Macy’s is Downsizing-Not Asking for Government Help

Macy’s is Downsizing-Not Asking for Government Help

Macy’s is reducing its Downtown store’s active floor space by 32 percent. Of course, employees are worried about possible job losses. This downsizing comes on the decades long trend toward smaller downtown retail operations. Since the early 1980s Horne’s and Gimbel’s have left, Kaufmann’s sold and downsized while heavily subsidized Lord and Taylor’s and Lazarus have come and gone quickly.

Meanwhile, Saks Fifth Avenue is telling City officials that it will need government financial help if it is to keep its Downtown store open. One can hope that after the horrible experience and financial losses Pittsburgh has suffered had in trying to prop up or grow Downtown retailing, and in view of the City’s own fiscal problems, elected officials will resist the temptation to waste even more money subsidizing an upscale retailer.

The encouraging part of the Macy’s downsizing story is that the store has not asked for government financial help to maintain its current size or to avoid possible employee cuts. Perhaps the company is being a good citizen expecting to pay its own way and to rise and fall on based on its own efforts and resources. Or perhaps the company simply has seen the pushback to the Saks request and understands the City and state are not in a position to subsidize retail outlets.

Not that there is ever a justification for subsidizing retail. Retail is driven by consumer spending. Helping selected retailers creates an unfair competitive disadvantage for non-subsidized retailers and produces no long term net increases in total sales. It merely attempts to redistribute where sales occur. As Pittsburgh has learned to its chagrin, fighting long term retail trends by throwing money at Downtown department stores is foolish. Too bad City officials refused to listen to folks who tried to tell them back in the mid 1990s what was going to happen if they embarked on a massive scheme of subsiding Downtown retail.