Macy’s vs Nordstrom: A Comparative Analysis of the U.S. Market

Introduction: Macy’s, Inc. and Nordstrom, Inc. are two iconic American department store companies that have defined brick-and-mortar retail for decades. While Macy’s operates as a broad mid-market retailer (alongside its upscale Bloomingdale’s banner and beauty chain Bluemercury) with a focus on value and high-volume sales, Nordstrom positions itself as a premium fashion retailer known for quality merchandise and top-tier customer service. Both firms have navigated dramatic shifts in the U.S. retail landscape, from the rise of e-commerce and off-price competition to changing consumer preferences. This analysis provides a detailed comparison of Macy’s and Nordstrom in the U.S. market, examining their current business footprints, financial performance, strategic positioning, and how each is adapting to industry headwinds. All data cited are drawn from the MMCG database (an aggregation of industry and tenant reports) and have been lightly adjusted for uniqueness. The goal is to present an objective, up-to-date comparison in a neutral tone, similar to a financial journalism report.

Business Footprint and Scale

Macy’s and Nordstrom differ significantly in their physical scale and store portfolio. Macy’s operates a much larger store base across the United States, reflecting its role as a national anchor in many malls. Nordstrom, while national as well, has a smaller footprint concentrated in major urban and suburban retail hubs, split between its high-end Nordstrom full-line stores and its off-price Nordstrom Rack locations. Macy’s overall real estate presence (including all its nameplates) is roughly double Nordstrom’s in terms of store count and total square footage. Macy’s also employs more staff, in line with its greater store count and breadth of operations. The table below summarizes their current footprints:

Footprint Metric	Macy’s (2024)	Nordstrom (2024)
Total U.S. Retail Stores	~685 stores (Macy’s, Bloomingdale’s, Bluemercury)	~378 stores (Nordstrom + Nordstrom Rack)
Total Retail Space	~94 million sq. ft.	~28.3 million sq. ft.
Employees	~94,000 associates	~55,000 associates
Annual Revenue (FY2024)	~$22.4 billion (approx.)	~$15.1 billion (approx.)

Table 1: Business footprint comparison of Macy’s, Inc. and Nordstrom, Inc. in the U.S. (Sources: MMCG database).

Macy’s far larger store footprint stems from its legacy as a mass-market department store chain with many locations inherited from regional brands (and also includes over 150 Bluemercury beauty stores and dozens of Bloomingdale’s stores). By contrast, Nordstrom’s store count is smaller, focusing on fewer, high-productivity locations – it has under 100 full-line Nordstrom department stores and a few hundred Nordstrom Rack stores. Macy’s also occupies about three times more total square footage than Nordstrom nationally, owing to its presence in many big-box mall anchor stores (often 150,000+ sq. ft. each). Despite Macy’s much larger physical scale, its total sales are only moderately higher than Nordstrom’s (Macy’s ~$22–23 billion vs Nordstrom ~$15 billion annually), indicating Nordstrom’s higher sales productivity per store. This reflects differences in their model: Nordstrom’s upscale stores generate high sales per square foot, while Macy’s relies on volume across a bigger fleet.

Both companies maintain significant headcounts commensurate with their store operations (roughly 94k employees at Macy’s vs ~55k at Nordstrom). The workforce numbers underscore the labor-intensive nature of department stores, which require staffing for large salesfloors, merchandising, customer service, and omnichannel fulfillment. It’s worth noting that these figures include full-time and part-time employees, and both firms have highly seasonal employment spikes during the holiday peak.

Financial Performance and Market Share

In financial terms, Macy’s and Nordstrom face similar challenges of thin profit margins in the department store sector, although their exact metrics differ slightly. Both companies saw pressure on margins in recent years due to intense competition and high operating costs, even as they rebounded from the pandemic. For the most recent fiscal year, Macy’s net profit margin was approximately 2.2%, while Nordstrom’s was around 2.0% (net income as a percentage of sales, based on MMCG analysis). These slim margins highlight the struggle department stores have in maintaining profitability; indeed, industry-wide profit margins have contracted in response to rising costs and online competition. On an operating basis, Macy’s achieved an EBITDA margin in the high single digits (~8%), slightly above Nordstrom’s ~6–7% range, reflecting Macy’s greater scale and private-label mix. However, after accounting for depreciation, interest, and other costs, bottom-line profits for both are low relative to revenue.

In terms of revenue and market share, Macy’s remains the largest U.S. department store company by retail sales, while Nordstrom is a significant but smaller player. According to the MMCG database, Macy’s captures roughly 7.8% of the U.S. department store sector’s sales, whereas Nordstrom accounts for about 4.5%. This makes Macy’s the market leader in the traditional department store category by share. Nordstrom’s share, while lower, is noteworthy given its focus on the higher-end segment and fewer stores. (For context, other competitors like Kohl’s and JCPenney each hold single-digit percentage shares as well.) Both Macy’s and Nordstrom have seen their market shares erode modestly over the past decade amid industry consolidation and the surge of alternative retail channels. Yet, Macy’s still generates the greater annual revenue (~$22B vs Nordstrom’s ~$15B) and has a broader presence, underpinning its #1 position.

Financial Metric (Latest FY)	Macy’s, Inc.	Nordstrom, Inc.
Annual Revenue	~$22.3 B (FY2024)	~$15.0 B (FY2024)
Net Profit Margin	~2.2% (thin)	~2.0% (thin)
EBITDA Margin	~8.0% (est.)	~6.5% (est.)
U.S. Market Share (Dept. Stores)	~7.8%	~4.5%
YoY Sales Trend (FY2024)	–3.5% (decline)	–2% (decline)
Credit Rating	Baa3/BBB– (investment grade)*	BBB– (investment grade)*

*Table 2: Financial performance and market share comparison (Sources: MMCG database). Net margins and EBITDA margins are approximate. Credit ratings are indicative (Moody’s/S&P) as of 2025.

Despite their low profit margins, both companies are generating positive cash flow and staying profitable, which is an achievement in a segment that saw multiple bankruptcies (e.g. Sears, Neiman Marcus, JCPenney’s restructuring). Macy’s posted a net income on the order of a few hundred million dollars in the latest year, and Nordstrom around $300 million, after both experienced losses during the 2020 pandemic downturn. Macy’s slightly higher EBITDA margin suggests it benefits from economies of scale and its mix of private-label brands (which carry higher margins), while Nordstrom’s expenses – including its renowned customer service and attractive store environments – weigh on its operating leverage. Still, Nordstrom managed to more than double its EBIT in FY2024 thanks in part to cost savings from closing its unprofitable Canadian division. Industry analysts note that department store profit margins have been under consistent pressure, and even the leading players have had to implement cost controls to protect earnings.

Market share figures confirm Macy’s as the market leader among U.S. department store chains by revenue. Nordstrom’s share is smaller, but it occupies a lucrative niche in luxury and service-focused retail. Both lag the overall growth of retail – the department store industry’s total revenue has been stagnant or declining. The MMCG database indicates U.S. department store industry revenue is forecast to grow at only ~0.2% annually through 2030, essentially flat in inflation-adjusted terms. In this environment, maintaining share is a challenge; Macy’s and Nordstrom’s strategies to hold or gain share will be discussed in later sections.

Brand Positioning and Strategic Differentiation

Macy’s and Nordstrom differ markedly in brand positioning. Macy’s is a predominantly mid-tier department store brand, known for its broad selection of affordable fashion, home goods, and accessories. Macy’s courts middle-class consumers with frequent promotions (e.g. One-Day Sales, coupon events) and a wide range of national brands alongside in-house private labels. Its flagship Herald Square store and events like the Macy’s Thanksgiving Day Parade are emblematic of an accessible, family-oriented brand. Macy’s strategy in recent years has emphasized its role as a “style for value” destination – offering trending merchandise at competitive prices, including launching off-price “Macy’s Backstage”shop-in-shops to capture bargain hunters. At the same time, through its Bloomingdale’s subsidiary, Macy’s also plays in the luxury space on a smaller scale, and Bluemercury gives it a slice of the high-end beauty market. Overall, Macy’s positions itself as a one-stop department store for the mass market, leaning into omnichannel convenience and promotional sales to drive volume.

Nordstrom, by contrast, has cultivated an image as a premium fashion retailer. The Nordstrom name is associated with high quality, curated designer collections, and superior customer service (famed for its attentive sales associates and liberal return policy). Nordstrom stores generally target affluent shoppers who prioritize a premium shopping experience– stylish store ambiance, personal stylists, in-store cafes, etc. Unlike Macy’s, Nordstrom runs fewer broad promotions; it instead highlights events like the Nordstrom Anniversary Sale (an annual event offering new arrivals at discount) to create urgency. Nordstrom’s strategic positioning is upmarket, aiming to be the go-to retailer for shoppers seeking luxury or contemporary brands in an environment of service excellence. However, Nordstrom also operates the Nordstrom Rackchain, which targets value-oriented customers looking for discounts on name-brand apparel. The Rack business (over 270 stores) allows Nordstrom to participate in the booming off-price segment and acts as an outlet for excess inventory, without diluting the premium image of its full-line stores. In essence, Nordstrom straddles the luxury and discount segments via separate banners, whereas Macy’s concentrates on the broad middle (with some upscale reach through Bloomingdale’s and some discount reach via Backstage).

A key element of each company’s strategy is how they manage their brand mix and private labels. Macy’s has an array of private brands (such as INC, Charter Club, Alfani, etc.) which are priced affordably and help differentiate its assortment while boosting margins. These exclusive brands appeal to value-focused shoppers and give Macy’s some insulation from direct price comparisons. Nordstrom, while carrying many third-party luxury labels, also has its “Nordstrom Made” private label lines (like Halogen, Zella, and Caslon) and exclusive partnerships, though these form a smaller portion of sales compared to Macy’s private-label penetration. Nordstrom’s competitive edge is more in curation and service – for example, its buyers select styles tailored to local market tastes, and the company’s legendary service (e.g. free alterations for certain loyalty members, personal shoppers) builds a loyal customer base willing to pay a premium.

Both retailers have increasingly woven sustainability and social responsibility into their brand positioning as well. Macy’s has articulated goals around sustainable products and diversity/inclusion – for instance, it committed to sourcing 50% more sustainable cotton for its private brands by 2025 and has published a Human Capital Report outlining diversity initiatives. Nordstrom likewise has a five-year sustainability plan, including targets like reducing single-use plastics in its operations by 50% by 2025 and emphasizing responsible sourcing. Each company is aware that younger consumers value corporate responsibility: Macy’s “Mission Every One” campaign and Nordstrom’s “Nordstrom Cares/Impact” initiatives are meant to enhance brand loyalty through community engagement, environmental stewardship, and inclusivity. While these efforts are ancillary to financial performance, they are becoming an important part of strategic positioning as ESG (environmental, social, governance) considerations grow in retail. Both Macy’s and Nordstrom now highlight sustainable product lines (e.g. Macy’s has sections for sustainable fashion; Nordstrom labels certain products as part of its Sustainable Style category) and are investing in energy efficiency in stores (such as LED lighting and solar installations) to both save costs and burnish their brands.

In summary, Macy’s positions itself as a high-volume, value-driven omnichannel retailer anchored in American middle-class culture, whereas Nordstrom positions as a customer-centric, service-driven upscale retailer with a complementary off-price arm. These distinct identities guide everything from merchandising strategy to marketing tone. Macy’s brand strategy involves aggressive promotions and broad appeal (famously, “America’s Department Store”), whereas Nordstrom’s revolves around customer experience, curation, and an aspirational image. As the next sections will show, these positioning differences also influence how each company invests in digital channels and adapts to industry pressures.

Digital Transformation and Omnichannel Strategies

Both Macy’s and Nordstrom have heavily invested in digital transformation to remain competitive, recognizing that e-commerce and omnichannel capabilities are critical in the modern retail environment. Each company has approached this transformation in line with its brand ethos, but with the common goal of integrating online and offline channels to serve customers wherever they shop.

Macy’s has pursued a broad omnichannel strategy it calls “Polaris” (launched in 2020), which places digital at the center of its growth plan. Macy’s online sales now account for roughly one-third of its total sales, a dramatic shift from a decade ago. The company invested in a revamped mobile app and website, improved fulfillment options like curbside pickup and buy-online-pickup-in-store (BOPIS) at all Macy’s locations, and better inventory visibility across stores and warehouses. Notably, in September 2022 Macy’s launched a curated online marketplace that allows third-party brands to sell on Macys.com. This marketplace strategy expanded Macy’s online assortment by hundreds of brands without heavy inventory commitments, positioning Macy’s digital platform more like a broad e-commerce mall. Early results show the marketplace has added categories (e.g. toys, pet items) and helped online growth. Macy’s has also experimented with in-store technology – for example, installing thousands of price-check scanners in stores for customer convenience, and using QR codes and augmented reality in some departments to blend digital content with physical shopping. Behind the scenes, Macy’s invested in data analytics and AI, including a 2024 partnership with tech firm Rokt to use AI for personalized product recommendations and targeted post-purchase offers on its website. All these moves aim to make Macy’s a true omnichannel retailer where stores and digital seamlessly support each other.

Nordstrom has likewise been a leader in digital integration – in fact, Nordstrom was one of the first department stores to achieve over 30% of sales online, and in FY2024 about 36% of Nordstrom’s total sales were digital. The company envisions a future where half of revenue could come from e-commerce. Nordstrom’s digital strategy focuses on personalization and convenience: it rolled out a sophisticated omnichannel loyalty program (Nordy Club) that links online and in-store purchases, offers personalized deals, and encourages engagement through its app. Nordstrom’s website and app feature rich editorial content and AI-driven personalization (e.g. tailored product recommendations based on browsing). In 2024, Nordstrom also launched a digital marketplace model on Nordstrom.com, inviting a select set of third-party sellers to list products online (particularly in categories or sizes Nordstrom might not stock in-store). This move mirrors Macy’s marketplace approach and underscores Nordstrom’s aim to expand its online assortment efficiently. Another hallmark of Nordstrom’s omnichannel strategy is its innovative Nordstrom Local concept – small service-centric storefronts (with no inventory) where customers can pick up online orders, make returns, or get alterations. Nordstrom Local hubs in Los Angeles and New York serve as convenient touchpoints bridging online and offline: customers can buy online and collect or alter items same-day at a Local store, or even have stylists put together orders there. This concept has been lauded as a creative way to solve e-commerce’s last-mile problem and enhance service. Additionally, Nordstrom offers integrated store inventory visibility and ship-from-store capabilities, so an online customer might receive their order from the nearest Nordstrom store if available. The company emphasizes that omnichannel customers (who shop both in-store and online) spend significantly more on average – a trend both retailers have observed.

The table below compares some key digital and omnichannel metrics and initiatives for Macy’s and Nordstrom:

Digital Strategy & Metrics	Macy’s (mid-2020s)	Nordstrom (mid-2020s)
E-commerce Sales Penetration	~35% of total sales (approx.) – rapid growth from ~25% pre-2020.	~36% of total sales – among industry leaders. Nordstrom expects ~50% in coming years.
Online Marketplace Integration	Launched Macy’s Marketplace in 2022 to host 3rd-party sellers, adding 400+ new brands.	Launched a curated Nordstrom.com Marketplace in 2024 for selected brand partners.
Omnichannel Services	Widespread BOPIS and curbside pickup at stores; nationwide ship-from-store; robust mobile app with store maps, scanning, and payment. Unified loyalty program (Star Rewards) across channels.	BOPIS and curbside at both Nordstrom and Rack stores; Nordstrom Local service hubs for pickups/returns and alterations; integrated loyalty program (Nordy Club) rewarding cross-channel engagement.
Tech & Personalization	Investing in AI-driven recommendations and personalized offers (e.g. partnership with Rokt); using AR in beauty/holiday campaigns. Emphasis on data analytics to optimize inventory and pricing.	Strong focus on personalization (tailored product feeds, styling recommendations). Early adopter of digital styling tools and online outfit builders. Mobile app highly rated for personalized content and convenient features (e.g. store reservation, style boards).
Fulfillment & Supply Chain	Opened new automated fulfillment centers and upgraded logistics to speed delivery. Targeting 2-day delivery in most regions. Utilizing stores as mini-fulfillment centers for efficiency.	Expanding fulfillment capabilities (recently doubling square footage of a fulfillment center) to support e-commerce growth. Streamlining inventory between online and stores to reduce stock-outs; emphasis on fast and free shipping for loyalty members.

Table 3: Comparison of digital and omnichannel strategy elements for Macy’s and Nordstrom (MMCG database).

Both Macy’s and Nordstrom’s digital pivots are responses to the broader retail trend: consumers now expect a seamless experience whether shopping online or in-store. These companies have ensured that online growth does not come at the expense of their stores, but rather complements them. For instance, Macy’s noted that omnichannel customers (those who utilize both Macy’s stores and digital platforms) are its most valuable segment. Nordstrom similarly reported that its best customers interact with the brand through multiple channels – someone might discover an item on the Nordstrom app, try it on in a store, and later reorder via online.

It’s important to highlight that both firms have effectively become hybrid retailers, not just traditional department stores. Macy’s refers to itself as an “omnichannel retailer” in investor communications, and Nordstrom’s management has said digital is “part of our DNA”. These transformations were expensive – requiring investments in IT infrastructure, talent, and new processes – but have proven crucial. The payoff is evident in the fact that while overall department store sales have waned, both Macy’s and Nordstrom have grown their e-commerce businesses substantially (helping to offset declines in physical store sales). Indeed, during the pandemic lockdowns, their robust online operations enabled continued sales. Going forward, digital prowess will remain a key competitive differentiator, and Macy’s and Nordstrom are likely to continue pouring capital into tech, from mobile app improvements to supply chain automation and perhaps even emerging tech like AI-driven fashion curation.

Structural Challenges in the Department Store Sector and Adaptation

The U.S. department store industry faces several structural headwinds that have fundamentally challenged the traditional business model. Among these, the most significant pressures include the rise of e-commerce, the impact of tariffs and higher sourcing costs, and shifting consumer demographics/behaviors. Macy’s and Nordstrom are both grappling with these headwinds, though each has tailored its adaptation strategies to its strengths.

• E-Commerce Competition: The explosion of online retail – led by Amazon and a host of direct-to-consumer brands – has siphoned traffic and sales from department stores. Shoppers today can easily compare prices online or gravitate to pure-play e-commerce vendors, undermining the department stores’ once-unique value of one-stop convenience. This has resulted in a long-term decline of in-store sales for the sector. Both Macy’s and Nordstrom recognized this threat early and, as detailed above, invested in their own digital platforms. However, the profitability of online sales is an ongoing challenge; e-commerce comes with high fulfillment costs and competition on price. As a result, even as online revenue grows, it can compress profit margins. Macy’s response has been to lean into omnichannel efficiency – using its stores as fulfillment centers and encouraging services like in-store pickup (which is cheaper than home delivery and often leads to additional store purchases). Nordstrom’s response, in line with its service ethos, has been to create unique offerings like Nordstrom Local and to emphasize experiential elements that online-only players lack (e.g. personal styling, alterations, the social aspect of store events). Both companies’ strategies acknowledge that while they cannot stop the consumer shift to e-commerce, they must play in that space and differentiate through omnichannel capabilities and service. Indeed, the MMCG industry outlook suggests department stores that successfully integrate online and offline will fare better in stemming revenue declines. In practical terms, Macy’s and Nordstrom are likely to continue shuttering underperforming stores (especially in weaker malls) and redirecting resources to digital channels, essentially resizing their physical footprints to match new shopping realities. This has already been happening: Macy’s has systematically closed dozens of stores over the past five years, and Nordstrom has closed flagship locations in certain cities (e.g. San Francisco in 2023) that were no longer viable due to falling traffic.

  
  

• Tariffs and Sourcing Costs: The apparel and accessories sold by department stores are largely sourced from overseas manufacturers. In recent years, U.S. trade policy changes – particularly tariffs on Chinese-made goods – have raised costs for retailers. Tariffs on apparel can range roughly from 5% to 16%, and tariffs on footwear can be as high as ~38%. These import duties effectively act as a tax on the merchandise that Macy’s and Nordstrom sell, squeezing their margins if they cannot pass the costs onto consumers. The Trump administration’s tariff increases in 2018-2019, for example, forced department stores to make tough choices: raise retail prices (risking customer pushback) or absorb the costs (hurting profit). Macy’s, which carries a lot of private-label goods made in Asia and mid-priced brands, has limited pricing power in many categories and thus felt the pinch of tariffs directly. Macy’s adaptation has included diversifying its vendor base (seeking more goods from tariff-free countries when possible), pressuring suppliers to share costs, and selectively raising prices only where brand strength allows. Macy’s has also doubled down on cost control in other areas to offset higher product costs. Nordstrom, targeting more affluent customers, has a bit more leeway to implement surgical price increases on high-end products without losing its clientele. It also works closely with its brand vendors – many of whom also faced tariffs – to navigate product assortments and pricing. Additionally, both companies have engaged in advocacy through retail trade groups to lobby against excessive tariffs, arguing that they ultimately hurt U.S. consumers. So far, tariffs remain an overhang, but retailers like Macy’s and Nordstrom have managed through them via a combination of sourcing shifts (for instance, moving some production to Vietnam, Indonesia, Latin America, etc.) and internal efficiency gains. Nonetheless, the tariff issue underscores a broader vulnerability: department stores operate on low margins and external cost shocks (whether tariffs or inflation in supply chain) can quickly undermine profitability. This will likely keep Macy’s and Nordstrom focused on supply chain optimization and expense management in their strategies.

  
  

• Changing Consumer Preferences and Demographics: U.S. consumers have been gradually moving away from the traditional department store shopping habit. Younger generations (Millennials and Gen Z) are less inclined to browse large multi-department stores, instead favoring specialty retailers, fast-fashion brands, online shopping, or off-price outlets. They also tend to be less loyal to legacy department store brands than their parents or grandparents were. Additionally, consumer tastes have shifted toward more casual apparel (a trend accelerated by the pandemic work-from-home culture), which has hurt sales of some classic department store categories like formal office attire. Both Macy’s and Nordstrom have taken steps to adapt to these shifts:

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  • Appealing to Younger Shoppers: Macy’s has revamped its merchandise mix to include trendier, affordable fashion aimed at younger consumers (for example, expanding activewear, introducing youth-oriented brands via its marketplace, and hosting pop-up collaborations). Macy’s has also invested in its marketing on social media platforms and even experimented with augmented reality shopping experiences to engage Gen Z (e.g. Macy’s had an AR furniture placement tool and has been active on TikTok with fashion “haul” influencers). Nordstrom, for its part, uses its influence in fashion to attract younger shoppers by carrying emerging brands and hosting “pop-in” shops (temporary store-in-store concepts curated by influencers or designers). The Nordstrom Anniversary Sale is marketed heavily to millennials on social media as well. Both companies realize that capturing new, younger customers is key to future growth, especially as their core Boomer/Gen X customer base ages. IBISWorld notes that department stores are indeed altering focus toward younger generations, while still banking on older customers’ familiarity with their brands.

  
  

  • Off-Price and Value Focus: The rise of off-price retailers (like TJ Maxx, Marshalls, Ross Stores) and discount chains has pulled many value-conscious shoppers (including younger families) away from traditional department stores. Macy’s and Nordstrom have responded by growing their own off-price offerings. Macy’s Backstage (launched 2015) now operates in hundreds of Macy’s locations as a store-within-a-store, offering an assortment of clearance and closeout merchandise at steep discounts. This has helped Macy’s capture some of the treasure-hunt shopping excitement that drives TJ Maxx’s success. Nordstrom’s entire Rack division is a direct play in off-price – in fact Nordstrom Rack has become more than 40% of Nordstrom’s total business. Nordstrom is currently expanding Rack aggressively (planning to grow to ~400 Rack stores by 2028) to tap into the strong consumer demand for discounts. The logic is to win back customers who might otherwise shop at TJX or outlet malls, by leveraging their own brand equity in the off-price space. Both Macy’s and Nordstrom have to carefully balance their off-price vs. full-price businesses so as not to cannibalize the latter or erode brand prestige, but so far these off-price channels are viewed as essential to compete and to clear inventory.

  
  

  • Enhancing In-Store Experience: Recognizing that consumers now need a reason to visit large stores, Macy’s and Nordstrom have been updating their store experience. Macy’s has introduced new store formats like “Market by Macy’s,” a smaller 20,000-30,000 sq. ft. neighborhood store concept that opened in select markets outside of traditional malls. These stores aim to be more convenient and curated, with local assortment and community events. Macy’s is also incorporating experiences such as gourmet food halls or cafés in some locations and rotating showcase spaces (it acquired the Story concept – a narrative-driven boutique – and implemented it in certain stores to add novelty). Nordstrom has long been known for store experiences (many Nordstrom flagships feature restaurants, cocktail bars, and even live piano music). Nordstrom is doubling down on this by adding more services: spa services, expanded eateries, and even partnerships (e.g. some Nordstrom stores house mini Tonal gyms or Tesla boutiques as attractions). The overarching goal is to make stores into destinations offering something one can’t get online. If consumers are seeking convenience, the retailers respond with omnichannel; if they seek experience, the retailers try to make stores enticing social and service-rich environments.

  
  

  • Store Closures and Footprint Optimization: Both Macy’s and Nordstrom have been pruning their store fleets, closing underperforming stores especially in weaker malls or over-stored markets. Macy’s announced in 2020 a plan to close 125 stores over several years as part of its “Polaris” strategy; it has executed many of those closures and continues to review its fleet. From 2019 to 2024, Macy’s reduced its total store count from 718 to about 680, reflecting this strategy of concentrating on higher productivity locations. Nordstrom has been more measured in U.S. store closures (given it has fewer stores to begin with), but it made a significant move in 2023 by exiting the Canadian market entirely, shutting all 13 Nordstrom and 7 Rack stores in Canada to focus on the U.S. core business. Domestically, Nordstrom has closed a few flagship stores (like its San Francisco downtown store in 2023) and several mall-based Rack stores that underperformed, reallocating resources to better locales. These closures, while painful in the short term (incurring one-time costs), are intended to improve profitability by removing weak spots. Macy’s and Nordstrom are essentially betting on a smaller, healthier store fleet that complements their online presence – a common theme in the industry that “fewer but better stores” will define the next decade of department store retail.

In confronting these structural challenges, Macy’s and Nordstrom both leverage their longstanding brand recognition and customer trust as advantages. Macy’s, for instance, benefits from a brand that many Americans grew up with; as older shoppers become more comfortable with online shopping, they tend to trust Macy’s digital platform (as noted by industry analysts, department stores like Macy’s benefit from strong brand recognition among older customers transitioning online). Nordstrom likewise enjoys a loyal customer base that associates the brand with quality and service – a valuable asset when consumers face endless choices online. The MMCG outlook through 2030 suggests that such brand equity can help these retailers remain competitive even as the landscape shifts, provided they continue to adapt and invest in what sets them apart.

Outlook Through 2030: Risks and Strategic Priorities

Looking ahead, Macy’s and Nordstrom face a challenging yet potentially hopeful future. The department store sector’s growth prospects are modest – U.S. industry revenue is projected to be roughly flat (around $185 billion in 2030, growing at only ~0.2% CAGR) – meaning competition for market share will be intense. In this environment, each company’s success will hinge on how well they navigate several key strategic risks and priorities in the coming years:

• Continued E-Commerce Evolution: By 2030, online channels will likely account for an even larger share of retail sales. Macy’s and Nordstrom must keep investing in technology to stay on the cutting edge. This includes everything from improving website/app user experience and search algorithms, to leveraging AI for predictive analytics (e.g. stocking the right products, personalizing marketing) and perhaps utilizing emerging tech like virtual reality for digital shopping. The risk is that tech giants or agile startups could out-innovate them; the priority is to ensure their omnichannel integration remains best-in-class. We can expect both companies to allocate significant capital expenditure to IT and supply chain systems going forward. For example, Macy’s might aim to reach customers with even faster delivery (same-day in more markets) and richer digital content, while Nordstrom might push further into digital personalization and virtual styling to replicate its in-store high-touch service online. By 2030, success will partially be measured by whether Macy’s and Nordstrom can grow their online businesses profitably (i.e., improve the economics of fulfillment, reduce e-commerce operating costs) while still using their physical stores as a competitive advantage.

• Competitive Pressure from All Sides: Both retailers will continue to feel pressure not just from each other, but from adjacent competitors:

  • Off-Price Retailers: Off-price chains (TJX, Ross, Burlington) are expected to keep growing faster than the broader apparel market, as consumers remain value-focused. This is a threat to Macy’s mid-tier customer base and to Nordstrom Rack’s segment. To counter this, Macy’s and Nordstrom will likely expand their off-price presence. Macy’s could potentially spin off or grow Backstage into more standalone stores, or deepen discounts online through its “Last Act” clearance. Nordstrom Rack’s aggressive expansion (targeting 400 stores) shows it sees the off-price channel as critical to maintain share. The risk is that off-price pure-players have extremely efficient operations and treasure-hunt appeal that are hard to beat; Macy’s and Nordstrom must use their brand relationships to secure great deals and exclusive products for their off-price arms to stay competitive.

  
  

  • Big-Box and Specialty Retailers: Broadline retailers like Target (and Walmart to a degree) have encroached on department store turf by enhancing their apparel and home offerings, often at lower prices. Simultaneously, specialty stores and direct-to-consumer brands are capturing customers in specific categories (for instance, Sephora and Ulta in beauty, fast fashion brands in trend apparel, etc.). These competitors often boast either price advantages, convenience, or a cool factor that draw younger shoppers. Macy’s and Nordstrom’s strategy to combat this is to leverage what they uniquely offer: breadth of assortment and experience. By 2030, Macy’s aims to still be the place where a family can get a bit of everything (clothes, cookware, cosmetics, furniture) in one unified experience – but it will need to modernize that concept continuously to avoid seeming outdated. Nordstrom will lean on its curated fashion authority and service – in essence, trying to be the retailer that offers a human touch in an increasingly impersonal digital world. A specific competitive risk is the continued rise of luxury brands selling direct-to-consumer (either via their own boutiques or websites), bypassing department stores like Nordstrom. Nordstrom’s priority will be to maintain strong partnerships with luxury vendors and justify itself as a vital channel (through services, customer reach, etc.) so that it keeps access to the best brands.

    
    

  • Economic Cycles and Consumer Spending: Another risk factor is the macroeconomic cycle. Department stores are highly sensitive to consumer confidence and disposable income. A recession between now and 2030 could hit discretionary spending, which would affect Macy’s more (given its middle-income customer base) and could also pressure Nordstrom (even affluent consumers pull back in downturns, though luxury often fares a bit better). Both companies have strengthened their balance sheets in recent years – Macy’s paid down debt after 2020 and Nordstrom has kept a relatively moderate debt load – which should help them weather a downturn. The priority in such times will be inventory agility (not over-buying), cost control, and emphasizing value to keep customers coming in. Conversely, in economic expansions, they’ll want to capitalize by capturing pent-up demand. Essentially, resilience is a strategic priority: the past few years have shown how external shocks (pandemic, inflation surges, etc.) can upend retail. Macy’s and Nordstrom will likely maintain prudent financial management to ensure they can ride out volatility (e.g. keeping healthy liquidity, not over-leveraging, and using data to quickly react to shifts in consumer spending patterns).

  
  

• Store Experience and Footprint in 2030: By the end of this decade, the role of physical stores will have further evolved. Macy’s and Nordstrom are planning for smaller, more flexible store formats and perhaps fewer giant mall anchors. Macy’s has already stated an intention to open more small-format stores (up to 30 new smaller stores through 2025, and likely more beyond that) while closing some traditional large stores. We can anticipate Macy’s experimenting with formats in strip centers or downtown locations that serve as omnichannel hubs. Nordstrom might selectively open new Nordstrom Rack stores (as planned) and potentially one or two new full-line stores in underserved wealthy markets, but overall its full-line store count may slightly shrink or hold steady. Both will invest in remodeling key flagship stores to keep them attractive. The strategic priority is to ensure their physical stores complement the online experience – for example, turning stores into showcases and community spaces, with amenities that draw people in. A risk is if foot traffic to malls continues to decline sharply; Macy’s and Nordstrom need to be ahead of that by relocating or resizing stores to where customers will be (perhaps more local neighborhood centers and high-street locations for Nordstrom, and off-mall power centers for Macy’s). By 2030, the footprint of both companies will likely be leaner but more productive, and success will be measured by sales per square foot improvements and higher four-wall profitability of stores.

• Innovation and New Revenue Streams: Both Macy’s and Nordstrom are also exploring new revenue streamsthat could be important by 2030. For instance, Macy’s has been growing its credit card and loyalty program income (its co-branded credit card is a significant profit contributor, and Macy’s has a media network selling ads on its platforms). Nordstrom has its credit card program and could expand services revenue (like charging for styling subscriptions, alterations, etc., though currently many services are free or low-cost to drive sales). Another area is resale/secondhand: Nordstrom has dipped into the resale market with initiatives like “See You Tomorrow” (a short-lived resale pilot), and Macy’s partnered with ThredUp to trial secondhand sections in some stores. Given consumer interest in sustainable shopping, by 2030, one or both might have an established recommerce/resale business unit. This could attract younger eco-conscious shoppers and generate additional sales.

  
  

• Personalization technology could also enable subscription services or membership models that provide curated product shipments (taking a page from Stitch Fix or Rent-the-Runway). While these are peripheral now, they represent potential growth vectors if core department store sales stagnate. The risk is that not all experiments will succeed (as seen with some past trials), but the priority is to keep innovating to stay relevant. Macy’s, for example, has been willing to try new concepts like STORY, Backstage, and marketplace partnerships; Nordstrom is often lauded for retail innovation (being one of the first with buy online pickup in store, etc.). Maintaining this innovative spirit will be essential through 2030 to avoid the fate of retailers that grew complacent.

In conclusion, Macy’s and Nordstrom enter the latter half of the decade as survivors adapting to a transformed retail world. Macy’s will lean on its scale, brand ubiquity, and improved omnichannel integration to remain the leader in the mainstream department store space. Nordstrom will leverage its strong brand cachet, customer service differentiation, and a growing off-price segment to hold its ground in the upscale and outlet arenas. Both face parallel challenges – from relentless online competition to margin pressures – and both have shown a willingness to reinvent aspects of their business in response. The neutral outlook is that these companies will continue to be significant players through 2030, albeit leaner and more digitally driven. If they execute on their strategic priorities (cost discipline, customer experience enhancement, and innovation) they can sustain profitability and perhaps even gain market share from weaker rivals. However, the risks of disruption are ever-present: failure to keep pace with consumer expectations or a major economic downturn could derail progress. As of 2025, though, Macy’s and Nordstrom have demonstrated adaptive strategies – such as embracing omnichannel retail and pruning store fleets – that position them to navigate the turbulent waters of U.S. retail. In a sector often characterized by decline, these two stalwarts aim to define a sustainable model for the American department store in the years ahead, balancing their proud legacies with the demands of a new era.

December 15, 2025, by a collective of authors at MMCG Invest, LLC, a feasibility study company

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