Respected retail analyst Neil Saunders had for years regularly posted pictures on social media showing extreme messiness at Macy’s stores—mounds of unfolded sweaters strewn on the floor or shelving that had fallen into disrepair—on social media. Now he was getting an individual tour from the department store’s new CEO, Tony Spring.

At the well-appointed Macy’s in the upscale Topanga Westfield mall in Los Angeles in June 2024, Spring walked the brand’s former bête noire through the improvements he was starting to roll out at 125 “priority” stores: elegantly styled mannequins and more staffers in key areas; double the staffing in the women’s shoe department; and three times as many in the dresses area. There were even live human beings manning the fitting rooms.

Saunders had to admit, he was impressed. “Their merchandising is sharper,” Saunders told Fortune. “There is greater neatness on the shop floor. They’re starting to elevate the shopping experience.”

But perhaps the biggest change Saunders saw, he told Fortune, was Spring’s openness to criticism—as shown by his willingness to engage with one of the brand’s harshest critics. “This was a really big sea change,” Saunders said.

It’s an attitude the CEO himself sees as essential for the 167-year-old retailer to carve out a new place for itself in today’s retail world.

“Neil didn’t take pictures of things that didn’t exist,” Spring told Fortune in an interview at Macy’s headquarters in New York. The venerable department store had long been in denial about the depth of its problems, said Spring, who took the reins of Macy’s Inc in early 2024 after a successful decade-long stint as CEO of its Bloomingdale’s division.

“We had to have a moment of reflection and say, ‘We’re not as good as we think we are,’” Spring said. “We can be proud of Macy’s history, but we can’t be proud of Macy’s current performance.”

Indeed, the brand’s performance was awful for years. Customer service scores dropped year after year, contributing to sales falling from an all-time high in 2014 of $28.1 billion to just above $22.3 billion a decade later. The company has closed hundreds of stores because customers took their business elsewhere amid the “retail apocalypse” set off by the rise of Amazon and the soaring popularity of cheaper retailers such as Target. Meanwhile, brands trying to elevate their own images were tiring of the subpar presentation their products had at many Macy’s stores: Ralph Lauren, Coach, Nike, and Levi’s, among others, took their products off the shelves.

Spring’s plan is simple in its essence: Go back to retail fundamentals. That means sufficient staffing to ensure the customer service that justifies shopping at a department store instead of online or at a discounter; well-maintained stores with more visually appealing product presentation; and newer brands rather than the same-old, same-old, over and over again—all while keeping costs down. Ultimately, his strategy aims for a Macy’s with fewer but more appealing stores, complemented by e-commerce. The goal is to go to from the current 449 locations, to 350 or so, including the 125 priority stores that will get disproportionately higher investment for things like more staffing and new lighting.

There are promising signs that, at very long last, Macy’s has found a turnaround plan that is taking. Last quarter, Macy’s reported its best comparable sales performance in 12 quarters. Sales only rose 1.1% year-over-year but that’s a victory at a time shoppers are hamstrung by economic anxiety—and an encouraging sign that Spring might be onto something.

Attitude adjustment

To have any hope of a successful turnaround, Spring felt that Macy’s needed a cultural reset first, to inspire a workforce battered by years of falling revenue, store closings, and staff reductions, and get buy-in to his strategy. “The big impact we’re finally seeing comes from the fact that we’re all singing from the same hymnal,” said the 57-year-old Spring.

Macy’s, founded in New York City in 1858, benefits from a huge reservoir of goodwill among its 40 million annual customers, many of whom remember trips to the department store as kids, to get outfits for their graduations or to sit on Santa’s knee. The Macy’s Thanksgiving Day parade in Manhattan, watched by millions around the country on TV every year, has cemented the brand’s place in American culture.

But while many associate the brand with its Manhattan flagship and its famously elaborate window displays during the holiday season, Macy’s has for decades been primarily a mall-based department store chain with hundreds of large emporia in suburbs across the country. It’s a shopping format consumer have been shifting away from since the 1990’s—and Macy’s is no exception.

At its peak just over a decade ago, Macy’s had more than 773 namesake stores. The company, which also owns Bloomingdale’s and the beauty chain Bluemercury, became a Frankenstein behemoth after a $11 billion mega-merger in 2006 in which it absorbed several regional chains, including Filene’s, Marshall Field’s, Foley’s, Hecht’s, and Kaufmann’s and slapped the name “Macy’s” on all the stores. That mega deal also led to a massive challenge for Macy’s: Too many of the brand’s stores were clustered together, cannibalizing each other’s customer base.

Over that period, Macy’s bureaucracy swelled, and the individuality of the regional department store chains it had absorbed faded.

“They didn’t ever manage to create one unifying culture from all these parts they mushed together,” said Kathy Gersch, president of the consulting firm Kotter International.

In addition to the “priority” stores, Macy’s will keep open another 225 stores or so once it is done closing a few dozen more locations in the next few years.

In the 2010’s, Macy’s continued to grow, aided by the implosions of long-time rivals Sears and JCPenney. But those gains masked Macy’s problems. Amazon, with its low prices and fast delivery, took market share, but so too did T.J. Maxx where shoppers could snag designer clothes for much less, and Ulta Beauty, which poached many of the beauty customers who were among the most frequent visitors to Macy’s.

The more Macy’s business was squeezed, the more it cut back on spending, creating a vicious cycle that undermined the service standards and pleasant atmosphere needed to justify higher department store prices.

Case in point: A decade ago, Macy’s tried to save on staffing by turning its footwear section into self-service “open-sell” areas, a short-lived but disastrous move. “If you want open sell, you can go to TJ Maxx,” said Saunders.

Macy’s, like many other retailers, fell into the trap of putting more merchandise on the selling floor to reduce how many times workers would have to re-stock shelves. But that created a messy, cluttered look more reminiscent of a clearance store.

The overly dense selling floors also made it hard to do storytelling—called “visual merchandising” in retail—with mannequins. More staffing was also an obvious need for the jewelry and handbag sections, where customers want to be shown the higher-priced items from cases. “It’s not rocket science,” said Spring “It’s back to the standards of retail.” And it’s something customers told Macy’s directly: In Spring’s first months, the company surveyed 60,000 current and former customers to get a deep understanding of what they want.

Spring pointed to the company’s missteps last decade, as investors grew impatient with Macy’s and its middling performance. So desperate was Macy’s to mollify Wall Street that in 2015 it announced that it would install “smart mirrors” in fitting rooms. (They often didn’t work properly, and were seen as an expensive flop.) “We became enamored with shiny objects and feeling we needed to keep up with everyone instead of playing our playbook,” said Spring, who as an executive at Bloomingdale’s was on Macy’s leadership team and saw firsthand the chain’s problems.

In 2015 an activist campaign by Starboard Capital, which saw little value in Macy’s retail business, sought to pressure the company to spin off its best real estate. It was the first of four activist campaigns by various firms targeting Macy’s in the past decade.

The pressure to keep costs under control became more urgent during the pandemic when Macy’s was fighting to stave off bankruptcy. And Wall Street is still keeping Macy’s on a tight leash over its expenses.

One anecdote Spring likes to tell is from a decade ago, when as director of stores for Bloomingdale’s, he conducted a store visit with other executives. He and “the suits” were intercepted by a shopper who told him that everywhere she went, staff would ask her how she was doing. Anticipating a compliment, Spring recalled, he heard a complaint instead: “Nobody could even wait for the answer,” she told him. The reproach was like a punch in the gut, Spring said.

“It was a good reminder that we were so focused on training people to say the line, that we forgot to explain to people why,” Spring said. The ‘why’ is that it makes a chat feel less transactional, even as it gives a store worker insights into what else a customer might need or want to buy.

Spring’s training is in hospitality: He studied hotel and restaurant management before starting at Bloomingdale’s as a management trainee in 1987, and his first ever job was in the service industry, at a Burger King in the 1980s. He wants that hospitality mindset to take hold and for store workers to feel their job is about more than folding clothes and manning cash registers. It is also about injecting the shopper experience with romance and theater, an endeavor that he argues can make the job more fun and fulfilling: “We’re all driven by psychic reward.”

Still mid?

Armed with some promising results, Spring has been working to attract new brands to Macy’s and bring back others. In July, he landed a coup when Abercrombie & Fitch’s children’s business started selling its products at Macy’s. Other brands Macy’s has recently added include Reiss, Good American, and Theory. Spring is also betting he can get important partners to come back to many of the Macy’s stores they abandoned.

Spring is quick to acknowledge that Macy’s still has much to prove. But his early results have sparked hope that at long last, it is turning a corner.

And even if critics such as Saunders are mollified by the moves Spring has made, they also say there’s more to be done. “Macy’s is still middle-of-the-road,” Saunders said. “They need to keep elevating the experience.”

And that is exactly what Spring intends to do, tapping into the cherished associations many Americans have with Macy’s.“There is so much love for this brand,” he said. “If we put our best on the table, we have the chance to win their business back.”

Can Macy’s win back America? How CEO Tony Spring is moving past denial and embracing change