For a while, it looked like the brick-and-mortar part of the retail industry would make a comeback after e-commerce giant Amazon hammered it for years. The brutal disappearance of companies like JCPenney, Kmart and Sears was over. Not so fast. Macy’s Inc. (NYSE: M) has announced large layoffs and several store closures. Management must see a storm coming, or perhaps the storm has already arrived.

Macy’s and AI

Macy’s will fire 2,350 people, many of them in corporate operations. That is nearly 4% of staff. Five stores will close. Part of the trigger may have been the ability to automate some jobs. Retailer workers have been concerned about this for years, and retail management has hoped artificial intelligence (AI) would allow them to cut costs. If AI is a cause, investors have something to cheer about. Retail is often described as one of the first industries that would benefit substantially from the improvements in AI software. Macy’s also said it would export some jobs, which might be a savings if workers overseas are paid less than their U.S. counterparts. (These 20 jobs are vulnerable to automation and AI takeover.)

What’s Next for Macy’s?

Macy’s stock trades just shy of $18 a share. A fairly good quarter announced in early December took the stock to $21. However, the stock traded for $25 last February. Its recent peak was $35 in November 2021.

Macy’s continues to try to find a place in the wider retail world. It is up against Nordstrom, Target, Gap, Kohl’s and even Gap in the clothes department. Walmart and Amazon continue to take the lion’s share of the entire industry in the United States. Macy’s has about 500 stores. Walmart has about 4,600. Amazon makes sales on every smartphone and computer.

Macy’s management has not developed a strategic plan that allows Wall Street to think it has a bright future.

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