# More sales than not: How does Macy's make money? **URL:** \ **Category:** Factual Questions\ **Created:** [August 24, 2010, 1:53am UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235 "2010-08-24T01:53:57Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [August 24, 2010, 4:09pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/21 "2010-08-24T16:09:52Z")
> [@zweisamkeit](#): > > I really wonder if Macy’s, now that they’re the main department store nationwide, has different tiers of “class”. They always had. It’s been so long that it’s out of peoples’ memories, but Macy’s once competed on price, especially with Gimbel’s. They both claimed to have the lowest prices and had perpetual price wars, with spies going into each other’s stores and making comparisons. The difference between then and today is mostly that department stores could afford to have several levels of price and quality in the same store. Here’s an anecdote from Margaret Case Harriman’s _And the Price Is Right: The R. H. Macy Story_. > [@](#): > > [A glove buyer was having trouble selling imported French gloves at $5.94. The head buyer said:] > “We will run an ad featuring only the French gloves at $5.94,” he told her. “That will bring the people in. When they come, instruct your clerks to show them only domestic gloves at $2.94 and $3.94.” > > “But how will that help my $5.94 French gloves?” > > “The customers will ask to see the $5.94 gloves because of the ad,” Mr. Jesse explained, “and after they have thoroughly seen the $2.94 and the $3.94 gloves first, the comparison will be so striking and the French gloves so much better that they can’t help buying them.” Yes, clerks had to show you the goods. You couldn’t browse. Imagine that working today. In addition, the Macy’s flagship store had some very high end departments that competed with upscale New York stores as well as a bargain basement. We’ve forgotten bargain basements today, when Filene’s Basement is the last remaining, but they accounted for up to 30% of the business of major department stores. Sort of a dirty little secret. The only time I ever got to shop in Sibley’s, the very upscale department store in Rochester, was when my mother went to the basement to look through the cheap stuff piled on tables. The huge downtown department stores were visual treats in many ways, but the reality was that they were mostly show, tricked out-amusement parks whose purpose was to lure people in who couldn’t afford to buy the glitzy merchandise dangled in front of them. Remember that five and dimes thrived right alongside the department stores. (Rochester had five in one downtown block.) If Macy’s really sold only the quality stuff that people remember it never would have stayed in business. It was a triumph of style over substance. They all were. ---
**Author:** ![filmore](https://avatars.discourse-cdn.com/v4/letter/f/7993a0/32.png) [@filmore](https://boards.straightdope.com/u/filmore)\ **Post date:** [August 24, 2010, 4:28pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/22 "2010-08-24T16:28:28Z")
> [@sassyfras](#): > > Here is my genius logic, please help me: **Few people will buy at Macy’s at list price, because there are so many sales**. Since Macy’s sells few items at list price, they must be making the vast majority of the sales at discount. This means, for them to stay in business, the actual cost must be lower than the sales price, which is already substantially reduced. > . I don’t know that this is the case. Many people are busy professionals. Do they want to spend their time monitoring Macy’s sale fliers and picking through the sale racks hoping to find the item they want? Or do they want to go to the store, find the item they want, and leave? I hate shopping. I would not look at the Macy’s flier week after week waiting for the item I want to be on sale. It’s worth it to me to walk into the store and buy a shirt at that moment even though it might be $20-30 less during a sale. That savings is not worth the hassle for me. Having lots of sales allows Macy’s to attract both the customer who pays full price and the bargain hunter. I’m sure there are lots of people who do look at the fliers and come in specifically because of the sale. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 24, 2010, 4:56pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/23 "2010-08-24T16:56:23Z")
> [@zweisamkeit](#): > > I really wonder if Macy’s, now that they’re the main department store nationwide, has different tiers of “class”. Around here, the Macy’s stores seem pretty damn crappy. There are a few corners of the store with (way) overpriced fancier stuff, but most of it is the same kind of crap I can get at Kohl’s or Penney’s for cheaper. Yes. See [this post](http://boards.straightdope.com/sdmb/showpost.php?p=12591950&postcount=11) from a San Francisco resident who describes two very different Macy’s stores in that city. ---
**Author:** ![Lynn\_Bodoni](https://avatars.discourse-cdn.com/v4/letter/l/e47c2d/32.png) [@Lynn\_Bodoni](https://boards.straightdope.com/u/Lynn_Bodoni)\ **Post date:** [August 24, 2010, 6:06pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/24 "2010-08-24T18:06:03Z")
> [@](#): > > We’ve forgotten bargain basements today, when Filene’s Basement is the last remaining, but they accounted for up to 30% of the business of major department stores. Sort of a dirty little secret. The only time I ever got to shop in Sibley’s, the very upscale department store in Rochester, was when my mother went to the basement to look through the cheap stuff piled on tables. > > The huge downtown department stores were visual treats in many ways, but the reality was that they were mostly show, tricked out-amusement parks whose purpose was to lure people in who couldn’t afford to buy the glitzy merchandise dangled in front of them. Remember that five and dimes thrived right alongside the department stores. (Rochester had five in one downtown block.) Instead of bargain basements (and I remember shopping in them too) we have Big Lots and similar closeout stores. And instead of five and dimes, we have dollar stores. However, we don’t have the big displays in either of them. ---
**Author:** ![VinylTurnip](https://avatars.discourse-cdn.com/v4/letter/v/b2d939/32.png) [@VinylTurnip](https://boards.straightdope.com/u/VinylTurnip)\ **Post date:** [August 24, 2010, 6:08pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/25 "2010-08-24T18:08:17Z")
> [@spark240](#): > > I find _malls_ to be pallid imitations of urban shopping districts, which were once understood to be the home of department store edifices. Yeah… quite a while ago, I think. I’ve topped 40 and I don’t think I’ve seen an “urban shopping district with department store edifices” since before I sprouted hair in private places. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [August 24, 2010, 6:48pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/26 "2010-08-24T18:48:42Z")
> [@astro](#): > > Many people have become so inured to it they only shop the Macy’s sale prices and closeouts period. But there also is a certain percentage of customers (rich ones) where price doesn’t matter. They buy at the regular, full price. Often early, just as the new fashions come out. In effect, they subsidize the rest of us who buy at sales prices. When they pay $80 for the sweater that cost Macy’s $20, then 3 more of those sweaters could be given away free and Macy’s would still break even. But they aren’t free, some are sold at a “50% off sale” for $40, and some are sold at 70% off for $25, and a few go to the closeout rack at $15 or $20. So even when they have gone out of style and are on closeout, the store often breaks even on them. The few that are sold below cost have been covered by all the previous sales at higher prices. (And, as Student Driver mentioned, the store also does well on sales of accessories or matching items, usually at full price.) ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 24, 2010, 7:48pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/27 "2010-08-24T19:48:36Z")
> [@Exapno\_Mapcase](#): > > In addition, the Macy’s flagship store had some very high end departments that competed with upscale New York stores as well as a bargain basement. > > We’ve forgotten bargain basements today, when Filene’s Basement is the last remaining, but they accounted for up to 30% of the business of major department stores. Sort of a dirty little secret. The only time I ever got to shop in Sibley’s, the very upscale department store in Rochester, was when my mother went to the basement to look through the cheap stuff piled on tables. > > The huge downtown department stores were visual treats in many ways, but the reality was that they were mostly show, tricked out-amusement parks whose purpose was to lure people in who couldn’t afford to buy the glitzy merchandise dangled in front of them. Remember that five and dimes thrived right alongside the department stores. (Rochester had five in one downtown block.) > > If Macy’s really sold only the quality stuff that people remember it never would have stayed in business. It was a triumph of style over substance. They all were. In the old days the 34th street store was far more diverse than it is today, and certainly more than a mall Macy’s. They had a good book department, a magic shop, a toy store, and food in the basement. (I don’t remember a bargain basement as of the '70s, but there might have been one earlier. An old gf used to work in the real Filene’s basement in Boston.) I don’t know of any American department store like that now, though they still exist in Europe. I visited one in Berlin, and it made me quite nostalgic. Macy’s even today has a wider range than most places. I bought my last suit there, and good shirts, and I actually got upsold by an older woman who helped me pick out shirts to go with the suit. That’s a level of service I haven’t seen in years, and she definitely made her commission on me. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 24, 2010, 7:52pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/28 "2010-08-24T19:52:32Z")
> [@Hilarity\_N.Suze](#): > > Have you ever looked on the back of those 20% off everything cards to see all the things the card does NOT apply to? > > When I worked there, a couple of things got so marked down that I’m pretty sure they had to be seeling them at cost. Fifty percent plus an additional 20% plus an additional 15%…and of course there were a lot of things that never got sold at all. > > So yeah, the markup is huge. I wanted to buy a new coffeemaker, and I had a discount card - but it was no good, because the coffee maker was an excluded small electric. I did not buy it anyway, and went to a Sears down the corridor where I found the same thing for less than the sale price. Some place, Kohl’s I think, started advertising that their discount coupons were actually good on everything. The Macy’s long list of exclusion in small print is a joke at our house, and I’ve seen many people caught by it. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [August 24, 2010, 8:21pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/29 "2010-08-24T20:21:35Z")
Macys has a unique sales philosopy-they carry high-end brands (like Polo) which are not usually discounted. They also carry a huge amount of medium/low quality stuff, which is heavily discounted-hence the purpetual sales. They also FLOOD their stores with merchandise-it is sometimes impossible to walk around-because of the racks of stuff everywhere. I prefer stores like Lord&Taylor, or Nordstrom-at least you can see where you are! ---
**Author:** ![Shot\_From\_Guns](https://avatars.discourse-cdn.com/v4/letter/s/ccd318/32.png) [@Shot\_From\_Guns](https://boards.straightdope.com/u/Shot_From_Guns)\ **Post date:** [August 24, 2010, 8:50pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/30 "2010-08-24T20:50:26Z")
> [@VinylTurnip](#): > > I’ve topped 40 [hijack]!!![/hijack] > [@Voyager](#): > > In the old days the 34th street store was far more diverse than it is today, and certainly more than a mall Macy’s. They had a good book department, a magic shop, a toy store, and food in the basement. […] I don’t know of any American department store like that now, though they still exist in Europe. You still have department stores like that in Japan, too. ---
**Author:** ![Procrustus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/procrustus/32/2994_2.png) [@Procrustus](https://boards.straightdope.com/u/Procrustus)\ **Post date:** [August 24, 2010, 8:58pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/31 "2010-08-24T20:58:46Z")
Perhaps, like other stores, they make more on their credit card business than on their clothing business. They could sell their clothing at cost (or below) if they could get people to borrow money to buy them. ---
**Author:** ![VinylTurnip](https://avatars.discourse-cdn.com/v4/letter/v/b2d939/32.png) [@VinylTurnip](https://boards.straightdope.com/u/VinylTurnip)\ **Post date:** [August 24, 2010, 10:20pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/32 "2010-08-24T22:20:29Z")
> [@Shot\_From\_Guns](#): > > > [@VinylTurnip](#): > > > > I’ve topped 40 > > [hijack]!!![/hijack] Yeah, I know. Sorry if you were misled by my immaturity. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 24, 2010, 10:29pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/33 "2010-08-24T22:29:49Z")
> [@Procrustus](#): > > Perhaps, like other stores, they make more on their credit card business than on their clothing business. They could sell their clothing at cost (or below) if they could get people to borrow money to buy them. I believe that Citigroup operates the credit card business for Macy’s so I doubt that it makes much, if anything for Macy. (Many retailers have sold their credit card businesses in recent years.) ---
**Author:** ![SmackFu](https://avatars.discourse-cdn.com/v4/letter/s/53a042/32.png) [@SmackFu](https://boards.straightdope.com/u/SmackFu)\ **Post date:** [August 25, 2010, 12:27am UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/34 "2010-08-25T00:27:29Z")
The Macy’s in downtown Chicago, which I believe used to be Marshall Fields, is still an old-school department store, with restaurants, furniture floors, a bookstore, etc. ---
**Author:** ![Lynn\_Bodoni](https://avatars.discourse-cdn.com/v4/letter/l/e47c2d/32.png) [@Lynn\_Bodoni](https://boards.straightdope.com/u/Lynn_Bodoni)\ **Post date:** [August 25, 2010, 6:41am UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/35 "2010-08-25T06:41:59Z")
> [@](#): > > But they aren’t free, some are sold at a “50% off sale” for $40, and some are sold at 70% off for $25, and a few go to the closeout rack at $15 or $20. So even when they have gone out of style and are on closeout, the store often breaks even on them. The few that are sold below cost have been covered by all the previous sales at higher prices. Actually, a garment that is listed as costing $20 costs more than that. $20 is how much the store paid for that garment, BEFORE shipping and handling, and before the paperwork and processing is done. So when that garment arrives at the store, it might already have cost the store $23 or 24 dollars, even before the labor of opening the box and processing the garment starts. We had to count the garments and see that the correct sizes were shipped, and then we had to put them on hangers, price them, steam them if necessary (some garments arrived in a very wrinkled condition), and then put them out on the racks. Even though it only takes a few minutes to do this, when you have a few hundred garments the labor costs are going to add up. ---
**Author:** ![Shot\_From\_Guns](https://avatars.discourse-cdn.com/v4/letter/s/ccd318/32.png) [@Shot\_From\_Guns](https://boards.straightdope.com/u/Shot_From_Guns)\ **Post date:** [August 25, 2010, 4:57pm UTC](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235/36 "2010-08-25T16:57:29Z")
> [@VinylTurnip](#): > > Yeah, I know. Sorry if you were misled by my immaturity. More by the fact that nobody over 35 is allowed to be funny. [Previous page](https://boards.straightdope.com/t/more-sales-than-not-how-does-macys-make-money/551235.md?page=1)