been even more significant changes in consumer shopping behavior since the rising COVID pandemic. The brick-and-mortar shopping experience has always been superior to online shopping until most recently that the shift switched dramatically. These changes can be identified through the companies’ sales data.

For Macy’s, in 2019 they had net sales of $24,560 million, which had a dramatic 29.4% decrease in 2020 due to the COVID pandemic, resulting in $17,346 million. Although, 44.3% of 2020’s net sales were directly from digital sales due to the changes in consumer shopping behavior from the COVID pandemic, as to 25.3% digital sales in 2019. The reason for consumers to shift from brick-and-mortar shopping behavior to online shopping was directly linked to the limited outings people were allowed due to the pandemic; which prevented people from shopping in physical environments and resulted in many store foreclosures. Now, consumers have discovered a newly found convenience to order online and have it delivered directly to their home without ever stepping out of their home.

These changes are also seen in Nordstrom’s consumers. Nordstrom’s net sales in 2020 significantly decreased at 31.6% from 2019. The decline primarily resulted from them temporarily closing stores due to the pandemic and as seen with Macy’s, Nordstrom’s digital sales increased greatly thereafter. They had a 16% increase in their 2020 digital net sales from 2019. The merchandise categories that consumers happen to shop more of were home, active, and beauty and ever since there has been a growth in activewear that is still being seen now.

Number of Employees Data

In 2018, Macy’s had around 130,000 employees and as of 2020, they have 75,711 employees. That is almost a 40% decrease (Number of MACY'S). This may very well be a direct cause of the COVID pandemic and the resulting effect of foreclosing many of their stores. Hence, less employees. By closing stores, it allowed for people to get laid off. The 2020 numbers are a production of all the employees lost during that time frame. However, the average revenue per employee did not go down, in fact the 40% loss in employees caused the average revenue per employee to significantly go up from $197,230.77 in 2018 to $334,561.67 in 2020. Macy’s are able to maintain their revenue despite the COVID pandemic crisis, and they may have been previously overstaffed or due to the shift of consumers behavior preferences of online shopping that result in these numbers.

Even though the number of Nordstrom stores is decreasing by the end of 2020 the number of employees went from 58,000 to approximately 62,000 in December 2020 (An.Rep.Nord.). This is almost a 7% increase due to the winter seasonal worker. However, when looking at the bigger picture, the number of employees has gone down significantly. In 2018, they had 71,000 and in 2020, not counting the winter seasonal workers, they had 58,000. That is a 14.71% decrease, but now they are focusing on having a more diverse workplace; currently women make up 45% of their Board of Directors; 30% of which are people of color (An Rep Nord, 2020). Nordstrom however, did not see the increase of average revenue per employee, but the decrease of it from $223,380.28 in 2018 to $184,741.38 in 2020. A significant decrease compared to Macy’s. This is due to Nordstrom not letting go of their employees as only about 15% were let go between 2019 and 2020. The average revenue per employee is decreasing because Nordstrom uses their revenue to keep their employees in their stores.

Number of Locations Data

According to Nordstrom's Annual report, the Number of locations in the beginning of 2019 was 388 stores; by the end of year they had 390 with only 7 store closures (An.Rep.Nord.). The next year (2020) they started with 390 and ended with 369. They had a total of 25 store closures which is over three times as much as the year before (An.Rep.Nord.). When looking at what they started with in 2019, 388 stores, and what they ended with in 2020, 369 stores, they had almost a 5% decrease in stores. Concerning Macy’s, their annual report states that as of 2020, they had 789 stores compared to in 2018 when they had 867 stores (Number of MACY'S). Their percentage decreased from 2018 to 2020 by 5.96% (Number of MACY'S).

Breakdown of Locations by State

As of 2021, there are many more Macy’s locations than Nordstrom locations, not including Nordstrom Rack stores. Macy’s with a total of 514 locations in 46 states and Nordstrom with a total of 345 in 41 states.

Macy’s has a total of 514 locations in 46 states. California, Florida, and Texas being the top 3 states with the most Macy’s locations that account for 171 locations. California with 94 locations, accounting for 18% of Macy’s total number of locations. Florida follows with 42 locations, accounting for 8% of the total number of locations and Texas with 35 locations, accounting for 6% of the total number of locations. However, this is still a substantial decrease in store locations since 2018, when they had a total of 649 locations. In 2019, they had a large decrease from their previous year totaling 613 store locations. By 2020, due to the COVID pandemic, they experienced a substantial decrease resulting in 572 store locations and continued to decrease to the total of 514 locations they now have left.

As for Nordstrom, which has a total of 345 in 41 states, California, Texas, and Florida coincidentally also result in its top 3 states with the most Nordstrom locations. California with 84 locations, accounting for 24% of Nordstrom’s total number of locations. Texas follows with 26 locations, accounting for 7% of the total number of locations and Florida with 22 locations, accounting for 6% of the total number of locations. However, this is still a large decrease in store locations since 2018, when they had a total of 379 locations. In 2019, they had their most successful year with an increase and highest total, totaling 390 store locations. By 2020, they experienced a decrease due to the COVID pandemic, resulting in 369 store locations and continued to substantially decrease in store foreclosures to the total of 345 locations now.

Conclusion

The goal of this report was to compare two apparel companies and research their annual reports. We chose to research Macy’s and Nordstrom, as both are retail powerhouses in the industry. Both companies have had to adapt to the new consumerism established throughout the pandemic. In order to develop a detailed comparison and analysis, as a group we had to decide on which topics to analyze. The points of data analysis we chose were Revenue per Store, Trends in Online versus Brick and Mortar Stores, Number of Employees Data, Number of Locations Data, and Breakdown of locations by State. We felt that these topics would provide the most data to analyze to develop a more concise comparison between both retailers. As we had been told, not all information would be located in the company’s annual reports, so we had to research through other sources to collect all the necessary data and information possible. We obtained a three year timespan data collection of each to record the companies’ data patterns and recognize the similarities and differences among them.

A very constant similarity we discovered throughout all our data points, was the decline in revenue, consumerism behaviors, employees per store, and number of locations. Both companies experienced decreases in these areas in different times from 2018-2020. Although, simultaneously, they both experienced major decreases in the year of 2020. This may be due to the rising of the COVID pandemic, which led to many store foreclosures. It caused both companies to have a drop in revenue as people were not shopping as much. Reason being that many people were out of jobs, therefore did not have the same amount of disposable income. However, there was a shift in consumers who remained shopping. Consumers were switching from in-store sales to e-commerce browsing. Due to the limitations the pandemic caused and consumers discovering the convenience of online shopping. As the nationwide shutdown continued, the store foreclosures led to mass layoffs; which can explain the reason behind the grandiose decreases in the number of employees for both companies. In 2020, we saw a slight increase in hire backs which was mostly tied to the reopening of public spaces. As for the number of stores, Macy’s and Nordstrom also reflected similarities in this area of focus. In the data we presented, we separated the numbers of locations by state. Both companies coincide in their top 3 states with the most locations, California, Florida, and Texas. California is by far the most popular with the highest number of department stores for each company. Although, by 2020 both companies had foreclosed many of their locations. Additionally, both experienced a decrease pattern of a -5% trend in store locations.

In conclusion, Macy’s and Nordstrom proved to be both affected by the pandemic. They had to close stores and shift sales online in order to produce revenue. Macy’s had a large series of markdowns, while Nordstrom stuck to its annual anniversary sale. In 2020, with the reopening of stores, there was not a huge increase in revenue for both Macy’s and Nordstrom and e-commerce has become the favored way of shopping which is why there is still a pattern decline in brick-and-mortar stores. As for the decline in the number of employees, we may see a shift and increase for both companies, as the situation surrounding the pandemic has progressed and allowed for stores to reopen. There may possibly be an increase in store locations too, if these companies manage to remain afloat and produce more revenue. Location is the biggest factor in a retailer's revenue and success for that matter. Cities and their target market bring in traffic to a store, which contributes to the success of retailers.

References

“Annual Reports.” Nordstrom, 2020, https://press.nordstrom.com/financial-information/annual-reports

“About Us” Nordstrom, 2021, https://press.nordstrom.com/about#:~:text=In%201901%2C%20John%20W.,customer%20service%20and%20great%20experiences.

“Macy’s Annual Report.” Macy’s, 2020, https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_M_2020.pdf

“Nordstrom Company History” Nordstrom, 2021.

https://www.nordstrom.com/browse/about/company-history

“Number of Macy’s Locations in the United States in 2021.” ScrapeHero, 2021, www.scrapehero.com/location-reports/Macys-USA/.

“Number of Nordstrom Locations in the United States in 2021.” ScrapeHero, 2021, www.scrapehero.com/location-reports/Nordstrom-USA/.

“Our Story Begins in 1858.” Macy’s, 2021.

https://www.macysinc.com/about/history

Published by Statista Research Department, and Aug 24. “Nordstrom: Number of Stores Worldwide 2020.” Statista, 24 Aug. 2021, www.statista.com/statistics/620105/number-of-stores-of-nordstrom-worldwide/.

Published by Statista Research Department, and May 11. “Number of MACY'S Stores by Brand Worldwide 2020.” Statista, 11 May 2021, www.statista.com/statistics/1073407/number-of-macys-stores-of-in-the-us-by-brand/.