Freakonomics Radio

Dying Is Easy. Retail Is Hard. (Update)

November 28, 2025

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  • Macy's CEO Tony Spring is attempting a turnaround strategy called "a bold new chapter" focused on store divestment, assortment improvement, and enhancing the customer experience, despite skepticism from retail experts like Mark Cohen. 
  • The Macy's Thanksgiving Day Parade is a highly valuable, likely profitable asset for Macy's Inc., serving as a powerful, albeit once-a-year, brand legitimizer, though it doesn't guarantee in-store shopping success. 
  • Jeff Kinney's revitalization of Plainville, Massachusetts, centered around his unprofitable but community-building bookstore, An Unlikely Story, demonstrates a successful, grassroots investment in local infrastructure that contrasts with the challenges facing large, consolidated retailers like Macy's. 

Segments

Macy’s CEO Interview Begins
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(00:00:49)
  • Key Takeaway: The Macy’s Thanksgiving Day Parade is a deeply ingrained tradition for 30 million TV viewers, but the future of the department store supporting it is uncertain.
  • Summary: The episode focuses on the economics of the Macy’s Thanksgiving Day Parade and the future viability of Macy’s department stores. The parade is considered a core tradition, but its existence is tied to the financial health of Macy’s Inc. The company’s market capitalization ($6 billion at the time of recording) is significantly lower than competitors like Target ($40 billion) and Walmart ($850 billion).
Tony Spring’s Retail Philosophy
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(00:05:17)
  • Key Takeaway: Macy’s CEO Tony Spring views the company as a ‘celebrator of life’s moments,’ balancing the prestige of the parade with the necessity of profitability, using the adage: ‘We want to win an Oscar. We also want to win at the box office.’
  • Summary: Tony Spring started his retail career with a focus on first impressions, stemming from an early job cleaning a Burger King parking lot. He joined Bloomingdale’s executive training program in 1987, experiencing its focus on ‘of the moment’ ideas like selling mood rings and pieces of the Berlin Wall. Macy’s Inc. currently comprises Blue Mercury, Bloomingdale’s, and Macy’s, with the latter shrinking from over 800 stores in 2007 to fewer than 500 currently.
Activist Investor Challenge
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(00:09:13)
  • Key Takeaway: Macy’s board rejected a takeover proposal from activist investors because it was deemed an under-financed proposal, asserting that the company’s value lies in its operational turnaround, not just its real estate assets.
  • Summary: The company’s market capitalization was around $4.2 billion when activist investors approached, while real estate estimates ranged from $7 to $11 billion. Spring argues that the company is an attractive stock because it offers the portfolio of Macy’s, Bloomingdale’s, and Blue Mercury, plus the potential upside of a successful turnaround. Macy’s Inc. has monetized over $2.5 billion in real estate over the last seven years.
Parade Economics and Brand Identity
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(00:12:38)
  • Key Takeaway: While Macy’s leadership avoids detailing the parade’s specific economics, they confirm it is a valuable asset, positioning Macy’s as a ‘celebrator of life’s moments’ spanning from mundane needs to extraordinary events.
  • Summary: The parade is considered a valuable asset, similar to the flagship Herald Square location, allowing Macy’s to connect with customers during major life events. Spring aims to integrate the ‘magic’ of the parade into the daily store experience, noting that Black Friday kicks off the gifting season following Thanksgiving. Macy’s is actively trying to secure more premium brands like Tory Burch and On Running for the main Macy’s stores, not just Bloomingdale’s.
Expert Critique of Macy’s Decline
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(00:13:52)
  • Key Takeaway: Retail expert Mark Cohen asserts that Macy’s currently stands for nothing because it failed to defend its point of view against specialty chains, big-box retailers, and Amazon, while historically abusing its vendor community.
  • Summary: Cohen notes that Macy’s peak profitability and fashion relevance were in the 1960s and 70s, exemplified by innovations like ‘The Cellar’ at Herald Square. The company’s decline involved consolidating regional banners and engaging in ’last man standing’ behavior by acquiring competitors. Macy’s historically demanded excessive concessions from vendors, such as exclusive deals and markdown protection, leading brands to seek alternative distribution channels.
Bold New Chapter Strategy Details
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(00:27:35)
  • Key Takeaway: Tony Spring’s ‘bold new chapter’ involves closing 150 irrelevant Macy’s stores, investing in merchandise assortment (like leaning into kids’ fragrances), improving store conditions, and expanding Bloomingdale’s and Blue Mercury.
  • Summary: Irrelevant stores are defined by poor physical condition (e.g., old roofs, broken elevators) and weak brand partnerships, often being the last store in a dying mall. Survey data shows Macy’s has high awareness (88%) but low popularity and loyalty (20-30%), indicating a significant conversion problem. The primary existential threat identified by Spring is disintermediation—brands selling directly to the consumer.
Jeff Kinney’s Town Reinvention
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(00:42:27)
  • Key Takeaway: Jeff Kinney is investing $17M to $35M to redevelop downtown Plainville, Massachusetts, transforming a depressed area anchored by his successful but unprofitable bookstore, An Unlikely Story, into a vibrant community hub.
  • Summary: Kinney built An Unlikely Story on the site of a beloved, long-abandoned market to give the town something to be proud of, despite the bookstore itself losing six figures annually. Plainville’s former economy was based on the jewelry industry, including the factory that made Tina Turner’s chain mail dress. Kinney believes that as the world becomes more digital, people crave connectedness, making physical community spaces like bookstores highly desirable.
Update on Turnarounds
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(01:03:30)
  • Key Takeaway: As of the update, Tony Spring closed 64 Macy’s locations and reported an uptick in earnings across all three brands, while Jeff Kinney’s redevelopment site now features a beer garden under construction.
  • Summary: Mark Cohen remains skeptical, calling any positive movement a potential ‘dead cat bounce’ until success is proven, echoing his advice that leaders should not talk about strategy until it succeeds. Spring, however, continues to advocate for the importance of retail variety that creates a reason for the local ‘stroll.’ Kinney’s project aims to change the town’s fate for generations to come, embodying the proverb about planting trees whose shade one will never enjoy.