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What kind of economy do we live in?
The contrasting fortunes of Macy’s, once a retail mainstay, and Nvidia, an artificial intelligence chipmaker that could become the most valuable company in history, are indicative of the turbulent reality in which Americans live.
Macy’s announced it would close 150 stores at the end of February amid shrinking sales and profits. A few years before the economic cycle, NVIDIA became one of the first publicly traded companies whose market capitalization, measured by total stock, reached $2 trillion.
The 166-year-old retailer and the 30-year-old tech startup represent different parts of the economy, but they’re also concerned about how different sectors are responding to changes that are reshaping the way we shop, work, and live. This is a summary of what we are working on.
While Nvidia develops chips that power AI that enable tasks from filling spreadsheets to smartphone functionality, Macy’s is responding to changing expectations among shoppers who want something different from the department stores of the past. I’m having a hard time catching up.
AI is “one of those technologies that will impact everyone, from the CEO to the frontline employee,” said Mukshit Ashraf, global lead at Accenture Strategy, a global professional services firm. .
But traditional department stores, which sell shoppers a wide range of products and once typified Macy’s, are becoming less and less important.
“We’ve seen it with J.C. Penney and Sears. Department stores don’t really resonate as much in the brick-and-mortar space,” said Zach Stamber, senior analyst at research firm eMarketer. It used to be that way. ”
“Retailers who have a very clear definition of who they are, what they offer, and what they are going to deliver will be successful, but what they are offering and what their customer base is. “Retailers who can’t clearly define what’s going to succeed will fall by the wayside,” he added.
Macy’s closes stores, shifts to luxury goods
After announcing in its latest earnings report late last month that net sales fell 1.7% in the fourth quarter and 5.5% for the year, Macy’s announced plans to revitalize its once storied brand.
The strategy, dubbed “A Bold New Chapter”, includes closing 150 “low productivity” floors, or about 30% of the site, by 2026, with about 50 of those floors to be closed by the end of this financial year. This includes being closed. Over the next three years, we will increase the number of small-format stores, open approximately 15 new Bloomingdale’s stores, and launch or renovate approximately 60 Bluemercury stores focused on skincare and beauty. We plan to further incline towards space.
“This bold new chapter is a powerful call to action,” Macy’s CEO Tony Spring said in a statement. We are taking the necessary steps to revitalize our relationship.” ”
These measures come even as consumers increasingly shop online, increasingly averse to fully stocked department stores and opting for smaller stores, often traditional, that offer a more customized experience. It could help Macy’s appeal to shoppers who prefer to shop outside the mall, industry and industry analysts said. experts say.
“We’re going to continue to shop in stores,” said Ray Wimmer, professor of retail practice at Syracuse University’s Martin J. Whitman School of Business. They visit often and think they’re getting some sort of differentiated experience… whether it’s the right brand, whether it’s saving them money, whether it’s great service. ”
Leave the mall and enter the community
Macy’s plan, likely to focus on smaller stores outside of traditional enclosed malls, is also a nod to the work-life changes that have taken hold since the pandemic.
“Especially in a world where people are increasingly working at least partially remotely, finding a location outside of the mall where people live gives them the ability to connect with consumers that they might not have otherwise.” It gives you an opportunity to build relationships,” Stamber says.
Physical stores will not disappear
Macy’s is closing dozens of stores, but the openings of new upscale and smaller stores highlight how brick-and-mortar stores remain an important part of the retail industry, despite the rise of e-commerce. There is.
eMarketer predicts that by 2027, online sales will account for 20.5% of all retail sales, up from an expected 16.6% this year.
Macy’s to close 150 storesMacy’s announces it will close 150 “low-productivity” stores by 2026
“But that still means 79.5% of retail sales are offline,” Stamber says.
Household staples like laundry detergent may eventually be available primarily at the click of a button, but many shoppers will continue to want to touch furniture, clothing, and other items in person. You would think so.
“You don’t have to ask customer service whether Cottonelle or Charmin is better, but…when you’re buying a TV, having a knowledgeable salesperson can be very helpful,” says Stamber. In physical stores, there’s a reason why many retailers continue to open more stores and locations,” he says, but adds, “The role of those stores will certainly change.” Ta.
Nvidia rides the AI wave
While changing consumer preferences are driving Macy’s move, Nvidia’s AI push may outpace public demand.
A 2023 Pew Research survey found that half of American adults say they feel more anxious than excited about AI in their daily lives, but only 10% are mostly excited. The “concerned” crowd has swelled in three years of polls.
But whether we’re ready or not, if industry predictions come true, most of us will have to learn to live and work with AI.
Nvidia’s $2 trillion market cap late last month marked a milestone, suggesting investors believe the company’s ultra-fast processors will fuel the surge in AI.
Consumers are already encountering AI in the marketplace and in their daily lives, even if they don’t know it. Consider how the iPhone predicts the next word in text or how Excel predicts the next move in a spreadsheet.
From Amazon product recommendations to AI-generated articles, there’s a lot of AI online. And we’ve all chatted with an AI assistant on our AI-powered smartphones.
“I can’t remember the last time I called customer service and didn’t have to go through a chatbot before speaking to a human,” says James Sidelius, assistant professor of business administration at Dartmouth’s Tuck School of Business.
AI will someday take notes for you
And as AI matures, we’re likely to see more of that.
In the next few years, “the scenario is that AI will be built into this stack of applications and solutions that everyone uses,” says Seth, vice president of industry research at the Computing Technology Industry Association (CompTIA).・Mr. Robinson says.
He said, “You’re already using Microsoft Word and Google, and they have AI built into them.” For example, if your email service flags a potential scam, you can thank AI.
“But as AI advances, it will be used for much more than that,” Sidelius says.
One day, your AI companion might be taking notes in a meeting, booking an appointment, or comparing calendars with other AI companions to schedule meetings. And experts say that at some point, AI and human content will become indistinguishable.
AI is likely to have an even bigger impact on college-educated workers
Goldman Sachs reported in a 2023 study that two-thirds of existing jobs are “exposed to some level of AI automation.” The study also found that AI could “replace” up to a quarter of all current tasks.
What’s behind Nvidia’s rise?Why Meta, Amazon and other ‘Magnificent Seven’ stocks soared today
The great industrial innovations of the past sometimes threatened the jobs of America’s working class. Remember when we talked about robots replacing assembly line workers?
But AI is an innovation expected to disproportionately impact college-educated, high-wage workers, Pew Research found. White and Asian workers are more exposed to AI than black and Hispanic workers, and more women than men, the Pew study found.
Want to avoid AI? Take a job as a barber, dishwasher, or pipeworker. Want to jump in? Work as a tax preparer, technical girlfriend writer, or web developer.
AI “kind of changes the narrative a little bit because it affects the people who write and the people who code,” says Lisa Simon, chief economist at workforce intelligence firm Rebellio Labs.
According to a 2023 analysis by Bizreport.com, AI jobs pay 77.5% more than non-AI jobs. The average annual salary for AI jobs in Connecticut is $176,000.
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