Macy's iconic flagship store, which is already the world's largest, is about to get even bigger.
The department store chain announced Tuesday that it plans to spend about $400 million over the next four years to expand and overhaul its storied flagship location at Herald Square in Manhattan. The makeover will affect every floor and virtually every department from shoes to luxury goods. The facelift comes as department stores are figuring out new ways to excite consumers in an era when shoppers are shifting toward the Web and using the latest technology to search and buy merchandise..
The renovations will begin in early spring 2012 and continue in phases through the fall of 2015. Macy's will add about 100,000 square feet of selling space for a total of 1.2 million square feet by opening up space currently used for stock and offices. The store's current total space is 2.2 million square feet.
"The excitement, size and scale of this remodel reinforces our conviction that Macy's Herald Square is and will remain a retail store in a class by itself," Terry J. Lundgren, Macy's chairman, president and CEO, said in a statement. "It is our company's most productive store, and experience shows that improvements in this location consistently result in higher customer traffic and sales volume."
More than 20 million people visit Macy's flagship every year, making it a top tourist destination, and Lundgren said he wants to make an even more powerful impression. He told reporters that Macy's had done a lot of research and was inspired by Harrods and Selfridges in London as well as other stores in Japan and France.
"This is a smart move at the right time," said Faith Consolo, chairman of retail leasing and marketing at Prudential Douglas Elliman. They're going to up the image. They want to be Harrods of the U.S."
As part of the renovations, Macy's will create the world's largest shoe department, featuring as many as 300,000 pairs of shoes on any one day, and infuse technology into the shopping experience ranging from interactive store directories to a new mobile app to guide customers as they shop. The flagship store will also have a new hall of luxury brands that will include a series of two and three-level designer shops. Louis Vuitton, for example, will be enlarged to multiple floors. The store will also have 22 restaurants and foodservice stations with seating for about 1,000 customers, an increase of 40 percent. The roster includes a new restaurant on the sixth floor with views of the Empire State Building.
One of the key strategies is better serving the "Millennials," who range in age from 13 to 30. Lundgren told reporters that Macy's "must pay attention" to this fast-growing group. As part of that campaign, Macy's will relocate departments focusing on the under-25 age group to the lower level, which will have a nail bar and salon and offer the latest technology and services that appeal to young shoppers. It will also have a pub.
The makeover will include restoring the store's exterior to re-capture its original grandeur and to fully capitalize on foot traffic along the famous shopping corridor. Windows along Broadway, 34th Street and Seventh Avenue _ which have been covered up over the years _ will be reopened. Windows on the upper floors also will be uncovered to allow more natural light into the building. Sidewalks will be replaced, with Macy's branded paved "welcome mats' added at every entrance.
The renovations, the most dramatic since the 1970s, come as Macy's has been outperforming peers like J.C. Penney. Its strategy for tailoring merchandise to local markets has helped it to overcome the overall sluggishness of the economy. The company finished what it called its most successful second quarter and spring season in more than a decade.
That streak has continued into the fall. After a successful back-to-school season, Macy's said last month that it expects third-quarter revenue growth in stores open at least one year to be at the high end of its previous guidance of 4 percent to 4.5 percent. Macy's, along with other major retailers, is expected to report sales figures Thursday for October, the last month of its fiscal quarter.
"We feel good about our own business," Lundgren said." We have lots of confidence."
Macy's said the flagship store will continue to operate during the construction. By fall 2015, the company says it plans to add about 800 new positions to the store's existing year-round workforce of about 4,600 people.
The first portion of Macy's Herald Square store was opened in 1902. It was expanded in three additional phases to its current configuration by 1931.
Macy's Inc. operates more than 800 stores under its namesake brand and 41 Bloomingdale's locations.