613. Dying Is Easy. Retail Is Hard.

0:00:02 (dramatic music)
0:00:05 On Thanksgiving morning,
0:00:08 roughly 30 million people will catch at least
0:00:11 some of the Macy’s Thanksgiving Day Parade on TV.
0:00:13 For a lot of them, it wouldn’t feel like
0:00:15 Thanksgiving without the parade.
0:00:18 Last week, we spoke with the parade’s executive producer,
0:00:19 Will Kos.
0:00:22 I asked him why it’s so popular.
0:00:25 His answer was pure tevia.
0:00:28 I’d say tradition.
0:00:32 Tradition, tradition, tradition is at the core.
0:00:34 It’s really about having this thing,
0:00:37 this giant thing that shows up for you.
0:00:39 Everything’s giving morning
0:00:41 and it’s gonna be a little bit of spectacle,
0:00:43 a little bit of kitsch, a little bit of art.
0:00:46 It’s become a moment in time for all of us
0:00:47 to drive back to.
0:00:51 But even our favorite traditions
0:00:54 are not guaranteed their place in the future.
0:00:58 The Macy’s department store has been around for 166 years
0:01:01 and they’ve put on a parade for the past 100.
0:01:03 We spent last week trying to figure out
0:01:06 how much money Macy spends to make the parade
0:01:11 and how much they earn from sponsorships and TV ad sales.
0:01:14 That was one part of this story that interested us.
0:01:17 The other part is the future of retail itself
0:01:21 or at least the kind of retailing represented by Macy’s.
0:01:23 They like to call the parade their annual gift
0:01:26 to the nation, which is a nice sentiment.
0:01:29 But there are two things you should know about that.
0:01:34 This gift is likely quite profitable for the giver,
0:01:35 which is unusual.
0:01:38 Also, the Macy’s parade may be
0:01:42 one of the most valuable assets that Macy still has.
0:01:44 For most of the 20th century,
0:01:46 Macy’s was a retailing giant,
0:01:49 but it’s been in trouble for years.
0:01:51 And if it were to disappear
0:01:54 the way that Sears and Montgomery Ward
0:01:57 and Lord and Taylor and many other department stores
0:02:01 have disappeared, the parade would likely disappear as well.
0:02:05 How likely is it that Macy’s disappears?
0:02:08 That’s one of the questions we’re asking in this episode.
0:02:11 Macy’s is a publicly traded company
0:02:14 worth a bit more than $4 billion.
0:02:16 That is not very much.
0:02:20 The target chain is worth about $60 billion.
0:02:24 Walmart, 720 billion.
0:02:27 Macy’s real estate is thought to be worth roughly double
0:02:30 its $4 billion stock market value.
0:02:32 You could take that to mean
0:02:34 that Macy’s simply is no longer very good
0:02:35 at being a department store
0:02:39 or that department stores in general are doomed.
0:02:41 Over the years on this show,
0:02:43 we’ve interviewed quite a few CEOs
0:02:46 and most of them were in thriving industries,
0:02:50 biotech and software, energy and entertainment.
0:02:53 We haven’t talked much about the retail industry,
0:02:55 but the fact is that a huge share
0:02:58 of the global economy is a retail economy.
0:03:03 So we thought this was a conversation worth having.
0:03:05 Today on Freakinomics Radio,
0:03:09 Macy’s CEO Tony Spring makes his case.
0:03:11 – We are not just a retailer.
0:03:13 We are not just a physical store.
0:03:17 We are a celebrator of life’s moments.
0:03:19 We also hear a dissenting voice.
0:03:22 – Until it’s successful, keep your mouth shut
0:03:24 because you create expectations
0:03:25 that may not be realistic.
0:03:27 – And we look at another retailer
0:03:29 who is swimming against the tide.
0:03:32 – I drove by the bookstore and I could see in the window
0:03:35 that people were really enjoying themselves
0:03:36 and I thought that’s what I want.
0:03:40 – But is wanting something enough to make it happen?
0:03:42 (upbeat music)
0:03:53 – This is Freakinomics Radio,
0:03:56 the podcast that explores the hidden side of everything
0:03:59 with your host, Stephen Dubner.
0:04:01 (upbeat music)
0:04:09 – Tony Spring became CEO of Macy’s
0:04:11 in February of 2024
0:04:12 and he was appointed chairman of the board
0:04:14 a couple months later.
0:04:16 He is proud of his parade,
0:04:19 but he recognizes that a parade isn’t enough.
0:04:22 – I want to be perceived as giving this gift
0:04:23 to the city and to the nation.
0:04:25 I also want to do a lot of business.
0:04:27 I’ll give you an adage that one of my former colleagues
0:04:28 at Bloomingdale said to me,
0:04:30 we want to win an Oscar.
0:04:32 We also want to win at the box office.
0:04:34 – So you grew up just north of New York City
0:04:35 in Westchester County.
0:04:36 – I did.
0:04:41 – How much did you know about or go to Macy’s as a kid?
0:04:43 – I certainly went to Macy’s Herald Square
0:04:45 and it felt like an adventure.
0:04:47 Everything was overwhelming.
0:04:51 The oversized ceilings, the environments, the storytelling.
0:04:52 I love this.
0:04:54 – Those old wooden escalators.
0:04:57 – And they are still there functioning to this day.
0:04:59 But I actually fell in love with retail
0:05:01 working in hospitality.
0:05:03 I worked in a Burger King restaurant
0:05:05 when I was in high school.
0:05:07 I remember starting that job
0:05:09 and feeling like working with the customer
0:05:12 was the most exciting thing, hearing the cash register ring,
0:05:14 being able to serve consumers.
0:05:16 But that first week on the job,
0:05:18 all I was doing was cleaning the parking lot.
0:05:20 After about a week, the manager pulled me aside.
0:05:21 He said, do you know why you were working
0:05:23 in the parking lot for a week?
0:05:24 I said, I have no idea.
0:05:27 He said, because that’s the first impression
0:05:28 that people have.
0:05:29 And if the parking lot is dirty,
0:05:31 they think the restaurant is dirty.
0:05:32 They don’t think the food is fresh.
0:05:35 And that first impression mentality stuck with me
0:05:37 all throughout my retail career.
0:05:40 – Spring went to Cornell University
0:05:43 and studied in its world famous hospitality school.
0:05:46 There he met a recruiter from Bloomingdale’s,
0:05:50 a beloved old luxury retailer in New York City.
0:05:52 They were looking to place Cornell graduates
0:05:54 in their executive training program.
0:05:56 Maybe you remember the Seinfeld episode
0:06:00 where Jerry’s parents want him to quit comedy
0:06:03 and join the Bloomingdale’s executive training program?
0:06:05 Jerry wasn’t interested,
0:06:08 but Tony Spring was and he loved it.
0:06:10 This was in 1987.
0:06:15 – The company was well known for of the moment ideas.
0:06:17 If you remember back in the late ’80s,
0:06:19 there were these rocking flowers
0:06:22 that came out of Asia that moved to music.
0:06:25 Bloomingdale’s, they were the ones who sold the mood rings.
0:06:28 They sold a piece of the Berlin Wall when it came down.
0:06:30 They had merchandise out of India
0:06:32 and out of China before anyone else.
0:06:33 – Bloomingdale’s had by then
0:06:36 long been part of a retail conglomerate called Federated.
0:06:40 Macy’s tried to acquire Federated, but failed.
0:06:44 Soon after, Federated entered bankruptcy.
0:06:47 Couple years later, Macy’s entered bankruptcy,
0:06:50 at which point Federated came out of bankruptcy
0:06:53 and acquired Macy’s, got that.
0:06:56 Federated became the biggest department store company
0:07:00 in the US, but they also knew the power of the Macy’s brand.
0:07:04 So they changed the company name to Macy’s, Inc.
0:07:08 and rebranded many of their other stores as Macy’s.
0:07:09 Although not Bloomingdale’s,
0:07:12 that brand was strong enough to stand on its own.
0:07:15 In 2015, Macy’s, Inc.
0:07:18 acquired the high-end beauty retailer, Blue Mercury.
0:07:20 So those are the three main brands
0:07:22 that today make up Macy’s, Inc.
0:07:26 Blue Mercury, Bloomingdale’s, and Macy’s.
0:07:29 For now, Tony Springs says they will remain separate,
0:07:34 but the mix will change as Macy’s itself continues to shrink.
0:07:38 Back in 2007, there were more than 800 Macy’s stores.
0:07:39 Now there are fewer than 500,
0:07:43 and that number is due to fall again soon by quite a lot.
0:07:47 So Tony Springs’ job is to at least stop the bleeding.
0:07:50 He does have a positive attitude.
0:07:54 Even though a lot of America needs to re-embrace Macy’s,
0:07:57 there’s still plenty of people who are shopping at Macy’s.
0:07:59 41 million active consumers,
0:08:03 five different generations shopping at Macy’s.
0:08:06 – Earlier this year, Tony, you faced a takeover challenge
0:08:08 from the investment firm, Arc House,
0:08:10 and the asset manager, Brigade.
0:08:11 And this was not the first time
0:08:14 that activist investors have come after Macy’s.
0:08:16 The current market capitalization of your firm
0:08:19 is only around 4.2 billion as we speak,
0:08:23 and Arc House offered 6 billion, I believe.
0:08:26 I’ve read that your real estate portfolio
0:08:30 is worth between $7 billion and $11 billion.
0:08:32 First of all, does that estimate seem about right?
0:08:33 Do you or no?
0:08:36 – I’ll leave that to the real estate experts.
0:08:39 – All right, so what’s your best case to shareholders
0:08:41 for why they should be happy
0:08:44 that you turned down that offer?
0:08:45 – Let’s put it in context.
0:08:48 It was a proposal, not an offer.
0:08:49 It wasn’t fully financed.
0:08:52 After seven months of due diligence,
0:08:55 the board unanimously voted to move on
0:08:58 and focus on creating value for our shareholders.
0:09:01 We remain open to a valuation that is higher
0:09:04 than we are today, but the most important thing
0:09:06 we can do as a leadership team
0:09:08 is get to work on delivering a better experience
0:09:09 for the consumer.
0:09:11 – Okay, so the market cap is real.
0:09:12 That’s verifiable.
0:09:14 Let’s call it 4.2 billion.
0:09:16 Let’s say that that real estate estimate
0:09:18 between $7 and $11 billion.
0:09:21 Let’s assume that that’s accurate-ish.
0:09:23 What does it say that your market cap
0:09:27 is roughly half of the real estate value?
0:09:29 – Now is the time to buy Macy’s.
0:09:31 (laughs)
0:09:32 – Okay, anything more on that though?
0:09:34 Because, you know, if I’m in…
0:09:35 – Well, I mean, I look at it as being
0:09:38 an absolutely attractive stock to buy.
0:09:40 The multiple is low.
0:09:42 The company has made a commitment
0:09:44 to turn itself around
0:09:46 and deliver a better experience for the customer.
0:09:49 It’s a portfolio company, so it’s not just Macy’s.
0:09:52 You get Bloomingdale’s and Blue Mercury.
0:09:54 And you’re at a moment in time
0:09:56 where there’s been so much disruption at retail.
0:09:59 If I could get in at an inexpensive price,
0:10:02 why wouldn’t I wanna capitalize on the future
0:10:03 of what this company is?
0:10:06 And then by the way, the real estate has value.
0:10:08 The company’s also proven over the last seven years
0:10:11 we’ve monetized over $2.5 billion worth of real estate.
0:10:13 – Monetized meaning sold?
0:10:14 – Sold.
0:10:16 So to your point, how can the sum of the parts
0:10:18 not be worth more?
0:10:20 Look, I don’t get to value the company.
0:10:23 I can only comment on how the company’s been valued.
0:10:25 We are a retail company first.
0:10:29 We enjoy and benefit from a great portfolio of real estate.
0:10:31 And we’ll continue to look at opportunities
0:10:36 to both acquire assets as well as divestive assets.
0:10:39 – When we’re talking about the value
0:10:41 of Macy’s Inc. real estate,
0:10:43 we’re really talking about the bigger Macy’s
0:10:45 and Bloomingdale’s locations
0:10:47 where the company owns the building.
0:10:49 They rent most of their smaller stores
0:10:52 as well as their Blue Mercury locations.
0:10:55 Tony Spring is planning to close and sell
0:10:58 around 150 of the bigger Macy’s stores.
0:11:01 This should raise roughly half a billion dollars.
0:11:05 At the same time, he plans to open some smaller Macy’s stores
0:11:08 and to expand Bloomingdale’s and Blue Mercury.
0:11:10 – We are ambitious, we are hungry,
0:11:13 we are interested in being better in the future.
0:11:16 You essentially have a healthy company
0:11:19 that has you throw in the parade, the fireworks,
0:11:22 the flower show, a relevancy gap
0:11:25 that will be addressed by this leadership team.
0:11:27 – I’m glad you brought up the parade, Tony.
0:11:29 No one we’ve spoken with at Macy’s
0:11:33 wants to talk about the economics of the parade.
0:11:35 It’s plainly expensive to produce,
0:11:39 but based on a rough calculation of sponsorship dollars
0:11:41 and TV ad sales,
0:11:44 it’s obviously quite valuable to you as well.
0:11:49 Is it possible that the parade is the most valuable asset
0:11:51 in the Macy’s portfolio?
0:11:53 – I would say the most valuable,
0:11:55 but I would say it’s a valuable asset
0:11:57 in the Macy’s portfolio.
0:11:59 The same way I would say Harold Square
0:12:01 is a valuable asset in our portfolio.
0:12:03 This is the advantage I think we have.
0:12:05 We are not just a retailer.
0:12:08 We are not just a physical store.
0:12:11 We are a celebrator of life’s moments.
0:12:13 I use the ordinary to the extraordinary.
0:12:16 The ordinary of I just need to run in and get a pair of socks.
0:12:20 I just need to get a new pair of jeans to the extraordinary,
0:12:21 the parade, the fireworks,
0:12:23 and how about your 50th birthday party?
0:12:26 How about you’re, hopefully you’re one marriage
0:12:27 to the person you love.
0:12:28 How about the birth of your son?
0:12:32 I mean, these are the moments that I think Macy’s
0:12:35 can be and should be and is known for.
0:12:37 (gentle music)
0:12:45 – And here’s someone who is not quite as confident
0:12:47 about the future of Macy’s.
0:12:50 – Macy’s has a hell of a challenge over the next few years
0:12:51 to remain upright,
0:12:54 let alone become successful as they once were.
0:12:56 – That is Mark Cohen.
0:12:58 – M-A-R-K-C-O-H-E-N.
0:13:00 – Cohen recently retired as a professor
0:13:04 and director of retail studies at Columbia Business School.
0:13:07 Before that, he worked for 30 years in the retail business.
0:13:10 His first job was at Abraham and Strauss,
0:13:12 which no longer exists.
0:13:16 His final job was as CEO of Sears Canada,
0:13:18 which also no longer exists.
0:13:21 I asked Cohen why the Columbia Business School
0:13:23 even teaches retail studies.
0:13:26 – It’s not the sexiest industry.
0:13:29 It is arguably the largest.
0:13:33 Retailing is 70 to 80% of the world’s economy.
0:13:37 There’s been an enormous resurgence in interest in retailing,
0:13:40 largely on the side of entrepreneurship.
0:13:41 I would also point out
0:13:45 that some of the world’s largest individual fortunes
0:13:48 have been made coming out of retail,
0:13:50 obviously the Walton family.
0:13:54 Then there’s the ubiquitous Jeff Bezos experience at Amazon.
0:13:57 – Zara is a big one into techs, right?
0:13:57 – You bet.
0:14:00 – LVMH, a different kind of retail, I guess,
0:14:01 but still retail.
0:14:02 – That’s right.
0:14:04 – So some retailers are obviously thriving.
0:14:08 And I’ve seen data suggesting that the e-commerce apocalypse
0:14:11 just hasn’t happened, that good brick and mortar has a future.
0:14:14 But let’s take a case study of failure.
0:14:16 Let’s talk about Sears.
0:14:19 They were massive, and now they’re pretty much dead.
0:14:23 You were a senior executive at Sears before its demise.
0:14:26 I assume it wasn’t your fault, but…
0:14:29 – No, it wasn’t my fault.
0:14:30 The underlying issue in retailing
0:14:33 is the customer has never disappeared.
0:14:35 The customer has never gone away.
0:14:38 The customer, worldwide, is hard-coded
0:14:40 to want to shop for things,
0:14:44 the only self-limiting issues being their economic capability
0:14:47 and their proximity to a marketplace.
0:14:49 At the turn of the 20th century,
0:14:52 customers in the United States were able to shop
0:14:55 by coming downtown to shop
0:14:59 in an emerging department store emporium.
0:15:01 They also began to be able to shop
0:15:04 in the early 20th century through catalogs
0:15:06 like Sears Robux.
0:15:09 If you couldn’t find it in a Sears catalog,
0:15:10 you didn’t need it.
0:15:13 You could buy everything from a barrel to a,
0:15:15 you build it, house.
0:15:17 And they built out the facility
0:15:20 with which to fulfill customer demand,
0:15:22 literally throughout the United States.
0:15:25 In the aftermath of World War II,
0:15:29 millions of servicemen began to return from overseas
0:15:33 and were eager on catching up on their lives
0:15:35 and forming households.
0:15:38 They began to migrate from urban centers
0:15:42 and rural communities into newly formed suburbs.
0:15:46 Dwight Eisenhower, the US president in the ’50s,
0:15:48 has a lot to do with the emergence
0:15:51 of mid-20th century retail
0:15:55 when he caused the interstate highway system to be built,
0:15:57 having come out of World War II
0:16:02 and witnessing the efficacy of the German Autobahn.
0:16:04 His rationale was we have to have a way
0:16:08 to move men and material north, south, east and west
0:16:11 efficiently as opposed to a cross two-lane black top,
0:16:15 which is what connected the United States at that time.
0:16:16 Of course, we were never invaded.
0:16:19 There was no reason for the interstate highway system
0:16:22 to be an adjunct of the defense department.
0:16:27 What it did was it spawned an enormous amount of migration
0:16:29 into newly formed suburbs,
0:16:32 which were being built in close proximity
0:16:34 to these interstate highways.
0:16:39 So there was this emergence of suburban-based mall retailing
0:16:43 which hollowed out traditional downtown-based retailing
0:16:45 in hundreds of US cities.
0:16:47 Sears was one of those department stores
0:16:50 that migrated to the suburban malls.
0:16:54 And they became the largest retailer in the world
0:16:56 through the 1960s.
0:16:58 So what happened to Sears?
0:17:03 Success, in many cases, brings complacency, hubris.
0:17:09 Success seeds failure in many enterprises
0:17:11 as they become larger and larger
0:17:14 and become convinced that they are the last word.
0:17:18 It was a very insular, inwardly-facing business.
0:17:21 In fact, when the two founders of Home Depot
0:17:24 came to visit Sears Robuck some years ago,
0:17:26 looking to get some financial support
0:17:29 to launch their business,
0:17:32 they basically got laughed out of the meeting
0:17:35 by senior executives at Sears who looked at them
0:17:39 as upstarts who had nothing to offer.
0:17:42 Okay, that’s Mark Cohen on the rise and fall of Sears.
0:17:45 How about Macy’s at its peak?
0:17:48 Macy’s was a brilliantly constructed
0:17:50 general merchandise emporium,
0:17:54 servicing customers from low-middle income
0:17:57 all the way up into near luxury.
0:17:59 They were very good-looking stores
0:18:02 that were very powerfully merchandised,
0:18:05 topical and current,
0:18:07 and they did it very consistently.
0:18:10 When you say it was powerfully merchandised,
0:18:11 I’ve read you write before about
0:18:13 what makes a good store good and a bad store bad.
0:18:15 What are some things that Macy’s did
0:18:16 when they were very good?
0:18:19 One of the most important things they did
0:18:22 was they created a over-large business
0:18:26 consisting of housewares products
0:18:28 by creating on the lower level
0:18:29 of their Herald Square store
0:18:31 something they called the seller.
0:18:33 Good use of underground real estate too.
0:18:36 Yes, so they took a whole variety of categories
0:18:38 that were not up until that point
0:18:41 viewed as particularly sexy or fashionable.
0:18:43 They gave them a home,
0:18:45 amped up their presentation,
0:18:48 and built a business that customers
0:18:51 would previously have seen as a place
0:18:53 to buy utility products.
0:18:55 We need another frying pan
0:18:58 to a place to buy an entire suite of cookware.
0:19:00 And they did it brilliantly.
0:19:02 It was putting the puzzle pieces together
0:19:04 in a way that hadn’t been done before.
0:19:07 Which decades were the strongest decades for Macy’s?
0:19:11 Probably the ’60s and ’70s.
0:19:13 How profitable was Macy’s in its heyday?
0:19:14 It was very profitable.
0:19:16 I don’t have a specific number to say,
0:19:19 but they were viewed as good as it gets.
0:19:21 How fashionable were the clothes
0:19:23 at Macy’s during its heyday?
0:19:24 Very fashionable.
0:19:28 They were purveyors of the best brands of the day.
0:19:32 And Macy’s also invested in a whole portfolio
0:19:34 of private label brands
0:19:37 in both apparel and accessories and in home.
0:19:39 So you’re telling us all these things that Macy’s did,
0:19:41 basically what Macy’s stood for
0:19:43 for these several decades.
0:19:45 When you look at Macy’s today,
0:19:47 what does it stand for?
0:19:49 Well, unfortunately, and in my view,
0:19:51 Macy’s doesn’t stand for anything today.
0:19:54 A consumer facing enterprise,
0:19:58 a brand, a store, a website has to stand for something.
0:20:00 It has to have a point of view
0:20:03 that not only is recognized by customers
0:20:06 as something they want to associate with,
0:20:09 but differentiates itself from competition
0:20:12 and is able to defend itself from competition.
0:20:15 So what’d they do wrong in these last several decades?
0:20:20 Well, Macy’s began to prop up their lagging productivity
0:20:25 and they began to play the last man standing game.
0:20:26 You know, buy your competition
0:20:28 and decide that’s the secret to life
0:20:30 because now you don’t have to compete
0:20:32 with someone head to head.
0:20:36 They also consolidated all of their regional banners
0:20:38 under the heading Macy’s.
0:20:43 They did this in an attempt to retain their relevance,
0:20:45 which was under tremendous pressure
0:20:48 because of all of these specialty store chains.
0:20:52 And then the big box off mall retailers
0:20:55 started to do an enormous amount of volume.
0:20:59 And then of course, there’s Jeff Bezos, Amazon.
0:21:02 I’m curious as Macy’s business and reputation
0:21:04 founded for all these decades,
0:21:07 what kind of brands would no longer sell to them
0:21:09 because they don’t want their stuff in a Macy’s?
0:21:13 Well, Macy’s has historically abused their vendor community.
0:21:17 And I’ve used that word and some former CEOs
0:21:19 at Federated Macy’s have objected to it,
0:21:21 but they can’t object very loudly
0:21:24 because they know damn well that I’m telling the truth.
0:21:29 They have been historically tremendously one-sided
0:21:31 in their behavior.
0:21:35 Many brands grudgingly supported their merchandise
0:21:35 being sold at Macy’s
0:21:38 ’cause they did not have an alternative.
0:21:40 They now have alternatives.
0:21:43 What specifically did Macy’s do to their vendors
0:21:45 that you’re calling abusive, paying late,
0:21:47 not marketing well, what was it?
0:21:52 They would be pounded for best price upfront.
0:21:55 And then there would be demands made for advertising
0:21:57 and presentation allowances,
0:22:00 demands made for gross margin guarantees,
0:22:05 markdown protection, exclusives.
0:22:06 In other words, if you sell us,
0:22:08 you can’t sell anybody else.
0:22:12 Macy’s played the, we want it all our way game
0:22:13 for many, many years.
0:22:16 And many brands basically took a deep breath
0:22:18 and did business with them
0:22:21 because that was the only game in town for their merchandise.
0:22:24 So if we were talking 10 years from now,
0:22:26 do you think Macy’s still exists?
0:22:27 It’s problematic.
0:22:30 They have survived several attempts by activists
0:22:35 to move into the stock, to monetize their assets,
0:22:37 which is principally their real estate.
0:22:39 And they’ve all failed because frankly,
0:22:41 there’s no they’re there,
0:22:43 even though you could argue that Harold Square
0:22:45 in New York Union Square in San Francisco
0:22:48 are worth an enormous amount of money.
0:22:51 Is there a buyer who’s going to pay billions of dollars
0:22:54 to put an office tower on top of Harold Square?
0:22:56 Answer is no.
0:22:59 – So Mark, I am not a business analyst of any sort,
0:23:01 but when I look at Macy’s,
0:23:03 I see a company whose market cap is a bit
0:23:07 over $4 billion with a real estate portfolio,
0:23:09 estimated at roughly double that.
0:23:12 And when I look at their other assets,
0:23:15 their Thanksgiving Day Parade is massive,
0:23:18 not only as marketing for the brand itself,
0:23:19 but as a profit center.
0:23:22 They’re selling sponsorships for the balloons and floats
0:23:23 and who knows what else.
0:23:26 And they’re getting a share of the ad sales
0:23:28 for one of the biggest TV events of the year.
0:23:32 So am I crazy, Mark,
0:23:34 for thinking that the Macy’s Parade
0:23:37 is maybe the single most valuable asset
0:23:39 that Macy still has?
0:23:40 – Well, you’re not crazy,
0:23:42 but you have to reflect on the fact
0:23:43 that for anything to have value,
0:23:46 there has to be someone who holds the value
0:23:49 and someone who has an interest in possessing the value.
0:23:54 Would the Super Bowl ad madness have any firmament
0:23:59 if there was no Super Bowl supporting that three hour window?
0:24:04 So the Parade has been forever attached to Macy’s
0:24:06 as a name and over the years,
0:24:10 it became a commercial issue unto itself.
0:24:13 They don’t tell you how much it costs to put on the Parade
0:24:16 and they won’t tell you how much they receive in return.
0:24:19 They will never reveal it unless it was required by law.
0:24:23 It is likely to be a substantial profit generator.
0:24:26 Nothing gets presented during the Parade
0:24:29 that doesn’t have a price tag attached.
0:24:33 But of course, it doesn’t translate these days
0:24:36 into footsteps to doing business inside the store.
0:24:39 – After the break,
0:24:41 Tony Spring thinks he knows how to get the footsteps
0:24:43 inside the store.
0:24:44 I’m Steven Dubner.
0:24:45 This is Freakonomics Radio.
0:24:46 We’ll be right back.
0:24:57 We’ve been talking about the fate of Macy’s
0:24:59 with Mark Cohen,
0:25:02 a former retail executive and business school professor
0:25:06 and Tony Spring, the CEO of Macy’s.
0:25:09 Spring spent nine years as CEO of Bloomingdale’s,
0:25:12 a more upscale store within the Macy’s portfolio.
0:25:16 And in early 2024, he took over the mother ship.
0:25:20 Spring knows, as does the entire retail industry,
0:25:23 that Macy’s ink is not in great shape.
0:25:26 So he has been asked to engineer a turnaround.
0:25:30 He came up with a strategy called a bold new chapter.
0:25:32 – The strategy is made up of really strengthening
0:25:34 the Macy’s brand.
0:25:37 And that includes divesting about 150 stores
0:25:39 that are no longer relevant.
0:25:41 – When Spring says divesting,
0:25:43 that means shutting down the failing stores
0:25:45 and selling the real estate.
0:25:49 What else is in the bold new chapter strategy?
0:25:51 – It’s investing into the improvements
0:25:53 within our merchandise assortment.
0:25:56 We’ve revamped the entire private brand portfolio,
0:25:58 exiting brands that were no longer relevant,
0:26:00 introducing new brands that resonate
0:26:03 with multi-generations of consumers.
0:26:05 – I asked for an example of this.
0:26:08 – Right now you have this trend on young kids,
0:26:10 boys wearing perfume, you know, cologne.
0:26:12 They’ve seen it on social media, on TikTok.
0:26:14 And so we got to lean into that.
0:26:15 We got to have the best assortment
0:26:17 of perfumes and colognes for kids
0:26:20 so that they think of Macy’s as being a great destination
0:26:22 to buy their fragrances.
0:26:25 – Okay, what else is Tony Spring working on?
0:26:27 – Improving the condition of our stores,
0:26:30 more staffing, better visual presentation,
0:26:32 embracing different store formats.
0:26:35 And then at the Bloomingdale’s and Blue Mercury brands,
0:26:38 it’s leaning into the affluent and luxury consumer.
0:26:41 And surrounding it is this desire to take cost
0:26:44 that is not visible to the consumer through automation,
0:26:47 through reducing complexity out of the business
0:26:50 so that we can give the customer just a better experience
0:26:51 no matter how they shop.
0:26:53 – So here’s something you’ve said in the past.
0:26:56 I love stores, I’m a store guy,
0:26:58 but bad stores are bad stores.
0:27:00 You just told me that you are planning
0:27:03 to close a lot of stores that are no longer relevant.
0:27:05 What makes a bad store bad?
0:27:08 What makes an irrelevant store irrelevant?
0:27:10 – You’re the last store open in the mall.
0:27:15 The store was built in 1965 for a different time period.
0:27:18 The store has a roof that’s about 37 years old
0:27:20 on a 30-year lifeline.
0:27:21 The elevator doesn’t work,
0:27:23 the escalator breaks five times a year.
0:27:25 The brands don’t wanna sell us,
0:27:27 so it’s made up of private brands
0:27:30 and brands that don’t care about their points of distribution.
0:27:32 – I’m looking at something here, Tony.
0:27:36 It’s a consumer survey with 1,200 respondents.
0:27:41 It shows that awareness of Macy’s is incredibly high, 88%.
0:27:44 But then when you look at the other categories,
0:27:49 Macy’s popularity, usage, loyalty, Macy’s buzz,
0:27:52 those are all in the 20 to 30% range.
0:27:55 That is an unbelievable gap.
0:27:58 So what makes you think you can recover from that?
0:28:01 – I’m a big believer in self-awareness and ambition.
0:28:02 You need to know who you are
0:28:04 before you can get to what you want to be.
0:28:07 We spent a greater part of 18 months
0:28:09 basically saying we’re not good at this,
0:28:12 we need to work on that, this needs to be stronger.
0:28:14 We did our own version of that same survey
0:28:16 which said high level of awareness,
0:28:18 not a strong enough level of conversion.
0:28:20 The issue remains with us.
0:28:23 How well do we execute our strategy?
0:28:25 How fast do we move?
0:28:27 How well do we communicate those changes?
0:28:30 – So there is a practice among some businesses
0:28:32 called a pre-mortem.
0:28:33 I don’t know if you’ve ever heard of this.
0:28:35 – I am very fond of it.
0:28:39 – So you imagine that things have failed
0:28:41 and then before it has a chance to fail,
0:28:43 you sit and think, well, why would it have failed?
0:28:45 And let’s fix that now.
0:28:48 So if you were to pre-mortem Macy’s Inc. right now,
0:28:52 what do you think are the biggest existential threats
0:28:54 to its continued longevity?
0:28:55 Is it online shopping?
0:28:57 Is it discount retailers?
0:29:00 Is it maybe people just deciding to buy less stuff,
0:29:01 et cetera, et cetera?
0:29:03 – I think disintermediation,
0:29:06 the brands being able to go directly to the consumer,
0:29:08 the brands deciding that you are not as important
0:29:10 a point of distribution.
0:29:13 And this comes down to being a people business.
0:29:15 The people that are attentive,
0:29:18 return your phone calls, texts or emails,
0:29:21 pay you on time, treat your brand with respect.
0:29:23 Those are the people that are gonna continue to sell you
0:29:25 or wanna sell you in the future.
0:29:28 – Name a brand partner or two that’s pulled out of Macy’s
0:29:30 over the last five or 10 years.
0:29:31 – Nike would be one.
0:29:34 They took an 18 month break and then decided
0:29:36 that they needed more points of distribution
0:29:39 and we’ve built a nice business back together again.
0:29:41 – Name a couple brands that you’d like to have
0:29:42 that you don’t have yet.
0:29:45 – We’d love to have Tory Burch at Macy’s.
0:29:47 We have a nice business at Bloomingdale’s.
0:29:50 We would love to have On Running,
0:29:52 which is a great sneaker brand that we have
0:29:55 at Bloomingdale’s that we don’t have at Macy’s.
0:29:56 – So what is that kind of conversation like
0:29:58 with a brand like let’s say Tory Burch
0:30:01 of trying to convert them or include them in Macy’s
0:30:03 since they’re already in Bloomingdale’s?
0:30:05 – Yeah, you have to talk about, again,
0:30:08 the benefit of a multi brand retail environment
0:30:11 where you’re talking to 41 million active customers
0:30:14 at Macy’s versus 4 million active customers
0:30:15 at Bloomingdale’s.
0:30:16 Based on the scale of Macy’s,
0:30:18 you have more affluent customers shopping at Macy’s
0:30:20 than shopping at Bloomingdale’s.
0:30:23 You have a more diverse customer shopping at Macy’s.
0:30:25 Bloomingdale’s is a great business.
0:30:27 I love that brand having grown up there,
0:30:28 but that’s a slice of America.
0:30:31 Macy’s is America and if you really want to understand
0:30:34 how fashion works across the country,
0:30:36 you need a partner like Macy’s
0:30:38 that can help give you that feedback.
0:30:41 – Describe for me what a good Macy’s store looks like
0:30:41 in the near future.
0:30:45 What specifically is changing and improving?
0:30:47 – You hopefully will go to Macy’s
0:30:50 and find a wide variety of assortment,
0:30:53 but not the endless aisle you’ve been hearing about.
0:30:55 I don’t want to wander down some place that never ends.
0:30:56 I want to go to the best aisle
0:30:59 where I have actual variety, not redundancy.
0:31:01 So you’re going to show me a handful of items
0:31:03 in a category ’cause I want to buy a polo shirt
0:31:05 and you’re going to give me good, better best.
0:31:07 You’re going to be in stock in my size.
0:31:10 I’m going to be greeted by somebody who’s pleasant.
0:31:12 I’m going to be rung up efficiently and effectively.
0:31:16 I also might go and meet my boyfriends, girlfriends,
0:31:19 whoever it is, and me enter through the store
0:31:20 and actually discover some things
0:31:22 that I haven’t heard of or seen before.
0:31:25 I might stop into the cafe or to the restaurant
0:31:28 or Starbucks and grab a latte.
0:31:30 And I’ll remember the experiences being,
0:31:33 Macy’s is there for me when I need them.
0:31:36 – We spoke with one retail analyst who,
0:31:37 by the way, as a fan of yours,
0:31:40 he thinks the turnaround is really promising.
0:31:43 He said that your parade, quote, generates magic,
0:31:45 but that’s not always the experience
0:31:46 of shopping at Macy’s.
0:31:49 He said, you guys run this fantastic parade,
0:31:52 but you can’t put any magic into your shop floor.
0:31:54 I’m curious to hear your response to that.
0:31:57 And I’m also curious to know whether you think about
0:31:59 integrating the parade designers
0:32:02 into your customer experience team somehow.
0:32:05 – Yeah, I think a challenge given, challenge taken.
0:32:09 How do I recreate a once a year phenomenon
0:32:11 that has, let’s just say, a few dollars thrown at it
0:32:14 to make it extremely magical?
0:32:16 I think it should inspire us to step up
0:32:19 and to deliver something far better.
0:32:21 But I think we also can’t hold the mirror
0:32:23 on the parade to the store experience
0:32:26 and say, that’s what every day is going to be.
0:32:29 – Given that you want to grow your luxury business
0:32:32 and given your Bloomingdale’s background,
0:32:35 I’m curious if you’re thinking about trying to use the parade
0:32:37 to move things in that direction.
0:32:40 Should we look for a Tory Burch float, for instance,
0:32:42 or anything in that direction?
0:32:44 – If Tory Burch had something to say in the parade,
0:32:46 I’d love for them to be in the parade.
0:32:50 You will see more integration in the future
0:32:52 of the things that we do in the parade
0:32:54 to the things that we do in the store.
0:32:55 Think about it this way.
0:32:58 Black Friday is the kickoff to the final parts
0:33:00 of the holiday season.
0:33:03 And we own America in conveying that message.
0:33:06 Thanksgiving is a family celebration
0:33:08 that begins not on the day of Thanksgiving,
0:33:10 begins several weeks before.
0:33:12 Do you have enough chairs?
0:33:13 Do you have enough plates?
0:33:14 How do I keep people active?
0:33:16 Do I have games for them to play?
0:33:20 So we have this opportunity to be a part of America’s Day
0:33:22 in a very meaningful way before
0:33:25 and the kickoff to America’s celebration
0:33:27 of the gifting time of the year
0:33:31 with the 28 and a half or 29 million people watching.
0:33:33 (upbeat music)
0:33:37 (upbeat music)
0:33:39 By the way, Macy’s does already sell
0:33:41 some Tory Burch merchandise,
0:33:44 like watches, fragrances and sunglasses,
0:33:47 but not the more expensive items like bags or shoes,
0:33:50 which they would like to sell.
0:33:52 So we just heard Tony Springs’ plan
0:33:55 for a bold new chapter.
0:33:56 Will it work?
0:33:58 I have no idea.
0:34:01 The bad news coming out of Macy’s doesn’t seem to stop.
0:34:04 Just recently, Macy’s revealed that an employee
0:34:08 had intentionally hidden around $150 million
0:34:11 in delivery expenses over the past few years.
0:34:13 This news forced a delay
0:34:15 of the company’s quarterly earnings report.
0:34:18 That is bad.
0:34:21 While the retail industry may not be as technically complicated
0:34:24 as a lot of the industries we’re used to talking about
0:34:27 on this show, like healthcare or artificial intelligence,
0:34:30 it is plenty complicated in its own way.
0:34:33 This makes it hard for any outsider to predict
0:34:36 whether Tony Spring will be successful.
0:34:40 So we went back to an insider, Mark Cohen,
0:34:43 the former retail executive and business school professor,
0:34:48 to ask what he thinks of the bold new chapter strategy.
0:34:51 Well, I’m generally speaking hostile to sloganeering.
0:34:54 And Macy’s has been guilty of sloganeering
0:34:56 for well over a decade.
0:34:59 They were invested in the magic of Macy’s,
0:35:03 which basically there was no magic to Macy’s.
0:35:07 The most recent CEO was all invested
0:35:10 in something called a Polaris strategy,
0:35:13 which not to be crude was more bulls*** than real.
0:35:18 There’s no there, there behind what Tony Spring
0:35:21 has been able or willing to describe.
0:35:25 His general description of improvements
0:35:27 in terms of making the assortments
0:35:30 more relevant to consumers.
0:35:32 That’s kind of like motherhood and apple pie.
0:35:34 I don’t decry him for saying those words,
0:35:37 but at the end of the day, I’m from the school that says,
0:35:41 come up with the idea, put the idea in place,
0:35:43 measure its success via failure.
0:35:46 And once it’s successful, start talking about it.
0:35:49 But until it’s successful, keep your mouth shut
0:35:52 because you create expectations that may not be realistic.
0:35:55 When’s the last time you were in a Macy’s?
0:35:58 A few months ago, I passed through Harold Square
0:36:01 whenever I’m in Midtown and some time before that,
0:36:06 I hit a bunch of their suburban branches in Metro New York.
0:36:10 When I’m asked to comment about someone’s success or failure,
0:36:13 I try to be at least up to date
0:36:15 in the observations that I make.
0:36:18 So what did those Macy’s stories look like to you?
0:36:19 They looked terrible.
0:36:23 I’m told that Tony Spring has begun a process
0:36:25 of cleaning up their act.
0:36:28 I don’t know him, but I know him by way of background.
0:36:32 He did a marvelous job of ensuring that Bloomingdale’s
0:36:36 was a pristine, up-to-date, well-presented store.
0:36:40 And so I’m told there has begun a process
0:36:42 of improvement that’s visible.
0:36:45 This literally means turning the stores
0:36:49 into something far more clean, neat, and friendly
0:36:52 than they had become under prior regimes.
0:36:54 Okay, so the clean, neat, and friendly I get,
0:36:56 but you’re also talking about the lack of good assortment,
0:36:58 the lack of stuff that people want.
0:37:00 What do they need to do there?
0:37:02 Well, you have to start with clean, neat, and friendly,
0:37:04 and then you have to fill the store
0:37:09 with merchandise customers really want to buy.
0:37:11 How hard can that be to figure out?
0:37:13 That is the codex of retailing
0:37:16 that is enormously difficult to do.
0:37:19 It takes years and years and years
0:37:23 to build a team of people who can create assortments,
0:37:26 which, by the way, have to be created, recreated,
0:37:30 represented almost every day,
0:37:33 especially today when the customer’s loyalty
0:37:35 can’t be counted upon.
0:37:38 If you please a customer today, they may very well come back.
0:37:41 If you piss them off today, they may never come back.
0:37:43 (upbeat music)
0:37:46 After the break, we talk to a very different kind
0:37:50 of retailer who seems to have the loyal customer thing
0:37:50 all worked out.
0:37:52 (audience applauding)
0:37:53 – It’s gorgeous inside.
0:37:55 The building itself is so cool.
0:37:58 – I hate change, but I think some of the stuff
0:37:59 he’s doing is good.
0:38:02 (audience cheering)
0:38:05 – I’m Steven Dovner.
0:38:07 This is Free Kinomics Radio.
0:38:08 We’ll be right back.
0:38:10 (upbeat music)
0:38:13 (upbeat music)
0:38:18 (upbeat music)
0:38:24 How do you design a store where people are dying to shop?
0:38:26 Macy’s is trying to figure that out.
0:38:29 Again, having been largely unsuccessful
0:38:31 for the past few decades after building
0:38:35 one of the biggest department store chains in history.
0:38:37 At the very least, Macy’s does know how
0:38:40 to throw a killer parade.
0:38:43 Last week in part one of this series,
0:38:44 we heard from Jeff Kinney,
0:38:47 author of the Diary of a Wimpy Kid books,
0:38:50 which has sold nearly 300 million copies.
0:38:52 For the past 14 years,
0:38:55 Kinney has had a giant balloon in the Macy’s Parade,
0:38:58 a balloon of Greg Hefley, the Wimpy Kid himself.
0:39:02 Jeff Kinney lives with his family in Plainville, Massachusetts,
0:39:07 and he has built a mid-sized media empire around Wimpy Kid.
0:39:11 Spin-off book series, films, a musical, board games,
0:39:12 quite a bit more.
0:39:16 And he’s got one more project that is related-ish,
0:39:17 but not quite.
0:39:20 – We have a bookstore in the center of town,
0:39:21 which is called An Unlikely Story,
0:39:24 which has been in business for about nine years.
0:39:27 – If I were to come visit your bookstore,
0:39:29 how much Wimpy Kid do I see there?
0:39:32 – You’d see very little Wimpy Kid at the bookstore.
0:39:35 We’ve got a statue of Greg on the main floor,
0:39:38 but mostly it’s a general bookstore.
0:39:45 – You’ve probably never heard of Plainville.
0:39:47 Only about 10,000 people live there.
0:39:51 – I moved up to Massachusetts in 1995.
0:39:54 My wife and I picked Plainville
0:39:57 by creating a Venn diagram of three locations,
0:40:01 Boston Logan Airport, TF Green Airport in Providence,
0:40:04 and then my wife’s parents live in Worcester,
0:40:07 and right at the intersection of those three places
0:40:09 is this little town called Plainville.
0:40:12 – Plainville is about an hour’s drive to Boston,
0:40:15 half an hour to Providence, Rhode Island,
0:40:17 and 15 minutes to Foxboro Mass,
0:40:19 where the New England Patriots of the NFL
0:40:21 play their home games.
0:40:24 So what led Jeff Kinney to build this big bookstore here?
0:40:27 – We started creating it about 12 years ago
0:40:31 on the site of an old market called Fox Market,
0:40:34 which had been built in, I think, 1853
0:40:36 before Lincoln became president.
0:40:39 It was a beloved market that everyone had
0:40:42 at the center of their lives for decades and decades.
0:40:45 It had been abandoned for about 17 years.
0:40:48 So once Wimpy Kid took off, we bought the building,
0:40:50 took it down, and created a bookstore.
0:40:52 – Why did you wanna do that?
0:40:56 You already had a very going concern with your property
0:40:57 that had all these other tentacles.
0:41:01 Why did you wanna commit to a big physical property
0:41:02 like a bookstore?
0:41:04 You were probably doing this at the time
0:41:07 when independent bookstores were closing at the rate of,
0:41:08 I don’t know, one a week or something.
0:41:10 So what gave you this impulse?
0:41:13 – A lot of people were really embarrassed
0:41:16 by the derelict building in the middle of our town.
0:41:19 We just wanted to build a building
0:41:21 that the town could feel proud of.
0:41:24 So my goal was just to create a nice building
0:41:26 and put the word Plainville on the side.
0:41:30 We didn’t give any thought to what was going to be inside.
0:41:33 At a certain point, I was really legitimately thinking
0:41:36 about just making it a basketball court inside
0:41:39 because I figured we could save a lot of money
0:41:40 if it was just hollow.
0:41:43 – It’s been described to me from other people
0:41:46 who are not you that your bookstore is
0:41:50 an absurdly successful stop on the book tour circuit
0:41:54 that every author worth anything wants to come
0:41:55 to your bookstore and do an event
0:41:58 and does in fact, how did that happen?
0:42:00 – Well, that’s music to my ears.
0:42:02 First of all, we created a really
0:42:05 architecturally special place.
0:42:07 As a touring author, I’ve seen hundreds of bookstores
0:42:08 all over the world.
0:42:11 So we really tried to capture the essence
0:42:14 of what makes a bookstore feel homey
0:42:16 and special and magical.
0:42:19 We use lots of old materials to make it feel
0:42:20 like it was really lived in.
0:42:23 It doesn’t hurt that we’re on the route
0:42:25 between Providence and Boston.
0:42:27 If we’re in the middle of Iowa or something like that,
0:42:30 it would be a lot harder for authors to reach us.
0:42:32 – Is the bookstore profitable?
0:42:34 – The bookstore is not profitable.
0:42:38 We lose quite a bit of money each year in the six figures.
0:42:41 There are lots of different reasons for that.
0:42:44 We do try to pay fairly, but we also, you know,
0:42:47 we give a lot of our employees healthcare, things like that.
0:42:51 – So you moved to this town, you’re raising your kids there.
0:42:54 You’ve got your wimpy kid property growing
0:42:56 and developing and it sounds like a very happy
0:42:58 productive place for you to live.
0:43:01 Then you decide to open a bookstore,
0:43:03 which I don’t know if you have a financial advisor.
0:43:06 I’m guessing they would have advised you against that.
0:43:07 – Yes, I think so.
0:43:08 – But you did it.
0:43:09 – Yes.
0:43:11 – And you still have it, even though, as you said,
0:43:12 you’re losing quite a bit of money.
0:43:16 And then you decide rather than pulling back
0:43:19 what sounds to me like you’re instead doubling down,
0:43:21 if not more, so describe that.
0:43:25 – Yes, we are redeveloping the whole downtown center,
0:43:28 which is about four city blocks.
0:43:31 This is an ambitious plan, maybe a foolish plan,
0:43:34 but also really an exciting plan.
0:43:37 Downtown Plainville has been depressed for years.
0:43:39 – Tell me a little bit about the history of the town,
0:43:43 like a lot of the Northeast and New England.
0:43:46 I’m guessing there was a kind of industrial
0:43:48 or manufacturing or commercial heyday
0:43:51 that is long in the rear view mirror.
0:43:52 All these towns and small cities
0:43:55 are trying to either hang on or reinvent themselves.
0:43:57 Where does Plainville fall in that?
0:44:01 – Plainville was built around a jewelry industry.
0:44:04 One of the companies was called Whiting and Davis,
0:44:06 employed thousands of people.
0:44:07 And what they’re most known for
0:44:10 was creating the chain mail dress
0:44:15 that Tina Turner wore in Mad Max Thunderdome.
0:44:18 But yeah, now the center of town is sort of hollowed out.
0:44:21 And in fact, a factory building that stood there
0:44:25 for at least 80 years were about to take it down
0:44:28 in about two days and create something new.
0:44:36 – We decided to take a drive up from New York
0:44:38 to see Plainville for ourselves.
0:44:40 It took about three and a half hours.
0:44:43 Getting close to town, we pass some outlet shops,
0:44:46 some nice houses and some not so nice houses.
0:44:49 We keep going and they are on Route 1A.
0:44:52 We instantly see that Jeff Kinney was right.
0:44:56 Depressing downtown, really nice bookstore.
0:44:58 The contrast is stark.
0:45:01 I could imagine an author driving into town
0:45:03 on a book tour thinking,
0:45:07 I’m going to kill the publicist who sent me here.
0:45:08 There aren’t a lot of buildings.
0:45:11 Most of them are rundown, tired.
0:45:14 And then you come upon an unlikely story.
0:45:16 I finally get the name.
0:45:20 And it looks more like the ideal of a New England bookstore,
0:45:22 like something that only Hollywood writers
0:45:24 would dare imagine.
0:45:28 The building is, like Kinney said, architecturally special.
0:45:32 It’s three stories built in a style he calls federal wharf,
0:45:34 muscular and proud, like something you’d see
0:45:38 in a wealthy port town like Boston or Portland.
0:45:40 It’s late Saturday morning when we arrive
0:45:42 and inside the store is already crowded.
0:45:47 All ages, busy cash registers, a humming cafe.
0:45:49 The walls are hung with old wooden signs
0:45:52 from old Plainville, but the tech is modern.
0:45:55 Nice lighting, helpful employees everywhere,
0:45:57 even nice bathrooms.
0:45:59 If it weren’t for the books,
0:46:01 you’d be surprised it’s a bookstore.
0:46:04 On the day we visited,
0:46:06 Kinney was hosting a presentation
0:46:09 called Plainville Center Past and Present.
0:46:13 He wanted to show his renovation plan to the community.
0:46:16 Thank you so much for coming today.
0:46:18 He was nervous beforehand.
0:46:21 Kinney knows he is a very big fish in this small pond,
0:46:25 and because he is an unusually considerate person,
0:46:26 he’s worried that his plan
0:46:28 will upset some of the old timers.
0:46:30 I asked him if he had had to buy out
0:46:32 the other business operators in town
0:46:34 and how complicated that was.
0:46:39 We did buy out the other operators,
0:46:40 but I wouldn’t put it that way
0:46:43 because it sounds like a little bit of a hostile action.
0:46:45 We floated the balloon with each of these property holders
0:46:49 and said, “Hey, tell us if you’re ever ready to move on.”
0:46:52 And in fact, the owner operators of the tool factory
0:46:53 that was across the street,
0:46:55 they were just ready to retire.
0:46:59 So how many people here actually shop at Fox Market?
0:47:01 Okay, great.
0:47:02 As soon as people started walking in,
0:47:05 I said, “Okay, everybody here knows much more
0:47:08 “about Plainville’s history than I do.”
0:47:11 As it turned out, Kenny didn’t need to worry.
0:47:13 The presentation was well attended
0:47:15 and it went over well too.
0:47:17 Kenny showed some images
0:47:20 of what a new Plainville Square would look like
0:47:23 and the town historian, Christine Moore,
0:47:27 showed some images of the before times, the better times.
0:47:30 The crowd was older, not surprisingly.
0:47:33 There was very little descent and a lot of reminiscing
0:47:35 and trying to refresh the memory.
0:47:38 Whose grandfather ran which hardware store
0:47:40 and which factory closed down when?
0:47:42 And you remember that milkshake?
0:47:44 You could only get it, such and such drugstore.
0:47:47 (audience applauding)
0:47:52 Afterward, Kenny invites us outside
0:47:54 to see what will be where,
0:47:56 if everything goes according to his plan.
0:48:01 – We are at the intersection of Bacon Street in 1A
0:48:03 in Plainville, Massachusetts.
0:48:05 And this is where Plainville Square
0:48:07 is going to come to life.
0:48:12 So far we have a bookstore and a parking lot.
0:48:15 But this is going to become an anchor restaurant,
0:48:18 a beer garden, hopefully an Airbnb,
0:48:21 and maybe a few other buildings as well.
0:48:25 But right now you’re here on a day when this is ash and dust.
0:48:27 We just took down seven buildings.
0:48:30 So if you had been out of town for the weekend,
0:48:33 you might feel like the town you grew up in
0:48:35 has been flattened by a hurricane.
0:48:38 But this is the pallet that we have to work with
0:48:40 and we’re going to start building up.
0:48:42 – What’s your budget?
0:48:44 – Our budget, we don’t know yet,
0:48:45 but I think that this is going to cost somewhere
0:48:48 between 17 million and about $35 million.
0:48:49 – Yeah.
0:48:52 Do you ever have conversations with friends and family
0:48:55 about what you might have done instead with that money?
0:48:58 – No, I don’t often do that.
0:49:01 I think people respect what we do with our money.
0:49:02 We’re doing something a little bit unusual,
0:49:05 investing in the town and infrastructure of the town.
0:49:08 The thing that really gets me excited
0:49:10 is the idea of changing this town,
0:49:14 not for just our generation, but for generations to come.
0:49:17 Motivation is that famous Greek proverb
0:49:19 that a society doesn’t become great
0:49:21 until old men plant trees
0:49:23 that they’ll never enjoy the shade of.
0:49:27 – The only place in Plainville
0:49:28 where you can see the future
0:49:30 is back at Jeff Kinney’s bookstore.
0:49:33 A crowd is already starting to gather.
0:49:35 By evening, there will be hundreds of people
0:49:38 lined up around the block for a visiting author.
0:49:41 (audience cheering)
0:49:47 The author is a local hero, Jason Tatum,
0:49:48 of the Boston Celtics.
0:49:50 He is one of the best, richest,
0:49:52 and most famous athletes in the world,
0:49:55 fresh off a Celtics championship
0:49:57 and an Olympic gold medal.
0:49:59 He has come to the big bookstore
0:50:01 in the little town of Plainville
0:50:03 to talk about a children’s book he just published.
0:50:05 It’s called “Baby Dunks a Lot.”
0:50:08 For authors of this magnitude,
0:50:11 Jeff Kinney himself runs the Q&A.
0:50:12 – All right, Jason, thank you so much
0:50:14 for coming to an unlikely story.
0:50:15 We’re so honored to have you here.
0:50:16 It’s really cool.
0:50:18 So let’s everybody give up one more time for Jason.
0:50:21 (audience cheering)
0:50:26 So you’ve done lots of different events
0:50:28 before Q&As and things like that,
0:50:31 but have you ever done something like this as an author?
0:50:33 – This is a first for me.
0:50:36 I played basketball in front of a thousand people,
0:50:39 but I’m honestly a little nervous to be up here.
0:50:41 – Wait a second, you also play basketball?
0:50:42 (audience laughing)
0:50:43 Did not know.
0:50:44 All right, this is cool.
0:50:46 We’re off to a good start.
0:50:46 But I was–
0:50:49 – The Q&A was a big success.
0:50:51 Tatum had pre-signed hundreds of books,
0:50:54 so he didn’t stick around long afterward,
0:50:56 but the store stayed open late
0:50:58 and the crowd kept shopping.
0:51:00 We wanted to know what they thought
0:51:03 of Jason Tatum, of the store,
0:51:06 and of their other local hero, Jeff Kinney.
0:51:08 We spoke with Benjamin McCuchy.
0:51:11 – Jason Tatum is my basketball hero.
0:51:15 I wanna be in the NBA and be just like him
0:51:20 and getting to see him and Jeff Kinney at the same time.
0:51:21 And Jeff Kinney’s my favorite author.
0:51:23 It’s just amazing for me.
0:51:26 We heard from Izzy Gaudet.
0:51:28 – We just did a loop through the bottom
0:51:32 and it’s got so much, like from books to non-books.
0:51:34 I’m definitely gonna have to come back.
0:51:36 – And here’s Chris Alba.
0:51:38 – Growing up here in North Attleboro,
0:51:40 this corner was always like,
0:51:43 it was a very dilapidated building, very old
0:51:44 and it didn’t look great.
0:51:47 He’s totally redone the way this entire area looks.
0:51:50 It’s really popular and it looks awesome.
0:51:51 So I love it.
0:51:57 – I think that there is a chance for so much improvement.
0:51:59 Like if we lived in Beverly Hills,
0:52:02 we would have no interest in doing this kind of a thing.
0:52:06 But Plainville can be changed in a really outsized way.
0:52:09 – I assume it felt like you were rowing against the tide
0:52:11 by opening an independent bookstore
0:52:12 in a relatively small place,
0:52:15 but it does seem like independent bookstores
0:52:17 are back on the rise.
0:52:22 They’ve done fairly well through COVID and then post COVID.
0:52:24 It strikes me, and I may be wrong,
0:52:27 that as the world continues to get bigger and faster
0:52:31 and more consolidated and more digital and more connected,
0:52:35 that there’s a counter push for a return to the handmade
0:52:37 and the homemade and for community.
0:52:38 What’s your view on that?
0:52:39 – I think there is.
0:52:42 I think that people are craving
0:52:44 this feeling of connectedness.
0:52:47 I’m really surprised that the effects of COVID
0:52:50 have had such a long tail.
0:52:51 I think we’re seeing the effects of COVID
0:52:54 on these 20-something year old people
0:52:57 who didn’t have a high school graduation,
0:52:59 who now want to go into jobs
0:53:02 where they work with peers physically in person.
0:53:06 I think that a bookstore is part of that experience.
0:53:08 But I also think that there’s a practical aspect to it,
0:53:11 is that you really can’t replicate
0:53:14 the book buying experience online.
0:53:17 It’s similar to the record buying experience.
0:53:19 We grew up in a time where you went to the record store
0:53:22 and you flipped through the big albums
0:53:25 and looked at the artwork and heard the music overhead.
0:53:27 It was just better.
0:53:31 – So, Macy’s is undergoing its own rehab
0:53:32 or renovation at the moment.
0:53:36 They’re trying to figure out how this very old-fashioned,
0:53:40 still prominent brand can persevere
0:53:42 and succeed in the 21st century.
0:53:44 And it strikes me as their challenges
0:53:45 are similar to what you’re trying to do now,
0:53:49 which is build a place or create a space
0:53:52 where people want to be with other people doing stuff
0:53:55 that a lot of people stop doing during our digital revolution.
0:53:58 Do you see any connection between yourself
0:54:01 and someone like them, some big corporate entity
0:54:03 that’s trying to reinvent their future?
0:54:06 – One of the things that’s been really surprising to me
0:54:09 is that a major beer operator,
0:54:10 and I can’t name names right now
0:54:11 because we haven’t signed papers,
0:54:15 but they’re interested in being in downtown Plainville.
0:54:18 And I said, “Why are you interested in being here?”
0:54:21 And they said, “Because if you’re here,
0:54:22 you’re the thing that people do.
0:54:25 If we go into Boston or a big town like that,
0:54:29 you’re competing with 30 or 40 other restaurants.
0:54:31 But in a place like this,
0:54:34 you’ve got a shot at becoming the show.”
0:54:39 So it’s possible that if we set the table just so
0:54:42 that we will get partners that we weren’t expecting to get.
0:54:46 And maybe Macy’s could be a part of something like this.
0:54:48 – I’m very curious about what’s going to happen
0:54:52 because we’re asking this really big question,
0:54:55 which is if you invest in your downtown,
0:54:57 can you change the fate of a town?
0:55:00 Can you change the way that people feel about the town?
0:55:03 Can you make the town a model for other towns?
0:55:05 I don’t know the answer to that.
0:55:07 And I think that’s gonna be my life’s work
0:55:10 is figuring out if this kind of thing can work.
0:55:16 – This made me think of the slogan that Macy’s
0:55:20 has adopted for its turnaround, a bold new chapter.
0:55:23 That could have also been the name of Jeff Kinney’s bookstore,
0:55:26 but an unlikely story is better.
0:55:29 In fact, an unlikely story might not be a bad slogan
0:55:32 for Macy’s considering what it is up against.
0:55:35 So I went back to CEO Tony Spring
0:55:38 and I asked him what he thought of Jeff Kinney’s
0:55:40 new and improving Plainville
0:55:43 and whether Macy’s might consider opening up
0:55:44 some kind of store there.
0:55:46 – We are always open to evaluating
0:55:50 different real estate opportunities for retail.
0:55:52 I applaud what he’s doing.
0:55:55 I want vibrant towns across this country.
0:55:57 – Spring still lives in Westchester County,
0:55:59 where he grew up.
0:56:01 Westchester has some of the nicest,
0:56:03 leafiest suburbs in America
0:56:08 with small town main streets and high median incomes.
0:56:11 – My town, we probably have more banks and restaurants
0:56:13 than anything else, nail salons.
0:56:15 I miss the candy store, I miss the bookstore,
0:56:17 I miss the record store.
0:56:20 Retail is that mix of variety
0:56:22 that creates the reason for the stroll
0:56:24 and the reason to spend locally.
0:56:27 So we want Macy’s to be a part of that experience.
0:56:30 You know, I wish Jeff the best, I would say,
0:56:32 follow the adage from Cheers,
0:56:34 make sure you know everybody’s name.
0:56:36 Those little touches make the absolute difference
0:56:38 in where you choose to shop again.
0:56:41 (gentle music)
0:56:45 It’s hard to predict the future of Macy’s
0:56:48 or the future of Plainville, Massachusetts.
0:56:52 Tony Spring and Jeff Kinney are both investing a lot
0:56:53 in their respective turnarounds
0:56:56 and it’s natural to wish them well.
0:56:59 On the other hand, people are fickle,
0:57:02 markets are fickle and generally speaking,
0:57:04 you don’t succeed in the future
0:57:06 by trying to mimic the past.
0:57:11 But for now, those concerns will have to wait.
0:57:14 It is Thanksgiving Eve, Spring and Kinney
0:57:16 both have a parade to get to.
0:57:18 (upbeat music)
0:57:23 – I’ll be with my wife.
0:57:24 I don’t think my kids will come
0:57:27 because they’ll probably be cooking Thanksgiving
0:57:30 and maybe a brother-in-law or sister-in-law too.
0:57:32 And the Macy’s leadership family
0:57:35 and hopefully some customers and colleagues
0:57:38 will sit in the grandstand like many others
0:57:40 and will enjoy the parade as it hits 34th Street.
0:57:42 – There’s something really hypnotic
0:57:46 about seeing one of those giant helium balloons
0:57:48 move between the buildings.
0:57:51 It’s the outsizedness which is so exciting.
0:57:54 It’s really cool when you see a giant Papa Smurf
0:57:58 go by somebody’s window or Clifford the Big Red Dog
0:58:01 and you see the scale of the thing.
0:58:04 – What do you think the parade represents?
0:58:09 It’s this weirdly old-fashioned traditional event
0:58:13 that in a world of much more dazzling modes
0:58:18 of entertainment draws 30 million people a year on TV
0:58:19 which is astonishing to me.
0:58:20 So what does it feel like
0:58:22 to be an essential component of that?
0:58:24 – It feels like legitimacy to me.
0:58:27 It feels like you’re making a statement about your brand
0:58:30 that you’re not just wishing and hoping
0:58:31 that you’re a part of this.
0:58:34 It’s like a theory or a thesis that you’re saying,
0:58:36 I think we belong here.
0:58:39 And then after a certain amount of time, you say,
0:58:41 you know what, we do belong here.
0:58:42 This is right.
0:58:46 – Do you interact with other property creators
0:58:48 or representatives at the parade?
0:58:51 – I’ve become friends with Jeanne Schultz,
0:58:53 the widow of Charles Schultz.
0:58:54 And it’s a small club.
0:58:57 So it’s pretty cool to be a part of that club.
0:59:00 – In a battle of balloons,
0:59:04 would Greg or Snoopy win?
0:59:07 – I’m gonna switch the question to be the Muppets.
0:59:10 The first year, Diary of a Wimpy Kid,
0:59:13 Greg Heffley was right behind Kermit the Frog.
0:59:15 – You think he could have taken him?
0:59:19 – Well, I was staring down the backside of a frog
0:59:22 and I said, that feels about right to me, you know?
0:59:28 – My thanks to Jeff Kinney and the Plainville crew
0:59:30 for spending time with us.
0:59:33 Ditto Tony Spring and the Macy’s crew.
0:59:37 Also to Mark Cohen for his sober retail insights
0:59:40 and thanks especially to you for listening.
0:59:43 I hope you have a great holiday season.
0:59:46 Meanwhile, coming up next time on the show,
0:59:49 the real world remains challenging.
0:59:54 – Putin looked great physically, was relaxed,
0:59:58 cracking jokes, some of them at our expense.
1:00:02 We hear an insider’s view of Russian ambition,
1:00:06 Ukrainian desperation and the American response.
1:00:10 – Our politicians aren’t leading Republicans or Democrats.
1:00:12 – We speak with John J. Sullivan,
1:00:16 former Deputy Secretary of State and US Ambassador to Russia.
1:00:18 That’s next time on the show.
1:00:20 Until then, take care of yourself
1:00:23 and if you can, someone else too.
1:00:26 Freakonomics Radio is produced by Stitcher and Renbud Radio.
1:00:29 You can find our entire archive on any podcast app
1:00:32 also at Freakonomics.com,
1:00:34 where we publish transcripts and show notes.
1:00:37 This series was produced by Alina Cullman
1:00:40 and we had recording help from George Hicks
1:00:42 and research help from Daniel Moritz-Rabson.
1:00:44 Our staff also includes Augusta Chapman,
1:00:46 Dalvin Abouaji, Eleanor Osborne,
1:00:49 Ellen Frankman, Elsa Hernandez, Gabriel Roth,
1:00:52 Greg Rippon, Jasmine Klinger, Jason Gambrale,
1:00:54 Jeremy Johnston, John Schnars,
1:00:56 Lyric Bowditch, Morgan Levy, Neil Carruth,
1:00:58 Rebecca Lee Douglas, Sarah Lilly,
1:01:00 Teo Jacobs, and Zac Lipinski.
1:01:03 Our theme song is “Mr. Fortune” by the Hitchhikers
1:01:05 and our composer is Luis Guerra.
1:01:13 – We used to be slacksville for a time, I think unofficially
1:01:17 and so, Plainville seemed like a giant upgrade.
1:01:18 (camera clicking)
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1:01:26 the hidden side of everything.
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