Macy’s is a popular department store that has everything from home goods to apparel.
It is not uncommon to find Macy’s department stores in various malls in urban centers.
However, the average consumer may notice that prices on certain products at Macy’s are expensive.
It may make them wonder what’s causing the expensive price.
Here are 10 reasons Macy’s is expensive.
Why Is Macy’s So Expensive? (Top 10 Reasons)
1. Heavy Discount Business Model
Macy’s is expensive because it uses a discount business model.
This isn’t a business model that has always worked in the company’s favor, as per a report by Modern Retail.
The model has the company set some or all of its products at high prices.
Then, over time, they reduce the price with a discount.
The attraction of a sale drives consumers to buy the product.
For example, it’s not uncommon to see a product at Macy’s that’s on sale for 80% off.
The original price may seem extremely expensive, but the sale price makes it a bit more palatable.
The idea is that the attraction of the discount drives customers into the store to buy the item.
While they are in the store, hopefully, they’ll have an interest in some of the other products that the store sells, too.
Although they may not make as much of a profit on the discounted item, they can more than make up for it through the sale of the other items that the consumer buys.
This practice can also make a product seem cheaper than it actually is.
For example, a product that costs $200 but is on sale for $100 may seem like a steal.
Depending on what the product is, $100 may still be too expensive.
The product may not be actually worth that much.
However, because it has a 50% discount on it, it seems cheaper.
2. Marketing Costs
There’s a lot of competition among department stores.
Although Macy’s has bought out some of its competitors, there are still those looking to take it off the map.
To remain relevant and keep competitors in their place, Macy’s has to spend a good amount of money on marketing.
Marketing helps them make their customers aware of new promotions and sales.
It makes them aware of new products that the store is offering.
It helps the store show why it is different from other department stores.
Without marketing, customers may simply choose the most convenient option rather than making the deliberate choice to shop at Macy’s.
In 2019, Macy’s spent $1.14 billion on marketing and advertising.
In 2020, due to the pandemic, they had to tighten their marketing budget.
They only spent $0.82 billion.
Once lockdowns ended and they started seeing customers again, they quickly increased their marketing spending to $1.18 in 2021.
Part of the reason marketing costs so much is that there are so many new avenues on which to advertise.
While there are always TV and magazine ads, there are also new ways to market.
One of the most popular and effective is buying ads on websites.
Because people are online more than ever, seeing an ad from Macy’s can plant the idea of shopping there the next time they need apparel or home goods.
Macy’s can also buy ads with Google.
Whenever someone searches for something related to a product that Macy’s sells, they’ll see an ad for it.
Buying ad space on Google isn’t always cheap since it is a highly competitive arena.
There are also the various shows and events that Macy’s helps to sponsor each year.
Attaching their name to it makes the store relevant to the viewers.
Since Macy’s spends a lot of money on marketing, they need to cover those costs with their revenue.
They get their revenue from expensive products.
Macy’s is expensive because of its high marketing costs.
3. Backstage Shops
One of Macy’s newest innovations is Macy’s Backstage.
It’s a store within a store.
Not all Macy’s locations have a Backstage store, but most of the major ones do.
Some areas even have a separate Backstage store outside of Macy’s.
Macy’s Backstage is basically a part of the store that gets changed out frequently.
It showcases on-trend products at discounted prices.
You can often find big-name brands there like Ralph Lauren.
While you can find discounted items in their Backstage shops, it makes Macy’s more expensive for a few reasons.
The first is that it requires the participating Macy’s store to build an area for that shop.
The Backstage area is literally a shop within a shop which means it has its own walls and area.
It needs its own real estate in each store.
It costs the store money to build that shop.
Another reason Backstage shops make Macy’s expensive is that it means the store has less room to put their products.
While Backstage is contributing to Macy’s revenue, it is also taking up space that the store could use to sell other products.
With fewer products on the floor at Macy’s regular prices, they are taking a risk of not making as much of a profit as they could otherwise.
They mitigate that risk by having higher prices.
Finally, because the items for sale in their Backstage shops tend to be on sale, the rest of the store needs to make up for any lack of profit that Backstage gives.
To balance it, the prices in the rest of the Macy’s store may be higher.
4. Leather Handbags
While some of Macy’s items are actually relatively cheap, many others are very expensive.
One of those items is handbags.
While there are some cheap handbags, you can also find handbags that cost $100 and more.
There are a few reasons Macy’s handbags are as expensive as they are.
The first has to do with the brand names.
Some brands are more expensive than others.
As an example, a Michael Kors handbag is going to cost much more than a generic handbag.
That’s because Michael Kors is a well-known designer who makes high-quality products.
People who buy the Michael Kors handbag do so knowing that they are getting a great product out of it.
Besides the brand name, the material that the handbag is made of also inflates the price.
For example, a handbag that is made with real leather is going to be more expensive than a handbag that contains fake leather or polyester.
Leather is more expensive because it is a high-quality material.
It lasts longer because it’s durable.
That’s an important detail for a handbag that sees a lot of use and abuse.
Leather is also an animal product.
It requires the rancher to care for the animal and keep it healthy to have the best possible skin.
After the animal gets butchered, its skin undergoes leathering until it is ready to give to manufacturers.
Animal care is costly.
When ranchers want to sell high-quality leather, animal care is even more costly since it requires them to invest more in their animals.
Since all these factors make producing the handbag more expensive, the retailer has to sell it at a higher price to cover those expenses and make a profit.
5. Certified Diamonds
Another reason Macy’s is expensive is that it has certified diamonds.
One big draw of Macy’s is its jewelry department.
You can find everything from rings to necklaces there.
While some of the jewelry is relatively cheap compared to other jewelry stores, you can also find jewelry that sells for $1,000 and more.
Without the item on sale, for example, you could find a ring worth more than $2,000.
You may wonder what makes such jewelry expensive at Macy’s.
There are a few reasons.
The first is that Macy’s uses certified diamonds in some of its jewelry pieces.
Certified diamonds are those that have been inspected by a certified gemologist.
They carefully examine the diamond and determine its value.
That gives the jewelry piece its value plus some markup.
In particular, gemologists look for the cut, clarity, carat weight, and color of the diamond to determine its value.
The better the cut, the more expensive the diamond.
The more carats it has, the more expensive the diamond.
Even the color can determine how valuable a diamond is.
White diamonds, in particular, are highly valuable.
Finally, the clarity of the diamond determines how clear it is or if it has any deformities.
Besides the diamond increasing the price of the jewelry piece itself, Macy’s also has to pay the gemologist for their time.
That adds more expense to the jewelry piece.
Some jewelry pieces are also unique or limited edition.
Macy’s may only have a few of those pieces available before they are gone forever.
That sort of scarcity drives up the price.
6. Gold Jewelry
If you’re not looking for diamonds in your jewelry, you may have some surprise when you see the prices on their gold jewelry, too.
Gold jewelry at Macy’s can cost anywhere from a few hundred dollars to well over $1,000.
The reason that gold jewelry is expensive at Macy’s is that they use 14k and even 18k gold in their products.
14k stands for 14-karat gold.
It means that the item is 58.3% gold and 41.7% alloy.
Jewelry makers mix gold with alloy to make it a bit more affordable for the masses.
14k gold has a yellower appearance than 10k gold.
18k stands for 18-karat gold.
It has an even higher gold content at 75% gold and 25% alloy.
Since it has more gold in it, it has a higher value than 14k gold.
Depending on how big the piece is, it may have a lot of gold in it.
That can make the piece very expensive.
Macy’s carries jewelry items made with both 14k and 18k gold.
Those pieces are expensive because of the amount of gold used in them and because of the typical markup Macy’s places on its prices to make a profit.
Jewelry is often associated with status in society.
If you have gold jewelry, it indicates that you’re a wealthy individual.
Couples will also buy gold jewelry for each other to demonstrate their affections.
Because it costs a lot, it shows a certain element of sacrifice for one’s partner.
Because they are looking to spend a lot of money on their partner, Macy’s can keep the prices of their jewelry high.
It’s an expectation.
Macy’s is expensive because it uses real 14k and 18k gold in some of its jewelry pieces.
7. Designer Clothes
One of the attractions of shopping at Macy’s is that you can find tons of designer clothing all in one area.
Some designers only use exclusive stores in which to sell their lines of clothing.
That can force you to hop from one store to the next.
No one has time for that.
Macy’s makes it more convenient by having a handful of A-list designers and their clothes in their stores.
However, this is also one of the reasons Macy’s is expensive.
Designer clothing is expensive because it is usually high-quality.
Designers gain a reputation by making unique clothes and using high-quality materials in their clothes.
They gain fans because they appreciate how long their clothes last and the way in which they look.
By buying designer clothing, you’re buying high-quality materials.
High-quality materials cost more to make.
Farmers have to invest more in their soil and water and reduce pests to give a high yield of high-quality crops.
Since they take on more expenses, textile factories also take on more expenses.
Retailers then have to sell the clothing at higher prices to make up for the costs associated with making their clothes.
Designer clothing is also more expensive because there aren’t as many products available as there are mass-produced clothing.
Even if the designer uses a factory to produce their clothing, it’s still usually a limited number compared to generic brands that mass produce clothing.
Since there are fewer for sale, the scarcity drives up the price.
8. Formal Evening Wear
A lot of people shop at Macy’s for their evening gowns and suits.
Whether it is for a school dance, a wedding, or just a special evening, it has a large number of dresses and suits available.
The problem is that this type of clothing is usually pretty expensive at Macy’s.
There are a few reasons for this.
One reason has to do with materials used in the evening dress or suit.
Some of the outfits use expensive materials like leather, silk, or even lace.
These are all expensive materials because they require a lot of labor or costs to make.
Since the material is expensive, the final product is also going to be expensive.
Another reason their evening dresses and suits are expensive is that Macy’s has a reputation for selling great evening wear.
While some other department stores might have a few dresses and suits, no one does it quite like Macy’s.
They devote a lot of their advertising to selling that idea to their consumers, too.
Since Macy’s has a reputation for high-quality dresses and suits, they are able to mark up the price a bit.
They know that their customers are looking for fairly high-end evening wear and expect the price to match.
Since there isn’t too much competition among other department stores, Macy’s also doesn’t face too much pressure to lower its prices.
9. History And Reputation
Macy’s is a pop culture icon.
It’s become a permanent part of Thanksgiving thanks to hosting the annual Macy’s Thanksgiving Day Parade in New York City.
It is also an extremely old company.
It got its start in 1858 and has only expanded since then.
That sort of history indicates the company must know what it’s doing.
It also means the company has had a long time to establish its reputation and quality.
Shoppers trust Macy’s.
They trust in the quality of products that the store provides.
Because there’s a lot of brand loyalty, Macy’s has a slightly easier time raising prices without receiving a lot of backlash for it.
Its reputation also makes its target audience well-known.
They tend to cater to those with an upper-middle-class or higher income.
Since they set their prices with that target audience in mind, anyone who makes an income below those thresholds may find the prices expensive.
Macy’s is expensive because of its long history which has allowed it to create a reputation for high-quality products geared towards a specific income threshold.
Macy’s is a department store, which means you can find several different departments within the store.
While Macy’s has a reputation for great products in their apparel, home goods, and furniture, they don’t have the best reputation for their electronics.
Their TVs, in particular, can often seem very expensive.
There’s one major reason the TVs at Macy’s are expensive.
They have a limited number of them.
Macy’s doesn’t specialize in TVs or electronics in general.
Instead, they only buy a few models.
Since they have a limited supply, they have to keep their prices relatively high.
Stores like Best Buy, on the other hand, have a huge number of different models available.
That enables them to have more competitive pricing.
Macy’s is a popular and famous department store that sells everything from apparel to electronics.
It also partners with designers for private labels and limited edition collections.
Because of its focus on high-quality products, Macy’s tends to be more expensive than other department stores.