Macy's closure reflects dramatic shifts in shopping patterns

It was where many Minnesotans went to get their first suit or fancy dress.

And it was where families flocked during the holidays to see Santa on the eighth floor, and treated themselves afterward to chicken potpie and popovers at the venerable Oak Grill.

Even as its name has changed, from Dayton's to Marshall Field's and finally Macy's, the sprawling department store at the corner of 7th St. and Nicollet Mall has been a landmark to generations of Minnesotans.

But while the retailing institution managed to survive the rise of suburban shopping malls and big-box stores, it couldn't withstand the latest threats of online shopping and the preference for fast-fashion stores and discount, off-price chains such as T.J. Maxx.

The closure of the Macy's store is the latest chapter in the changing face of downtowns, once bustling with shoppers in the evenings and on weekends, as well as suburban shopping malls across the country.

The downtown Minneapolis location, which some Minnesotans still refer to as Dayton's, is one of 100 that Macy's is closing nationwide amid faltering sales. But it is far from alone among onetime retail successes that have faced challenges in more recent years.

Sears, for example, is also shuttering dozens of locations, while mall stalwart The Limited is also closing stores across the country.

The closing comes despite the fact that the resident population downtown has been growing and now numbers about 40,000. On top of that, there's a vibrant base of downtown workers, though they are more likely to come to Macy's to reach adjoining skyways and buildings than to actually shop its aisles.

"Downtown isn't the attraction for retail that it once was in the '90s," said Dave Brennan, retailing professor at the University of St. Thomas. "It has gone more downscale versus upscale. The total amount of retail has whittled away."

In the 1950s, downtown Minneapolis was home to four major department stores — Dayton's, J.C. Penney, Donaldson's and Powers Dry Goods — in what was known as "four-block walk" of department stores. In later decades, it boasted hopping, multilevel shopping centers such as Gaviidae Common, City Center and the Conservatory.

While the first two are still around, they have much smaller retail footprints than they once did. Gone from Nicollet Mall are marquee names that dotted the street a decade ago such as Saks Fifth Avenue, Neiman Marcus, and Crate & Barrel.

But there have also been some promising signs with new retailers filling empty spaces. A Saks Off Fifth, the discount offshoot of the luxury chain, opened on Nicollet Mall last year. And a two-story Nordstrom Rack is set to open in the IDS Tower this fall.

While he thinks big downtown department stores will continue to be a fixture in bigger cities such as Chicago and New York that attract shopping tourists, Brennan has a bleaker outlook for retail in downtown Minneapolis.

"I think it's going to be a struggle," he said. "What I see is less retail and more services to support the people working downtown."

But Andrea Christenson, head of leasing at IDS Tower, is more upbeat about the prospects.

"Everybody is all gloom and doom about it, saying the sky is falling," she said. "But I look at it as a huge opportunity. That store was very tired. It's an opportunity for us to bring something unique and new to downtown that will hopefully draw a new audience."

The ongoing multiyear renovation of Nicollet Mall has made it more challenging to attract new tenants, she said.

"They have the time and luxury of spending money," she said. "People are going to look at the demographics and want to be here."

Christenson said that to become more of a destination, downtown needs to attract stores that you can't find at another shopping mall in the Twin Cities — or that might only have an outpost at the Mall of America.

"I think Zara would kill it on Nicollet Mall," she said. "You have to have a store that is unique so people will drive downtown and pay to park in a ramp."

That's been one of the keys to the success of the North Loop, which has been populated in recent years with a number of specialty boutique stores.

"What I hope to see downtown and what we're finding is attracting people to the North Loop is stuff you can't find anywhere else," said Eric Dayton, who runs the Askov Finlayson retail boutique. He is also a descendant of the family that started Dayton's department store and its discount offshoot that is now Target Corp.

Sandy Stein, Twin Cities-based retail analyst, said Macy's is partly to blame for its woes.

"I think Macy's along with the department stores in general are having a very hard time of their own making," he said. "They have stripped away everything special about the customer experience ... service, quality and focus in the name of chasing price and the race to the bottom."

Still, he said, that building at 7th and Nicollet and its life as a department store has been an integral part of Minnesota life and beyond for generations.

His grandparents, who lived in rural Wisconsin, would drive 150 miles to go to Dayton's and would talk with nostalgia about those trips.

"It was that kind of a destination that drew people from a 3-4 state area to Minneapolis," he said.

Staff writer Kristen Painter contributed to this report.